…Remi Babalola, former minister steps in as chairman
Governor of Central Bank of Nigeria (CBN), Godwin Emefiele, has announced the sacking of all members of the board of First Bank Nigeria Ltd and First Bank of Nigeria Holdings Plc with immediate effect.
This was the fall out of the action of the former board which sacked Adesola Adeduntan, managing director of the bank and replaced him with Gbenga Shobo without the approval of the regulatory authority.
The apex bank has subsequently ordered that Adesola Adeduntan be returned with immediate effect to his position as the managing director/chief executive officer of the bank, with Gbenga Shobo now re-instated to his previous position as the deputy managing director, while Remi Oni and Abdullahi Ibrahim were appointed executive directors.
The CBN also faulted appointment of Abdullahi Ibrahim as deputy managing director as well as the appointment of Ini Ebong, Segun Alebiosu, Seyi Oyefeso and Bashirat Odunewu, as executive directors.
Emefiele said that the move was in the interest of 31 million customers, minority shareholders of First Bank of Nigeria Ltd, while reassuring depositors, creditors and other stakeholders of the bank of its commitment to ensure the stability of the financial system:
The CBN Governor, in a press briefing, said that the apex bank had, over the past five years, observed First Bank of Nigeria and 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.
“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 financial state of the bank.
“…The bank has not also divested its non-permissible holdings in non-financial entities in line with regulatory directives.”
He said in Abuja that the decision taken by the CBN management was in line with its powers under the Bank and Other Financial Institutions Act (BOFIA) 2020.
Besides, he said the CBN considered 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 First Bank.
The CBN boss said: “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.”
Justifying the CBN intervention, Emefiele said: “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.”
It named Mr. Remi Babalola as replacement for Otudeko (FBN Holdings Chairman) and Tunde Hassan-Odukale as Mrs. Awosika’s replacement FBN (Chairman).
Other directors announced into the reconstituted Board are: Dr. Fatade Abiodun Oluwole; Kofo Dosekun; Remi Lasaki; Dr. Alimi Abdulrasaq; Ahmed Modibbo; Khalifa Imam; Sir Peter Aliogo and UK Eke.
Emefiele said: “The CBN’s recent target examination as at December 31, 2020 revealed that insider loans were materially non-compliant with restructure terms (e.g. non perfection of lien on shares/collateral arrangements) for over three years despite several regulatory reminders.
“The bank (FBN) has not also divested its non-permissible holdings in non-financial entities in line with regulatory directives.”
First Bank of Nigeria, Emefiele said, was gradually working its way out of the dire situation it found itself before 2016 but the belligerence of some board members forced its hands.
The CBN boss said: “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.
“Another thing is the granting of concession to insider borrowers to restructure their non performing loans facilities under very strigent conditions and the renewal of the forbearances on a yearly basis between 2016 and 2020 following thorough monitoring of progress towards exiting from the forbearance measures.”
Emefiele said he was shocked to hear of the sack Adeduntan from media reports after he had made entreaties that the former FBN Holding chairman should pull the brake
The CBN governor said an interested party leaked information to him about plans to sack Adeduntan. To stop the move, he said he called Otudeko and “spoke to him that such changes will require CBN approval”.
Emefiele said he pleaded with Otudeko, sent a shareholder to also plead with him not to go ahead with the decision but they went ahead all the same.
The CBN governor said: “By our last assessment, FBN has over 31 million customers, with deposit base of N4.2 trillion, shareholders’ funds of N618 billion and NIBSS instant payment (NIP) processing capacity of 22 per cent 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 action by the board of FBN, Emefiele told journalists “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”.
He warned that the CBN took the decision to sack some FBN board members to send a clear message to bank shareholders who feel they are too big.
According to him, Mrs. Awosika was queried “but the response is no longer necessary in the light of the latest developments.”