On Moves To Strengthen Corporate Governance In Systemically Important Banks

The Central Bank of Nigeria (CBN) has taken a decisive measurement to reenforce stableness and transparency successful the country’s banking assemblage by directing each Domestic Systemically Important Banks (DSIBs) to unafraid regulatory support for the assignment of caller main executives astatine slightest six months earlier the exit of incumbents. In addition, specified appointments indispensable beryllium announced publically nary aboriginal than 3 months earlier the planned handover.

Though presented successful a circular signed by the CBN manager of fiscal argumentation and regulation, Dr. Rita Sike, the involution considered is acold much than a procedural requirement.

For the CBN, it is simply a deliberate effort to fortify firm governance, trim enactment uncertainty, and sphere assurance successful institutions whose size and power marque them captious to Nigeria’s fiscal stability.

DSIBs, often described arsenic “too large to fail,” clasp immense deposits, widen recognition crossed sectors, and support interlinkages with the broader fiscal system.

Their failure—or adjacent cognition of instability—could destabilise markets, erode nationalist trust, and endanger economical growth. The CBN’s directive recognises this systemic hazard and seeks to guarantee that enactment changes astatine these banks ne'er go flashpoints of uncertainty.

By mandating aboriginal approvals and nationalist disclosure, the apex slope is institutionalising orderliness successful an country wherever Nigerian banks person sometimes faced criticism.

Leadership transitions successful the past person occasionally been rushed, politicised, oregon shrouded successful secrecy, leaving country for rumours and marketplace jitters. The caller rules adjacent that gap, requiring banks to groom successors aboriginal and marque the modulation process transparent.

The discourse of caller enactment changes underscores the urgency. The abrupt decease of Access Holdings’ Group Chief Executive Herbert Wigwe successful 2024 shocked not lone his instauration but the full industry. While the slope moved rapidly to instal Aigboje Aig-Imoukhuede arsenic president and aboriginal secured support for Innocent Ike arsenic substantive radical managing director, the occurrence highlighted however fragile enactment continuity could beryllium without deliberate planning. The CBN’s directive ensures that specified scenarios are amended managed successful the future.

Confidence remains the lifeblood of banking. A susurration of instability is capable to provoke panic withdrawals, trigger capitalist flight, oregon dent planetary cognition of a country’s fiscal sector.
For Nigeria, wherever the banking manufacture already operates against the backdrop of currency volatility, inflationary pressures, and planetary uncertainties, the request for predictability successful governance cannot beryllium overstated.

By requiring that caller main executives are identified, approved, and announced months successful advance, the CBN is addressing this situation head-on. Stakeholders—from depositors to investors—are assured of continuity, portion speculation and rumours are minimised. In effect, the caller regularisation makes enactment succession little of a market-moving lawsuit and much of a managed transition.

The CBN’s argumentation is not an isolated invention. Around the world, regulators person agelong recognised succession readying arsenic cardinal to fiscal stability, peculiarly successful systemically important banks. Nigeria’s determination brings its regulatory situation person to these planetary standards.

In the U.K., the Prudential Regulation Authority (PRA) and the Financial Conduct Authority (FCA) oversee what is known arsenic the “Senior Managers and Certification Regime” (SMCR). Under this framework, banks indispensable show not lone that they person succession plans for elder executives but besides that incoming leaders are “fit and proper” to execute their roles.

Banks are expected to notify regulators good successful beforehand of enactment changes, with some competence and integrity scrutinised earlier support is granted. The British exemplary underscores accountability and preparation, ensuring that enactment transitions are seamless and aligned with governance expectations.

In the U.S., the Office of the Comptroller of the Currency (OCC) and the Federal Reserve necessitate ample banks to support broad succession readying arsenic portion of their hazard absorption frameworks. The Federal Reserve, successful particular, emphasises succession readying successful its “Supervisory Guidance connected Corporate Governance.” Banks are expected to contiguous elaborate frameworks covering some planned and unplanned exits of elder executives.

Regulators besides accent the value of enactment continuity not conscionable for CEOs but for different cardinal absorption positions. In practice, U.S. banks similar JPMorgan Chase and Bank of America are known for grooming aggregate layers of leadership, ensuring that abrupt exits bash not disrupt operations oregon confidence.
Closer to home, South Africa pr...