Bank directors with non-performing loans asked to resign

The Central Bank of Nigeria (CBN) has instructed directors of banks with non-performing insider loans to resign from their positions with immediate effect.The apex bank classified the loans as facilities that are granted by a bank or financial institution to its executives, directors, employees, major shareholders or other related parties.

The Acting Director of Banking Supervision of the CBN, Adetona Adedeji, signed the circular that conveyed the directive. The circular read in part: “Directors with non-performing insider-related facilities are required to step down immediately from the board, while the bank should commence immediate remediation of the loans through the recovery of the collaterals including the shareholdings of the affected directors.”

It added that all banks are to implement the directives regarding the insider-related facilities in their books, which is in line with the provisions of Section 19 of the Banking and Other Financial Institutions Act (BOFIA)

“Banks are required to regularise within 180 days all insider-related facilities above the limits prescribed in Section 19 (5) of the BOFIA, which were approved by the CBN without specific timelines.

“Accordingly, all affected individual director-related facilities should be brought within the prescribed limit of 5 per cent of the bank’s paid-up capital, while the aggregate insider facilities for the bank should not exceed the 10 per cent paid-up capital limit,” it stated.

The circular said banks are obligated to comply with the directives effective immediately in adherence to regulatory requirements and sound corporate governance practices.