Shareholders divided over CBN’s plan to sack bank chiefs
Capital market shareholders have expressed divergent views on the recent decision by the Central Bank of Nigeria (CBN) to sack CEOs and chairmen of banks that fail to publish their banks’ yearly account, 12 months after the financial year ends.
While some shareholders argued that the first step should have been sanctioning the two personalities (Chairman/MD) of the banks through fines, before the issue of losing their appointment/job is considered, others opined that the new CBN directive is a welcome development that would strengthen the nation’s financial industry.The CBN had on Monday, issued a directive that any bank which failed to publish its annual account 12 months after the financial year ends will have its chief executive sacked.
Also to be fired is the chairman of such a bank. This directive is contained in the CBN’s Monetary, Credit, Foreign Trade and Exchange Guidelines for Fiscal Years 2018/2019 released at the weekend.
It was signed by CBN Governor Godwin Emefiele. The policy aligns with the provisions of the Bank and Other Financial Institutions Act (BOFIA) 1991, which require banks to, subject to the written approval of the CBN, publish their audited financial statements- financial position and comprehensive income- in a national newspaper printed and circulated in Nigeria not later than four months after the end of each financial year.
Specifically, the Co-Founder, Nigeria Shareholders Solidarity Association, Gbadebo Olatokumbo in an interview with The Guardian, maintained that the apex bank should have applied sanctioning first before taking the decision of outright sack.He warned that if the decision is binding, the apex bank must do such in a manner that would not suffocate the banks.
“I am of the view that even in the court of law, they do caution offenders. Therefore, the first step should be sanction with fine to the above two personalities (Chairman/MD) of the banks and the payment must be by the persons involved and not the banks, before the issue of losing their appointment/job were considered, if it was the agreement.
“As the banker of the banks and their regulatory body, the CBN has a responsibility to perform and must be seen to do same, but it must do such in a manner that wouldn’t suffocate the banks.He continued: “If most of the CBN sanctions had been to the individuals concerned and not the banks, we would have noticed great improvements in the banking industry in Nigeria and shareholders would not hold grudges against CBN.
“I respectfully suggest that those responsible for each failure be made to face the sanction and not the banks, since the banks do not operate themselves, but managed by personnel that get remunerated for their services,” he added.
The President of Proactive Shareholders Association, Taiwo Oderinde, pointed out that the nation’s banking industry is over-regulated.“They should be careful the way they are issuing these directives because the sector is already over regulated. The banking sector is over regulated; these banks need to get approval from all these regulators.
“There must be reasons for delay. No serious minded director will want the result to be delayed. They should not consider their own perspective alone. They should be careful so that they will not take a wrong decision that may lead to the sack of a performing board. “There have been penalties, so what they should have done is to ensure that these directors pay from their own purse not from the shareholders’ fund going forward instead of outright sack.”
However, the Publicity secretary of the Independence Shareholders Association of Nigeria, Moses Igbrude said it is a good policy that will make the nation’s financial institutions more accountable to stakeholders.“I hope this directive will affect those banks that are not publicly quoted. 12 months is a long period for any serious management to finalise their books and make it public.”
Corroborating his view, the President, Constance Shareholders Association, Mallam Shehu Mekail explained that such stringent policy is paramount if the nation must achieve transparency in its financial accounting system.
“We need to take such serious steps if we must achieve transparency in our accounting systems because within a year, financial report should have been cleared and made available to stakeholders.“Therefore the new CBN directive is a welcome idea which has been long due if we really want to strengthen our financial industry and achieve true accountability.”
No comments yet