Dissatisfied with the level of banksâ€™ compliance with the new code of corporate governance, the Central Bank of Nigeria (CBN) is in the process of engaging specialists to oversee and review the practice in the industry on a continuous basis.
Sanusi Lamido Sanusi, the apex bank governor, said the new measure is being taken to ensure a regime of zero tolerance for the infraction of corporate governance principles.
Sanusi, who was represented by Tunde Lemo, CBN deputy governor, operations, at the Bank Directors Association of Nigeria (BDAN) 2010 stakeholdersâ€™ forum held in Lagos, Monday, said many banks are only paying â€œlip serviceâ€ to compliance with most sections of the code.
â€œIn Nigeria, though many banks have, in theory, complied with most sections of the code, the reality is that only a few banks have demonstrated strict observance of its provisions. 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 while the power, knowledge, influence and contribution of the various groups differ widelyâ€, the CBN governor said.
According to Sanusi, in order to forestall the pitfalls of the recent past where corporate governance malpractices brought a number of banks to their knees, the apex bank decided to establish a specialist function focusing on governance issues to ensure that best practices are enshrined in the banking industry.
In addition, the governor said, the apex bank has commenced the implementation of some remedial actions on governance in line with Pillar 1 of the blue print for the current banking sector reform programme.
Some of them include directing banks to update corporate governance framework, particularly as it relates to matters of the role and constitution of the board, size and composition of committees and their terms of reference, disclosure and evaluation of board performance.
Others include increasing the number of mandatory board committees from three to five; intensifying efforts at educating board members on their individual and collective responsibilities; mandating bank directors to make full disclosures of their ownership interest and related party transactions, and further strengthening the requirement for fit and proper persons test, among others.
Tony Elumelu, immediate past chief executive of UBA plc, who was the guest speaker at the event said: â€œWe have had errors of exuberance, letâ€™s put it behind usâ€, adding: â€œIt is never too late to start a new beginningâ€.
He told the gathering of directors of banks that the era of bandwagon where everybody declared huge profits that were unrealistic should be put behind, and the industry should now move on to a new beginning.
According to him, since the last quarter of last year, UBA plc has been in the forefront of turning financial quarterly results in, early, unlike in the past when one bank would wait for the another to make sure it out-did what the former had announced.
He advised that managing directors and chief executive officers be judged by the values their banks espouse, and not just by profitability, as was the case in the past.
Ferdinad Alabraba, president of the Bank Directors Association of Nigeria (BDAN), agreed that the recent developments in the Nigerian banking sector have demonstrated that bank directors must stay more focused and proactive.
Umaru Ibrahim, chief executive, Nigeria Deposit Insurance Corporation (NDIC), who was the chairman of the forum, said every director should study and understand the focus of the reforms as well as the new rules and regulations being issued by the CBN, and ensure compliance by their respective banks.