Banks in Nigeria are seeing their corporate governance standards tighten by local authorities. During the summer, the NDIC stressed the need for tighter governance arrangements for large domestic banks, including renewed focus on director duties. The authorities believe that weak corporate governance has contributed to insider and reckless lending resulting in the growing NPLs to a high of 38%, according to Moody's. The Central Bank back in 2011 strengthened its fit and proper tests for senior periods.
Last week, the Central Bank announced higher standards for bank directors and senior persons, such as a post graduate degree such as a MBA, a qualification such as a CFA, a minimum of 20 years experience. Specifically for directors, NEDs should have a minimum of eight years post graduate experience plus have a solid understanding of financial statements and banking law & regulations. Moody's also reckons that board members and senior persons at FBN, Zenith, United Bank for Africa, Guaranty Trust Bank and Access Bank all possess sufficient qualifications to meet the new standards but that smaller firms may be impacted by the new requirements.
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