Respite For First Bank MD/CEO, Adeduntan As CBN Sacks Key Directors
BY COBHAM NSA – It is certainly not the best of times for the First Bank family as the Central Bank of Nigeria (CBN) on Thursday unceremoniously sent key board members of the financial institution into the busy unemployment market.
In wielding the big stick, the apex bank has now left the Chairmen of both First Bank of Nigeria Holding Plc, Mr Oba Otudeko and First Bank of Nigeria (FBN), Mrs Ibukun Awosika, alongside many other directors jobless with their replacements already calling the shots on the saddles.
However, embattled Managing Director and Chief Executive Officer of First Bank of Nigeria Limited and Subsidiaries, Adesola Kazeem Adeduntan emerged the major beneficiary from the crisis as he was reinstated to his position by the apex bank.
CBN Governor. Godwin Emefiele, who addressed journalists in Abuja on its decision to sanction the FBN’s big shots, alleged worrying insider abuses in the bank’s operations, lamenting that; “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.”
According to Emefiele; “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 3 years despite several regulatory reminders”.
He also accused the bank of flouting existing industry regulations by refusing to divest “its non-permissible holdings in non-financial entities in line with regulatory directives”.
Similarly, Emefiele noted that the FBN was gradually working its way out of the dire financial situation it found itself before 2016, but the belligerence of some board members unfortunately put the bank “in grave financial condition with its capital adequacy ratio (CAR) and Non-Performing Loans ratio (NPL) substantially breaching acceptable prudential standards”.
Furthermore, the CBN boss disclosed that; “The problems at the bank were attributed to bad credit decisions, significant and non-performing insider loans and poor corporate governance practices”, adding; “The shareholders of the bank and FBN Holding Plc also lacked the capacity to recapitalize the bank to minimum requirements. This conclusions arose from various entreaties by the CBN to them to recapitalize.”
Emefiele said as part of measures aimed at stabilising the bank in its quest to maintain financial stability, especially given FBN’s systemic importance as a major player in the nation’s banking industry with over 31 million customers base, there was a “Change of management team under the CBN’s supervision with the appointment of a new Managing Director/Chief Executive Office in January 2016.”
He also stated that other intermediations engaged to save FBN from ruins include granting FBN “regulatory forbearances to enable the bank work out its Non-Performing Loans through provision for write off of at least N150 billion from its earnings for four consecutive years”.
Other measures are; granting of concession to insider borrower to restructure their non-performing credit facilities under very stringent conditions; and Renewal of the forbearances on a yearly basis between 2016 and 2020 following thorough monitoring of progress towards exiting from the forbearance measures.
However, Emefiele said despite these interventions to save FBN, including entreaties made to the Chairman of FBN Holding Plc Oba Otudeko, it was quite shocking to learn from media reports that the bank’s Managing Director Sola Adeduntan has been relieved of his appointment.
Disclosing that an interested party leaked information about moves to send Adeduntan packing, Emefiele said to stop the unlawful plans, he engaged Oba Otudeko and told “him that such changes will require CBN’s approval”.
Regretting that all pleas clearly felt on deaf eyes, the apex bank governor said something drastic needed to be done for FBN, as a systemically important player in the sector “given its historical significance, balance sheet size, large customer base and high level of interconnectedness with other financial service providers, amongst others”.
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 percent of the industry.
“To us at the CBN, not only is it imperative to protect the minority shareholders, that have no voiceto 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”.
Emefiele said; “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 fiveyears aimed at stemming the slide in the going concern status of the bank”.
He said based on further review of the situation and to preserve the bank’s stability as well as protect minority shareholders and depositors, the CBN management, in line with its powers under BOFIA 2022, approved the following appointments as directors of FBN Holdings: Chairman – Remi Babalola, Dr. FatadeAbiodun Oluwole, Kofo Dosekun, Remi Lasaki, Dr Alimi Abdulrasaq, Ahmed Modibbo,Khalifa Imam, Sir Peter Aliogo and UK Eke – Managing Director
Also, to run the Bank’s affairs are: Chairman –Tunde Hassan-Odukale, Tokunbo Martins, Uche Nwokedi, Adekunle Sonola, IsiomaOgodazi, Ebenezer Olufowose, Ishaya Elijah B. Dodo, Sola Adeduntan – ManagingDirector, Gbenga Shobo – Deputy Managing Director, Remi Oni – ExecutiveDirector and Abdullahi Ibrahim – Executive Director.
Meanwhile, Mr Emefiele has reassured all depositors, creditors and other stakeholders of CBN’s commitment to ensure stability of Nigeria’s financial system, adding; “There is therefore no cause for panic among the banking public, given that the actions being taken are meant to strengthen the bank and position it as a banking industry giant.”
