Oba Otudeko, chairman of FBN Holdings, the holding company of First Bank Nigeria Limited, on Thursday lost out in the boardroom war against Oye Odukale and Mike Adenuga.
The Central Bank of Nigeria (CBN) sacked the board of directors of First Bank of Nigeria and its holding company, FBNH, over governance is sues just as it also returned Sola Adeduntan as Managing Director with immediate effect.
Adeduntan was on Wednesday replaced with Mr. Gbenga Shobo as the new Managing Director/Chief Executive Officer (CEO).
CBN governor, Godwin Emefiele, announced the sweeping action in Abuja.
Sources said Otudeko and his allies with 10 percent shareholding could not match the war chest of Oye Odukale (10 percent) and Mike Adenuga (6 percent) which informed the return of Sola Adeduntan as MD/CEO.
Emefiele, while addressing the media, said the CBN took the decision to save the bank as the purported management changes at FirstBank do not conform with laid down regulations.
Emefiele said, “Ordinarily the board is vested with the authority to make changes in the management team subject to CBN approval. However, the CBN considers itself a key stakeholder in management changes involving FBN due to the forbearances and close monitoring by the bank over the last five years aimed at stemming the slide in the going concern status of the bank.
“It was therefore surprising for the CBN to learn through media reports that the board of directors of FBN, a systemically important bank under regulatory forbearance regime had effected sweeping changes in executive management without engagement and/or prior notice to the regulatory authorities”.
He added that the action by the board of FBN sends a negative signal to the market on the stability of leadership on the board and management and it is in light of the foregoing that the CBN queried the board of directors on the unfortunate developments at the bank.
“As you may be aware, FBN is one of the systemically important banks in the Nigerian banking sector given its historical significance, balance sheet size, large customer base and high level of interconnectedness with other financial service providers, amongst others.
“By our last assessment, FBN has over 31 million customers, with a deposit base of N4.2 trillion, shareholders’ funds of N618 billion and NIBSS instant payment (NIP) processing capacity of 22 percent of the industry. To us at the CBN, not only is it imperative to protect the minority shareholders that have no voice to air their views, also important, is the protection of the over 31 million customers of the bank who see FBN as a safe haven for their hard-earned savings.
“The bank maintained healthy operations up until 2016 financial year when the CBN’s target examination revealed that the bank was in grave financial condition with its capital adequacy ratio (CAR) and non-performing loans ratio (NPL) substantially breaching acceptable prudential standards.
“The problems at the bank were attributed to bad credit decisions, significant and non-performing insider loans and poor corporate governance practices. The shareholders of the bank and FBN Holding Plc also lacked the capacity to recapitalize the bank to minimum requirements. These conclusions arose from various entreaties by the CBN to the bank to recapitalize”, the CBN governor said.
The CBN said it stepped in to stabilize the bank in its quest to maintain financial stability, especially given FBN’s systemic importance as enumerated earlier. Regulatory action taken by the CBN in this regard included a change of management team under the CBN’s supervision with the appointment of a new Managing Director/ Chief Executive Office in January 2016.
It also granted regulatory forbearances to enable the bank to work out its non-performing loans through provision for write off of at least N150 billion from its earnings for four consecutive years. It also granted the concession to insider borrowers to restructure their non-performing credit facilities under very stringent conditions, among other things.
Emefiele added that following further review of the situation and in order to preserve stability of the bank, so as to protect minority shareholders and depositors, the management of the CBN in line with its powers under BOFIA 2020 has approved and hereby directs, immediate removal of all directors of FBN Ltd and FBN Holdings Pl and appointment of the following persons as directors in FBN Ltd and FBN Holdings Plc.
HoldCo has Remi Babalola as Chairman. Other members are Dr. Fatade Abiodun Oluwole, Kofo Dosekun, Remi Lasaki, Dr. Alimi Abdulrasaq, Ahmed Modibbo, Khalifa Imam, Sir Peter Aliogo, while UK Eke is Managing Director.
For the bank, the CBN appointed Tunde Hassan-Odukale as Chairman, Sola Adeduntan as Managing Director, Gbenga Shobo as Deputy Managing Director, Remi Oni as Executive Director, Abdullahi Ibrahim as Executive Director.
Other members of the FirstBank board are Tokunbo Martins, Uche Nwokedi, Adekunle Sonola, Isioma Ogodazi, Ebenezer Olufowose and Ishaya Elijah B. Dodo.
In a second letter dated April 28, 2021, the Director of Banking Supervision, CBN, raised issues concerning FBN’s investment in Honeywell Flour Mills and Airtel Africa and the regulator’s instructions that the bank divest its interests in both companies.
Meanwhile, in another letter from the CBN’s Director of Banking Supervision, Haruna B. Mustafa, CBN noted that it is concerned that the bank has not complied with regulatory directives to divest its interest in Honeywell Flour Mills despite several reminders.
The letter observed that, “After 4 years, the bank is yet to perfect its lien on the shares of Mr. Oba Otudeko in FBN HoldCo, which collaterized the restructured credit facilities for Honeywell Flour Mills contrary to the conditions precedent for the restructuring of the company’s credit facility.”
It went on to comment that, “Given the bank’s failure to perfect the pledge and satisfy the condition for regulatory approval, the restructuring has thus been invalidated and the credit facilities now payable immediately.”
Consequently, the CBN insisted that Honeywell Flour Mills fully repay its obligations to the FBN within 48 hours, failing which the regulator would take appropriate regulatory measures against the insider borrower and FBN itself.
Furthermore, the bank noted what it described as the “untenable delay in resolving the long outstanding divestment from Bharti Airtel Nigeria Ltd in line with extant regulations of the CBN”.
The Director of Banking Supervision hence requested that FBN should divest its equity interests in, “all non-permissible entities such as Honeywell Flour Mills and Bharti Airtel Nigeria Ltd within 90 days”.
Mustafa urged the bank’s board to “forward evidence of compliance in accordance with the timelines above to the Director of Banking Supervision.”
Source :