Jobs of some bank Chief Executive Officers and their Chairmen may soon be on the line following a directive from the Central Bank of Nigeria (CBN). The directive has warned that bank CEOs and chairmen who fail to publish their institutions’ accounts 12 months after the end of the financial year will be removed from office.
The order was contained in the CBN’s Monetary, Credit, Foreign Trade and Exchange Policy Guidelines for Fiscal Years 2014/2015 released at the weekend.
The regulator will continue to hold the Board chairman and CEO of a defaulting bank directly responsible for any breach and impose appropriate sanctions, which may also include barring the CEO or his/her nominee from participation in the Bankers’ Committee and disclosing the reason for such suspension.
In accordance with -BOFIA (2004)–banks are required, subject to the written approval of the CBN, to publish not later than four months after the end of each financial year, their audited financial statements (balance sheet, and profit and loss account) in a national daily newspaper.
The CBN said to facilitate the implementation of consolidated supervision, all banks, discount houses and their subsidiaries shall continue to adopt December 31, as their accounting year end.
The CBN also said other sanctions may include suspension of the foreign exchange dealership licence of the bank and its name being sent to the Nigerian Stock Exchange, where such offender is a public quoted company.
The CBN said it would continue to adopt the risk-based supervision (RBS) approach in the supervision of institutions under its regulatory purview.
“The objective of the RBS approach is to provide an effective process to assess the safety and soundness of banks and other financial institutions. This is achieved by evaluating their risk profile, financial condition, risk management practices and compliance with applicable laws and regulations,” it said.
It enjoined banks to pursue profitability in their business models through efficient operations, adding that they should charge competitive rather than excessive rates of interest in the course of their transactions. The lenders are also to disclose their prime and maximum lending rates as fixed spreads over the Monetary Policy Rate.
The CBN said it would sustain the use of macro-prudential regulation, and top-down quarterly solvency and liquidity banking industry stress testing, in assessing the health of banks. Similarly, banks would continue to conduct and submit to the CBN their quarterly bottom-up solvency stress testing report.