Announce MD successors three months before exit

The Central Bank of Nigeria (CBN) has ordered all Deposit Money Banks (DMB) to announce  the appointment of new managing directors at least three months before the exit of the incumbents.

DSIBs are banks considered “too big to fail”—financial institutions whose distress or disorderly collapse, due to their size, complexity, and systemic interconnectedness, could severely disrupt the wider financial system and economic activity.

In a circular signed by Rita Sike, Director of Financial Policy and Regulation, the apex bank explained that the directive is intended to minimise leadership disruptions and safeguard financial system stability.

According to the CBN, the boards of DSIBs must secure regulatory approval for successor appointments no later than six months before the end of a managing director’s tenure, with the successor then publicly announced at least three months before the incumbent steps down.

“The requirement seeks to minimise disruptions at the top management level, enable top management appointees to prepare adequately for their new roles, and generally mitigate risks associated with abrupt changes in leadership,” the circular stated.

It added: **“In recognition of the critical role that Domestic Systemically Important Banks (DSIBs) play in sustaining financial system stability, the CBN hereby reiterates the importance of effective succession planning in these institutions.

“Consequently, and in line with good corporate governance practice, each DSIB is hereby required to:

‘1. Ensure it obtains regulatory approval for the appointment of a successor Managing Director (MD/CEO) not later than six months to the expiration of the tenor of the incumbent MD/CEO.

‘2. Publicly announce the appointment of the successor MD/CEO not later than three months to the planned exit of the incumbent MD/CEO.’”

The apex bank stressed that effective succession planning remains central to good corporate governance, particularly for DSIBs, given their crucial role in maintaining financial system stability.