Bye to Life-CEOs

Jim Ovia, MD, Zenith Bank Plc

A new corporate governance code limiting the tenure of bank chief executives to a maximum of 10 years comes into effect, with serious contentions over its retroactive status
By Bayo Amodu
Jim Ovia started his banking career as a clerk at Barclays Bank, now Union Bank in 1973. He became a financial analyst in 1980 with the International Merchant Bank (IMB) and rose to the management cadre seven years later, before taking the bull by the horn to co-establish Zenith Bank in 1990. Another top banker, Tony Elemelu, 46, who has driven his bank, United Bank for Africa (UBA) to a new international profile within the last four years as the managing director of the bank was the founder of Standard Trust Bank (STB), a bank created from the ruins of Crystal Bank in 1997.
For these top bankers, it might be time to take a bow from their highly exalted positions. The Central bank of Nigeria, CBN, last Tuesday, unveiled new sets of corporate governance codes that would see chief executive of banks spending a maximum of 10 years in office. Ovia and Elumelu have spent 19 and 12 years as CEOs of their respective banks.
The fixed tenure is broken down into five-year term, in the first instance, subject to renewal for another five years by the board of the respective banks. The apex bank said that it took the decision in order to enthrone good corporate governance practices in Nigerian banks; institutionalise the arrangement of the appointment of banks CEO's, ensure that banks developed good succession plans and also ensue that banking institutions were not personalised.
To this end, the CBN warned all CEO's who would have served for 10 years by July 31, 2010, to cease to function in the capacity.
It said: “The guidelines shall apply notwithstanding the terms of engagement or the provisions of the memorandum and Articles of Association of any bank.”
It also directed them to kick-start a succession programme that would be supervised by their respective boards and monitored by the CBN. This, it noted, would enable the CEOs hand over to credible successors. Where a bank is a product of a merger, acquisition, take over or any other form of combination, the CBN said that the 10-year period shall include the pre and post combination service years of the CEOs, provided that the bank in which he previously served as CEO was part of the new bank that emerged after the combination.
The CBN Director of Banking Supervision, Samuel Oni, who disclosed this while addressing journalists shortly after the Bankers’ Committee meeting in Abuja last week, added that top CBN and Nigeria Deposit Insurance Corporation (NDIC) officials have also been barred from taking bank jobs until five years after leaving office. For the governor, deputy governors of the CBN and the managing director/chief executive officers and executive directors of the Nigerian Deposit Insurance corporation, they have been barred from receiving appointment in any capacity from any bank and their subsidiaries until the expiration of five years from the date of their exit from active service as regulators.
Reacting to the development, the President, Nigeria Shareholders Solidarity Association (NSSA), Timothy Adesiyan, said: “What the Governor is saying is that a bank is the custodian of public funds and the CBN regulate banks. As the CBN governor, he has the right to control what happens in the banks. With what has happened since August 14, 2009, we know that there is a problem.
“The only challenge is professionalism. It is a threat to professionalism for those who choose banking as their career."
Also, the Managing Director, Partnership Investment Limited, Victor Ogiemwonyi said the 10-year tenure was a good guide since the banks were all quoted companies and were subjected to good corporate governance.
However, there are strong insinuations of personal vendetta and fears that the move may further destabilise the economy as well as question on the legality of the new policy. Some lawyers who spoke to The Source on the condition of anonimity said that it is illegal to backdate a new policy to 10 years.
“Our laws in Nigeria are against retroactive implementation. Any policy that is not consistent with our laws is null and void. There is no democracy in the world where you introduce a policy and apply it retroactively,” said a lawyer who did not want to be named.
He said what Sanusi is trying to do is equal to what military dictators usually do. An insider in one of the banks told The Source that Sanusi was on a personal vendetta mission which he is carefully implementing. The Source gathered that Sanusi is being alleged by top shots within the banking sector as acting out a script intended to catch only two persons–Ovia and Elumelu while Akinsola Akinfemiwa, chief executive officer of Skye Bank is said to be the unintended victim.