News Column

Return of Former Bank Chiefs As Board Chairmen - What Good for Banks?

August 29, 2014

Omoh Gabriel and Peter Egwuatu

In the last two weeks the media have been awash with the return of the duo of Jim Ovia and Tony Elumeleu to the banking industry. What looked like the end of an era in 2010 when the CBN rolled out a policy fixing the tenure of bank chief executives for two terms of five consecutive years has in itself entered the second phase.

The first phase saw men like Jim Ovia of Zenith Bank, Tony Elumelu of UBA and Akinsola Akinfemiwa of Skye Bank out of the system having served the mandatory ten years. Later Agboje Aig-Imokhuede of Access Bank, Oba Otundeko of First Bank joined the trail of those who were compulsorily retired from the banking system.

Before the introduction of the tenured appointment for bank executives and in the dispensation of modern banking in Nigeria, six names can not be ignored no matter what you think. They are either referred to as champion of the new era of banking in Nigeria or the grand fathers of banking in Nigeria.

Names like Fola Adeola, the pioneer Managing Director of GTBank who retired voluntarily, Jim Ovia of Zenith and Tony Elumelu of UBA who was caught in the web of the CBN policy; Cecilia Ibru of Oceanic Bank, Erastus Akingbola of Intercontinental Bank, (both banks now defunct); Agboje Aig Imokhuede of Access Bank.


These were men, who the older and traditional bankers that relied solely on operational procedures described as cow boy bankers. They were so referred to because they imbibed the American tradition of flamboyance, speed in service delivery, jumbo pay packages for employee, luxury cars and expressive offices. It was the belief then that many of the banks led by them would fail and they would crash out of the system.

True to type many did not survive consolidation and the Sanusi Lamido Sanusi's tsunami. But the interesting thing was that many of them were not just CEOs, they were owner managers. They persisted and brought the best into the banking system.

Tony Elumelu, Jim Ovia, Fola Adeola and Akinsola Akinfemiwa

While Elumelu and Ovia were said to have spent over 10 years, Akinfemiwa attained 10 years in November last 2009. The bankers were not asked to leave the industry on account of non performance, declining productivity but a policy directive aimed at addressing some general industry problems.

According to the CBN then this was actually done to enthrone good corporate governance in the banks, to institutionalise the arrangement of the appointment of CEOs in banks, to see to it that banks put in place a good succession plan programme and also, more importantly, to ensure that institutions are not personalised,".

He said all CEOs who would have served for 10 years by July 31, 2010, shall cease to function in that capacity and shall handover to their successor. The CBN policy had prescribed that "Where a bank is a product of a major acquisition, takeover or any other form of combination, 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 governors, deputy governors of the Central Bank of Nigeria and managing director/CEOs and the executive directors of the Nigeria Deposit Insurance Corporation (NDIC), shall not be eligible for appointment for any capacity in banks and their subsidiaries under the supervision of CBN and NDIC until after the expiration of five years from the date of their exit from the CBN and the NDIC as the case may be.

The department directors of CBN and that of the NDIC shall not be eligible for appointment in any capacity in banks and their subsidiaries under the supervision of the CBN and the NDIC until after the expiration of three years of their exit either from the CBN or the NDIC."

CBN said the appointment of bank CEOs as approved by the board must also be ratified at the annual general meeting and such term of appointment in the first instance shall not exceed five years which is renewable for another five years provided the cumulative does not exceed ten years.

Maximum tenure

It had said that "Any person who has served as CEO for the maximum tenure in a bank shall not qualify for appointment in his former bank or subsidiaries in any capacity until after a period of three years after the expiration of his tenure as CEO.

Four years after the policy became effective, the first victims of the policy many saw as very harsh having met the mandatory three years outside the banks have returned. First it was Jim Ovia who returned to Zenith with a fanfare as the chairman of the bank's board. A week later, Tony Elumelu followed. The fear then was that in actual fact these men were calling the shots from behind the scene. How true that is remains in the rumour mills.

