By Yemi Kolapo

Thursday, 9 Dec 2010

There are strong indications that some chief executive officers of banks, whose former bosses were asked to retire by the Central Bank of Nigeria because they had spent 10 years, do not have control over the banks they are supposed to be managing.

The development, our correspondent gathered, had degenerated into a situation whereby some of the new bank bosses were already thinking of quitting their jobs.

It was learnt that the system in place in some of the banks was such that the new CEOs were just being paraded as figure heads, while the banks were actually being controlled by their erstwhile group managing directors, who were still regarded as owners of the banks.

In realisation of the trend, the CBN issued a memo to the affected banks, warning the incumbent CEOs not to allow the former bank chiefs or other members of the board to interfere in the day-to-day activities of their banks.

The CBN had, at the beginning of the year, directed bank MDs, who had spent 10 years in office to quit in July.

In line with the directive, the former Group Managing Directors of Zenith Bank Plc, United Bank for Africa Plc and Skye Bank Plc, retired on July 31, 2010.

Mr. Godwin Emefiele took over from Mr. Jim Ovia at Zenith Bank; Mr. Kehinde Durosinmi-Etti took over from Mr. Akinsola Akinfemiwa at Skye Bank; while Mr. Tony Elumelu handed over to Mr. Phillip Oduoza at UBA.

The memo, dated November 29, 2010, and signed by the Deputy Governor, Financial Systems Stability, CBN, Dr. Kingsley Moghalu, a copy of which was obtained by our correspondent on Wednesday, said, ”The Central Bank of Nigeria has received reliable information regarding the involvement of former managing directors of Deposit Money Banks and key stakeholders, who are not directors, in the management of the banks.

”This includes cases of senior management staff by-passing established governance structures and reporting to non-bank officials. The CBN would like to draw the attention of all chief executive officers and boards of directors of banks that their ability to protect the integrity of established governance structures is a key element in our ongoing assessment of fit and proper status.

”Board members and chief executive officers who are unable to assume full responsibility for their institutions assume the risk of not retaining this status.”

A top official of one of the affected banks told our correspondent in confidence that the former CEO was making the bank ungovernable for the new CEO, who still had to run to him for orders.

He said, ”The former GMD is ‘unofficially‘ still in charge because all major transactions are taken to him for approval. The new GMD just sits in the office and awaits the next line of action to be dictated by the former boss, who is still in charge because of this notion that he virtually owns the bank.

”As it is here, it appears that even the executive directors have more powers than the GMD because they can take decisions that should be taken by their office. But the GMD cannot take any decision on his own, unless he runs to meet the ‘de-facto‘ GMD. We, the senior staff also report to the former GMD.”

He said the development was telling on the morale of the current CEO, who had, on a few occasions, stepped on the toes of his former boss for taking unilateral actions.

Another top source in another highflying bank, whose former CEO also had to resign after spending 10 years in the saddle, said the bank‘s current helmsman was also occupying his seat as an ‘onlooker.‘

He said it was clear to employees of the bank that the former boss was still in charge because many transactions were usually delayed until the former boss, popularly called ”oga” approved them.

”I‘m sure the CBN must have been fed with stories like that before it sent memos warning the new chiefs of interference. But the truth is, there is nothing they can do. The system is so complex that they can‘t win. The CBN may just have to replace them as it has threatened,” the official, who asked not to be named, said.

A CBN source told our correspondent that the memo was issued because of complaints from stakeholders outside the banks that nothing had changed in the affected banks, except that ”the former CEOs had moved their offices out of the headquarters.”

He said the apex bank had to take action to ensure that there was no interference from those that had been asked to quit, so that the essence of the term limit would not be defeated.

”Everything is all about good corporate governance. But if the same people are governing from outside, then the whole process would be meaningless,” he noted.

 

Source: Punch