Financial experts have said that the Central Bank of Nigeria (CBN), by wielding its big stick, would reduce the overbearing influence of directors on commercial banks.
They disclosed while reacting to the apex bank’s appointment of new Chairmen for First Bank of Nigeria Ltd and FBN Holdings Plc.
Mazi Okechukwu Unegbu, former President, Chartered Institute of Bankers of Nigeria (CIBN), said that the big stick would bring sanity among bank board of directors.
Unegbu said that the action would reduce overbearing influence and powers being exhibited by some commercial banks’ directors going forward.
He said that it would bring to an end the activities of powerful board directors in a corporation.
According to him, the decision and action will warn other people to be careful and to act within regulatory limit.
He, however, said that directors had the power to remove or appoint a managing director, but must obtain the approval of the apex bank before making the announcement.
Also speaking, Prof. Uche Uwaleke, President, the Association of Capital Market Academics of Nigeria, said that it was right for the CBN to wield the big stick on any bank that flours the rules.
Uwaleke said the action would serve as a lesson to the boards of other banks that similar fate awaits them if they take critical decisions bordering on board composition and corporate governance in general without prior approval of the CBN.
“A banking system regulator should be seen to take the issue of corporate governance very seriously.
“In this particular matter, my take is that the apex bank is in order in view of the fact that it gave the Board of FirstBank the opportunity to defend itself.
“It behoves the CBN now to communicate the reasons for its action to members of the public and provide reassurance of Banking system stability,” Uwaleke said.
The apex bank on Thursday announced the immediate removal of all directors of First Bank of Nigeria Ltd. and FBN Holdings Plc over purported management changes at the bank.
The CBN said that the decision was to protect minority shareholders and depositors.