The Nigeria banking scene that some of these men played a key role in was characterised by inadequacies which included low capital base, large number of small banks with relatively few branches, poor rating of some of the banks, weak corporate governance including inaccurate reporting and non-compliance with regulatory requirements, declining ethics and huge non-performing insider-related credits. Others included over-dependence on public sector deposits and foreign exchange trading.

Do these men of yester year's fame in the banking industry have anything new to contribute to the industry? Or are they in to play the catch up and remain relevant in the scheme of things in Nigeria? Many stakeholders see their return as chairmen of the various boards as positive development in the industry. Commenting on their return to the banks as chairmen, operators, shareholders welcome Elumelu and Ovia's return to banking system

"Banking in Africa is a dynamic, exciting and an increasingly competitive and challenging industry," said economic and financial analyst, Mr. Bismarck Rewane, Chief Executive Officer, Financial Derivatives. "Tony and Ovia are visionary, courageous and have shown their abilities to both, think for the long term, and to create significant shareholder value in their respective banks. The drive, dynamism and competitiveness that we saw during their period in their banks as CEO of UBA, Zenith were one of the catalysts of the enormous changes in the Nigerian banking sector," he said.

Dr. Farouk Umar, President, Association for the Advancement of the Rights of Nigerian Shareholders (AARNS) said "We are delighted with these appointments. It bodes well for UBA and Zenith and the banking industry in general, now and in the future. Elumelu and Ovia are transformers and value creator for shareholders. We are excited about their return."

Boniface Okezie, Chairman, Progressive Shareholders Association of Nigeria, PSAN said " It is a good omen for the banking sector that both Elemelu and Ovia have come back to the system where they left due to the reform led by former Governor of Central Bank of Nigeria, CBN, Mallam Lamido Sanusi on tenure limit. For these former Chief Executives to come back to the system is an indication that they are good, sound and remain relevant.

Though, this time they are coming as non Executive Directors. Again what this had shown us is that Sanusi came up with hidden agenda and there was nothing wrong with some of the banks' chief executives who were sacked. The success of these people in their private businesses shows that they are good managers. Now that they are back to the system, they should not relax and they should prove to the government that the banking sector is sound and those whose banks were confiscated in the past should regain them.

Tangible reason

Also, some banks executives that were relieved of their duty without tangible reason should be allowed to come bank.

Mr. Oderinde Taiwo, Chairman, Proactive Shareholders Association of Nigeria, PROSAN, said " Elumelu and Ovia are experienced technocrats. They will bring their experience to bear in the industry. They will add value to the banks, which will in turn get to shareholders through enhanced dividend.

Elumelu will bring his turnaround experience in Transcorp. Transcorp were turnaround when Elemelu came on Board, the company has started paying dividend to shareholders. In fact, both Elemelu and Ovia have done well in their private businesses since they left the banking sector. We welcome them back to the system.

Chief Timothy Adesiyan, said "These people are epitome of progress and good thing to happen to the banking sector and the country in general. Elemelu and Ovia are motivators and standard technocrats and this they have demonstrated in the Nigerian capital market and banking sector.

We welcome them back to the system. It is a good thing that the big lions are returning to the banking system. We are really happy for their contribution in the past and hope they will bring more progress to the banks.

Insurance operators have been reacting to the trend where former managing directors of banks are returning to their former banks as chairmen.

Reacting to the development, Mr. Wole Adetimehin, Managing Director of Jully Insurance Brokers Ltd. said that such move is not out of place if only the banks are acting in line with the dictates of the Central Bank of Nigeria as well as Companies and Allied Matters Act, CAMA.

According to Adetimehin, shareholders of such companies must also play the role of watchdogs to keep the chairman in check so that he does not operate beyond his mandate or act like a demigod. Adetimehin said that such banks can only be accorded respect if the board of directors, management and shareholders work hand in hand and in accordance with the rule of the game.

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Source: AllAfrica

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