Two of Nigeria’s most prominent bank chief executives are to be forced to stand down under new rules introduced by the Central Bank of Nigeria (CBN) as part of the governor’s ongoing tussle with some of the country’s most powerful tycoons.

Lamido Sanusi, who took over as CBN Governor in June, has already rocked the financial sector in Africa’s second largest economy, dismissing the executives of eight banks during a debt crisis brought on by reckless lending. The Central Bank of Nigeria (CBN) bailed out stricken banks to the tune of $4 billion.

In the latest move, the country’s 24 banks have been instructed to place a 10-year limit on the tenures of chief executives. “All CEOs who would have served for 10 years by July 31, 2010 shall cease to function in that capacity and shall hand over to their successors,” the CBN said.

The purpose of the new rules was to address “corporate governance issues”, the CBN said.

Three chief executives would be affected, including the heavyweights who run two of the continent’s largest banks, people familiar with the situation said.

One is Tony Elumelu, who emerged as chief executive at United Bank for Africa (UBA) following a power struggle that followed its 2005 merger with Standard Trust Bank, which he had run since 1997. UBA’s board has just appointed Phillips Oduoza as the MD/CEO designate to replace Tony Elumelu.

UBA says it has assets of more than $19 billion, seven million customers in 14 African countries, and offices in New York, Paris and London. In 2008, US regulators fined UBA $15 million for failing to implement an adequate anti-money laundering program. The bank has since appointed new risk managers.

The other high-profile banker who will be obliged to relinquish control is Jim Ovia, who co-founded Zenith Bank in 1990. Regarded as one of the elder statesmen of Nigerian finance, he serves as chief executive of a bank with which his name is all but synonymous. Zenith Bank’s board has just appointed Godwin Emefiele as the MD/CEO designate to replace Jim Ovia.

Both banks survived an emergency audit of all lenders last year after a stock market crash and a slump in oil prices soured loans made to speculators during the preceding boom.

Some Nigerian bankers suggested the CBN’s latest move could meet resistance from the ousted chiefs. “It’s lights out but they will fight politically,” said one Lagos-based financier.

Another senior financier suggested part of the purpose of the 10-year tenure limit was to sweep aside two influential figures amid the CBN’s attempts to impose reforms.

“This initiative may have been designed to force them out,” the financier said.

Read more on Banking in Nigeria

United Bank for Africa (UBA) | Zenith Bank

Source(s): Financial Times