‘Why CBN Should Not Impose Independent Directors On Banks’

In attendance at the workshop, held at the Civic Centre, Victoria Island, were executive directors and general managers of banks, including the Managing Director of Access Bank, Aigboje Aig-Imoukhuede and the newly appointed chief executive officers of Finbank and Afribank, Messrs. Suzanne Iroche and Nebolisa Arah.

Kendis stated that an imposition of directors on banks that are slow in complying with the CBN directive could negatively affect the ‘board chemistry’ as it takes time for such an outsider to be integrated into the board’s scheme of things.

The Deputy Governor of the CBN, Mr. Tunde Lemo, had, during the 2009 forum of the Board of Directors Association of Nigeria (BDAN), read the riot act to banks, which were yet to appoint independent directors for their boards, insisting that it (the CBN) would be forced to intervene.

According to him, prompt appointment of independent directors would enhance good corporate governance and prevent management abuses in banks.

But Kendis told The Guardian that: "The chemistry of the board is essential. For a new independent director to join the board, it takes time, even when he is an internal or management appointee. He has to represent the shareholders and it is going to take a long time for that new person to run in."

The expert, who was a resource person at the IFC corporate governance seminar, charged boards to build and enforce their strategies around long-term franchises of their institutions.

"The group that supports and enforces the long-term vision of the bank is the board of directors," he said.

"All the time, management had pursued short-term financial growth goals, size and scale; the board of directors now has to re-enforce the long-term mission of each bank."

Linking the global financial crisis to banks’ pursuit of short-term financial assets, Kendis said without effective board oversight, management would naturally emphasise short-term financial gains.

Through training and data analysis, Kendis has spent 25 years as an adviser to boards of banks globally. With its corporate headquarters in the United States of America, The Banking Group also has an office in Singapore.

Finbank MD, Suzanne Iroche said she attended the programme with the executive directors of the bank’s board due to the governance challenges in the industry.

According to her, the bank would focus on risk management and streamline its operations to cut avoidable costs in the interest of depositors and shareholders.

"The IFC is an international institution and their standards are of high quality; so, I felt I will be able to get something out. I should take that to the board," she said.

IFC’s Country Manager (Nigeria), Mr. Solomon Adegbie-Quaynor, said the Corporation had been running the programme for boards of banks since 2007.

Adegbie-Quaynor explained that the 2009 edition of the programme was significant in the sense that the current governance issues in the banks, as were revealed by the CBN/NDIC special examination, had accentuated the need to take board administration and management more seriously.

"As you can see from the special examination of banks in Nigeria, there are 24 banks and nine were found to have failed corporate governance. It is also discovered that many of these banks had exposure to the capital market," Adegbie-Quaynor said.

THE discourse as to whether the Central Bank of Nigeria (CBN) should appoint independent directors for erring banks took a new dimension during the week, with an international banking expert, Kurt Kendis, cautioning against the move.

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