The Governor of Central Bank of Nigeria, Godwin Emefiele in a press briefing earlier on Thursday, sacked the entire members of the Board of FBN Holdings Plc and its banking subsidiary First Bank Nigeria Ltd.
The order was that all directors of FBN Limited and FBN Holdings vacate their positions with immediate effect while an interim board is to be constituted to clean up and stabilize the tier -1 lender.
The CBN Governor also announced the reinstatement of Dr. Sola Adeduntan as the Managing Director of the interim Board.
The reinstatement of Dr. Adeduntan and the constitution of the interim management board was published on the twitter handle of the apex bank.
— Central Bank of Nigeria (@cenbank) April 29, 2021
The Apex bank also listed the interim board members for FBN Holdings Plc;
#CBN appoints Dr. Fatade Abiodun Oluwole, Kofo Dosekun, Remi Lasaki, Dr Alimi Abdulrasaq, Ahmed Modibbo, Khalifa Imam, Sir Peter Aliogo, and UK Eke (Managing Director) as Directors of FBN Holdings Plc
— Central Bank of Nigeria (@cenbank) April 29, 2021
On Wednesday, CBN had queried the board of First Bank Nigeria Limited over the removal of the Managing Director/Chief Executive of the bank, Dr. Adesola Adeduntan, saying the action was without regulatory approval.
The apex bank said the board’s move has “dire implications for the bank and also portends significant risks to the stability of the financial system.”
The central bank stated this in a letter dated April 28, 2021, signed by its Director, Banking Supervision, Mr. Haruna Mustafa, and addressed to the bank’s Chairman, Mrs. Ibukun Awosika, a copy of which was obtained by THISDAY.
“The CBN was not made aware of any report from the board indicting the managing director of any wrong-doing or misconduct; there appears to be no apparent justification for the precipitate removal,” the letter signed by Haruna Mustafa, CBN’s director of banking supervision, read.
“We are particularly concerned because the action is coming at a time the CBN has provided various regulatory forbearances and liquidity support to reposition the bank, which has enhanced its asset quality, capital adequacy and liquidity ratios amongst other prudential indicators.
“It is also curious to observe that the sudden removal of the MD/CEO was done about eight months to the expiry of his second tenure, which is due on December 31, 2021.”
In the press briefing on Thursday evening, Mr. Emefiele stated that the apex bank had been keeping close tabs on First Bank Nigeria over the past 5 years having discovered 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.”
He stated that the apex bank suspected that the board removed Adeduntan because he took some decisions which were not in line with the major shareholders of the bank “who felt hurt and felt he should be removed”.
“This is a bank were depositors’ fund is almost 10 times shareholders’ fund, our interest is to protect depositors and minority shareholders who have no voice in this business. We will not sit idle and allow this to continue,” Emefiele said.
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“I spoke to Mr. Oba Otudeko, he refused to grant my request. I had to call two of his major shareholders to call him to ask the board not to take such decisions without the approval of the CBN. He refused to pick the calls of these shareholders — who are also owners of the bank.
“I called him the second time, I heard on another phone one of the shareholders begging him not to take that decision, he insisted on taking that decision. I sent the shareholder back to the office of Mr. Oba Otudeko to appeal to him to suspend the decision, he refused to see the shareholder. I feel we have done our best and we would not allow a shareholder who cannot subject himself to regulatory control and authority to remain as the director of a bank.”
In a letter also signed by Mustafa, titled: “Re: Audited FIRS Accounts for the Financial Year Ended December 31, 2020,” revealed that the bank was yet to divest its interest in HoneyWell Flour Mills, Barti Airtel and other non-permissible interest. The Chairman of FBN Holdings, the holding company of First Bank Nigeria Limited, Oba Otudeko is also the Chairman of Honey Well. He used to be the Chairman of Barti Airtel.
However, the CBN in the letter stated: “We are concerned that the bank has not complied with regulatory directives to divest its interest in Honey Well Flour Mills despite several reminders. We further noted that after four years the bank is yet to perfect its lien on the shares of Mr. Oba Otudeko in FBN Holdco, which collateralised the restructured credit facilities for Honey Well Flour Mills contrary to the conditions precedent for the restructuring of the company’s credit facility.
“Given the bank’s failure to perfect the pledge and satisfy conditions for regulatory approval, the restructuring has thus been invalidated and the credit facilities now payable immediately.”
Consequently, the central bank has requested that HoneyWell, “ fully repays its obligations to the bank within 48 hours failing which the CBN will take appropriate regulatory measures against the insider borrower and the bank.”
It added: “Furthermore, the Bank notes the untenable delay in resolving the long outstanding divestment from Bharti Airtel Nigeria Ltd in line with extant regulations of the CBN.
“Accordingly, you are required to divest the equity investments in all non-permissible entities such as Honey Well Flour Mills and Bharti Airtel Nigeria Limited within 90 days. Please you are to forward evidence of compliance in accordance with the timelines above to the Director of Banking Supervision.”
The Board of Directors of First Bank had earlier yesterday announced that the appointment of Shobo as its Managing Director/Chief Executive Officer (CEO) took immediate effect.
The web being spurn in the board rooms of FBNH was captured in the words of the CBN Governor during the press breifing;
“The insiders who took loans in the bank, with controlling influence on the board of directors, failed to adhere to the terms for the restructuring of their credit facilities which contributed to the poor financial state of the bank. The CBN’s recent traget examination as at December 31, 2020 revealed that insider loans were materially non-complaint with restructure terms (e.g. non perfection of lien on shares/collateral arrangements) for over 3 years despite several regulatory reminders. The bank has not also divested its non-permissible holdings in non-financial entities in line with regulatory directives.”
Nnamdi Maduakor is a Writer, Investor and Entrepreneur