New rules affect Nazir Razak's future as CIMB chairman

The guidelines state that CEOs of financial institutions are prohibited from taking over as chairmen of the board of directors. This could have implications for Datuk Seri Nazir when his position as director on the CIMB board comes up next year for r
The guidelines state that CEOs of financial institutions are prohibited from taking over as chairmen of the board of directors. This could have implications for Datuk Seri Nazir when his position as director on the CIMB board comes up next year for renewal.PHOTO: THE STAR/ ASIA NEWS NETWORK

Malaysia's central bank has imposed new guidelines for financial institutions that are set to test prominent banker Nazir Razak's position as chairman of the country's second-largest lender CIMB Group.

Under the Bank Negara rules issued early this month, chief executive officers of financial institutions are prohibited from taking over as chairmen of the board of directors.

The guidelines also stipulate that financial institutions must have a majority of independent directors on their respective boards.

While the rules will not be applied retroactively, bankers say they could have implications for Datuk Seri Nazir when his position as director on the board comes up next year for renewal by the bank's nomination committee.

Mr Nazir, who is the younger brother of Prime Minister Najib Razak, served as CIMB's CEO between 1999 and 2014, before becoming chairman of the group.

CIMB executives did not respond to requests for comment on how the bank intends to deal with the central bank's new guidelines.

According to central bank regulators, the guidelines are aimed clearly at demarcating the separation of powers between the board and the management.

A senior central bank official, who spoke on condition of anonymity, said Bank Negara wanted to avoid situations where a "chairman could be in a position to oversee policies that were put in place when that person was CEO".

The new rules have already forced Datuk Seri Najib's administration to re-work at least one top-level appointment at a government-linked business entity.

Senior aides to Mr Najib say the Premier had originally planned to appoint Datuk Seri Abdul Wahid Omar, who was Minister in the Prime Minister's Department in charge of economic planning, as chairman of Maybank when he stepped down from the Cabinet in June. But Datuk Seri Wahid was president and CEO of Maybank, the country's largest lender, between 2008 and 2013.

He has now been appointed chairman of government trust fund agency Permodalan Nasional.

A version of this article appeared in the print edition of The Straits Times on August 11, 2016, with the headline 'New rules affect Nazir's future as CIMB chairman'. Print Edition | Subscribe