Why we fired First Bank’s Chairman, Directors

The Central Bank of Nigeria (CBN) has disclosed the reason behind its surprising and sweeping removal of the leadership of First Bank Nigeria Ltd (FBN), one of Nigeria’s foremost lenders.

Specifically, the move, the apex bank disclosed, was to protect 31 million customers and minority shareholders of First Bank.

In addition, CBN Governor, Godwin Emefiele revealed that the bank was in ”grave financial condition”; necessitating a change of management. Emefiele made this known in a statement issued to the media.

”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. This conclusions arose from various entreaties by the CBN to them to recapitalize,” Emefiele stated.

#Emefiele says #CBN acted to protect 31 million customers, minority shareholders of First Bank of Nigeria Ltd.

— Central Bank of Nigeria (@cenbank) April 29, 2021

Earlier, the CBN had announced the removal of Mrs Ibukun Awosika as Chairman of the board of FBN; as well as the axing of Mr Oba Otudeko as Chairman of the board of FBN Holdings. Also, it had announced the removal of all the directors of both entities.

In their place, the apex bank had approved the appointment of Tunde Hassan-Odukale as Chairman of First Bank of Nigeria Limited (FBN). The CBN also approved the appointment of Remi Babalola as Chairman of FBN Holdings Plc.

FBN Holdings is a subsidiary of FBN.

Furthermore, the CBN had reinstated Sola Adeduntan as Managing Director; Gbenga Shobo as Deputy Managing Director; as well as Remi Oni and Abdullahi Ibrahim as Executive Directors of FBN Limited.

Adeduntan was earlier removed by the Awosika-led board. He had been replaced with Sobo as managing director, a move the apex bank condemned as not following due process.

The CBN made this known in a series of tweets on its Twitter handle on Thursday.

“First Bank of Nigeria is one of Nigeria’s systemically important banks; given its historical significance, balance sheet size, large customer base and high level of interconnectedness with other financial service providers.

“CBN reassures First Bank of Nigeria depositors, creditors and other stakeholders of the bank of its commitment to ensure the stability of the financial system,” Emefiele said.

Meanwhile, the CBN also announced the appointments of Dr Fatade Abiodun Oluwole, Kofo Dosekun, Remi Lasaki; as well as Dr. Alimi Abdulrasaq as directors of FBN Holdings. Other directors of FBN Holdings so appointed are, Ahmed Modibbo, Khalifa Imam, Sir Peter Aliogo; as well as UK Eke, who was appointed as Managing Director.

Directors of FBN Limited, as announced by the apex bank, include Tokunbo Martins, Uche Nwokedi and Adekunle Sonola.Others are Isioma Ogodazi, Ebenezer Olufowose and Ishaya Elijah Dodo.

MuchTalksBlog reports that the CBN had earlier queried the management of First Bank over its failure to comply with regulatory directives on divesting its interest in Honeywell Flour Mills. The query was contained in a letter dated April 26, 2021 and addressed to Ibukun Awosika; erstwhile Chairman of FBN Limited.

It was in response to their audited International Financial Reporting Standards accounts for the 2020 financial year.

In the letter signed by Director of Banking Supervision, Haruna Mustafa, the apex bank said;

“We further noted that after four years the bank is yet to perfect its lien on the shares of Mr. Oba Otudeko in FBN Holdings which collateralised the restructured credit facilities for Honeywell Flour Mills contrary to the conditions precedent for the restructuring of the company’s credit facility.”

The apex bank instructed First Bank to diversify the equity investments in all non-permissible entities; such as Honeywell Flour Mills and Bharti Airtel Nigeria Limited within 90 days.