CBK to cap bank CEO tenures

The Central Bank of Kenya (CBK) is working on regulations that will cap the tenures of bank chief executives and board directors.

The move comes as the banking regulator moves to strengthen corporate governance within banking institutions as cases of poor financial practices emerge.

CBK Governor Dr Patrick Njoroge said the cap on the tenure of chief executives will ensure the robustness of banks while enhancing safe banking practices.

“We are appreciative that unlimited tenures may breed complacency, we therefore encourage banks and their stakeholders to review our proposals when released to ensure that the final guidelines would be useful and relevant to our sector,” Dr Njoroge said.

This is part of CBK’s efforts to strengthen bank supervision.

Three banks have been placed under receivership in the past one year, with the central bank concerned that all three had directors or Executives who had served for over 10 years.

According to the central bank governor, Banks will further be expected to disclose shareholders who own more than 5 percent stake in an effort of making shareholders more accountable.

This will see lenders disclose vital details of the shareholders in order to foster transparency in the banking industry.

“Banks are now required to disclose details of significant shareholders who own five percent or more on their share holding on their website at a minimum, the names, shareholding levels, composition of local and foreign ownership as well as group structures for banking groups should be disclosed,” he added.

The disclosure of banks shareholder’s details is meant to signal adherence to corporate governance as well as instill confidence and stability in specific banks and the sector as a whole.

The move comes after Imperial Bank and Chase Bank were placed under receivership while Dubai bank of Kenya was liquidated in August.

The central bank has stepped up its supervisory role as it seeks to restore confidence in the banking sector.

Reporting by Beatrice Eghwa