New CBN Rule Demands Timely CEO Succession in Major Banks

The Central Bank of Nigeria has introduced a new rule requiring major banks to secure regulatory approval for the appointment of new chief executives at least six months before the current MD/CEO leaves office.

The directive, issued in a circular signed by the Director of Financial Policy and Regulation, Dr. Rita Sike, was published on the CBN website on Tuesday.

It also requires banks to make the appointment public no later than three months before the outgoing chief executive formally steps down. The measure, the apex bank said, is designed to strengthen corporate governance and maintain confidence in the financial system.

“Each Domestic Systemically Important Bank must ensure it receives regulatory approval for a successor Managing Director no later than six months to the expiration of the current MD/CEO’s tenure, and must publicly announce the successor at least three months before the planned exit,” the circular read.

The guideline is based on Section 2.14 of the Corporate Governance Guidelines (2023), which mandates strong succession planning for senior executives of commercial, merchant, and non-interest banks.

The CBN explained that the new rule would minimise risks associated with sudden leadership changes, give appointees enough time to prepare for the role, and help maintain financial stability.

Domestic Systemically Important Banks, often referred to as “too big to fail,” are crucial to Nigeria’s financial system because of their large size and complex linkages. The central bank warned that uncertainty in leadership at such institutions could destabilise the wider economy.

The policy aligns Nigeria with international best practices, where regulators emphasise succession planning as a core aspect of risk management.

Analysts believe the move will reduce speculation around leadership changes and ensure smoother transitions. However, some industry experts have called for flexibility in situations where unexpected exits occur, such as sudden resignations or death.

The directive follows recent boardroom changes in the sector, including the appointment of Innocent Ike as Group Managing Director of Access Holdings Plc after CBN’s approval, as well as other leadership adjustments across top-tier banks.

Governor Olayemi Cardoso has made governance and transparency central to his reform agenda, and succession planning now joins recapitalisation and FX reforms as part of his broader efforts to strengthen resilience in Nigeria’s banking sector.