ByAdemola Alawiye

Tuesday, 2 Nov 2010

The Central Bank of Nigeria on Monday said that it was in the process of engaging specialists to oversee and review corporate governance practices in the banking industry on a continuous basis.

The CBN Governor, Mr. Lamido Sanusi, said this at the 2010 Bank Directors Stakeholders Forum in Lagos.

Sanusi, who was represented by the Deputy Governor, Operations, CBN, Mr. Tunde Lemo, said, “The CBN has established a specialist function focusing on governance issues to ensure that best corporate governance practices are enshrined in the banking industry.”

He noted that some banks in theory had complied with most sections of the corporate governance code but only few banks had demonstrated strict observance of its provisions in reality.

Sanusi said, “Investigations and studies carried out by the CBN indicated that, in many instances, the interests of some stakeholders are often in conflict with one another. The board of directors and the executive management appear to be the most influential and at the centre of all corporate governance issues.”

He, however, added, “In order to forestall the pitfalls of the recent past where corporate governance malpractices brought a number of banks to their knees, CBN would henceforth enforce a regime of zero tolerance for the infraction of corporate governance principles.”

Sanusi noted that weakness in corporate governance in Nigerian banks had manifested itself in diverse ways, including the struggle for power and control, ineffective board oversight, overbearing influence of chairman and chief executive officers.

He added, “As we are aware, effective corporate governance has been established to be one of the prerequisites for fostering systemic stability, achieving and maintaining public trust and, in broader sense confidence in the banking system. For this reason, issues related to corporate governance have continued to attract significant attention.”

The Managing Director, Nigeria Deposit Insurance Corporation, Alhaji Umaru Ibrahim, said, every bank director, especially the non-executive directors, should take time to study and understand the focus of the reforms and the new rules issued by the CBN.

Ibrahim said, “Bank directors must now show interest in the way their banks are being managed to forestall the catastrophes of the immediate past.

Source: Punch