*Bank Complies, Shares Fall
The Central Bank of Nigeria (CBN) has ordered the immediate removal of all directors of First Bank of Nigeria Limited (FBN Limited) and FBN Holdings Plc, the holding company of the bank
Governor, CBN,Godwin Emefiele, announced at a press briefing on Thursday.
The CBN also reinstated Sola Adeduntan as the Managing Director and chief executive officer of the bank and announced other appointments into the board and management of both FBN Limited and FBN Holdings Plc.
On Wednesday, the CBN had queried the board of First Bank of Nigeria Limited over the removal of Sola Adeduntan, without due consultation with regulatory authorities.
Remi Babalola is the interim chairman of FBN Holdings Plc, other members include, Peter Aliugo, Fatade Oluwole, Kofo Dosekun, Remi Lasaki, Alimi Abdulrasaq, Ahmed Modibo, and Khalifa Iman.
The apex bank, however, directed U.K. Eke to remain as the group chief executive officer of FBN Holdings Plc.
Tunde Hassan-Odukale is the new chairman of First Bank Limited, other members include Tokunbo Martins, Uche Nwokedi, Adekunle Sonola, Isioma Ogodazi, Ebenezer Olufowose, Ishaya Dodo, Sola Adeduntan as managing director, Remi Oni, Gbenga Sobo and Abdullahi Ibrahim.
And in line with the directive of the CBN, First Bank on Friday has announced the reinstatement of Adesola Adeduntan as managing director/chief executive officer.
Meanwhile, shares of First Bank Holdings plunged 6.7 percent — the biggest daily loss in three months — to N6.90 on Thursday as investors sell 51.5 million units in the tier-1 lender. It was the most traded stock by volume and valued at N359.83 million.
The bank said it is cooperating with the CBN and other regulators in ensuring its smooth operation.
In a statement on Friday, the bank said the boards of FBN Limited and FBN Holdings Plc have been reconstituted in line with the directive of the apex bank.
“Dr. Adesola Adeduntan has since resumed work as CEO in line with the directives of the CBN. We can confirm that the bank is cooperating with the Central Bank of Nigeria and other regulators while the operations of the bank are not hampered or hindered in any way and are in fact running smoothly,” the statement read.
It added: “We further wish to reassure the public, our esteemed customers and stakeholders in the words of the governor of the Central Bank in concluding his press conference, “the CBN hereby reassures the depositors, creditors and other stakeholders of the bank of its commitment to ensuring the stability of the financial system. There is therefore no cause for panic amongst the banking public, given that the actions being taken are meant to strengthen the bank and position it as a banking industry giant.”
The CBN statement announcing the sacking of the bank’s board reads in full:
1.0 Good afternoon ladies and gentlemen.
2.0 The media has been awash with commentaries on the purported management changes at First Bank of Nigeria Ltd (FBN) and the related regulatory inquiry by the Central Bank of Nigeria (CBN) to the Board of First Bank of Nigeria Limited. It has therefore become necessary for me to address the public to clear any misconceptions.
3.0 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 5 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. 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.
4.0 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 31m customers, with deposit base of N4.2trn, shareholders funds of N618bn and NIBSS instant payment (NIP) processing capacity of 22% 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 31m customers of the bank who see FBN as a safe haven for their hard-earned savings.
5.0 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.
6.0 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.
7.0 The CBN 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:
i. Change of management team under the CBN’s supervision with the appointment of a new Managing Director/ Chief Executive Office in January 2016.
ii. Grant of the regulatory forbearances to enable the bank work out its non-performing loans through provision for write off of at least N150b from its earning for four consecutive years.
iii. Grant of concession to insider borrower to restructure their non-performing credit facilities under very stringent conditions
iv. Renewal of the forbearances on a yearly basis between 2016 and 2020 following thorough monitoring of progress towards exiting from the forbearance measures
8.0 The measures had yielded the expected results as the financial condition of FBN improved progressively between 2016 when the forbearance was initially granted to the current financial year. For instance, profitability, liquidity and CAR improved whilst NPL reduced significantly.
9.0 Notwithstanding the significant improvement in the bank’s financial condition with positive trajectory of financial soundness indicators, the insider related facilities remained problematic.
10.0 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 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. The bank has not also divested its non-permissible holdings in non-financial entities in line with regulatory directives
11.0 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:
i. Immediate removal of the all directors of FBN Ltd and FBN Holdings Plc
ii. The appointment of the following persons as directors in FBN Ltd and FBN Holdings Plc Holdco
1.Chairman – Remi Babalola
2.Dr. Fatade Abiodun Oluwole
3.Kofo Dosekun
4.Remi Lasaki
5.Dr Alimi Abdulrasaq
6.Ahmed Modibbo
7.Khalifa Imam
8.Sir Peter Aliogo
9.UK Eke – Managing Director Bank
1. Chairman – Tunde Hassan-Odukale
2. Tokunbo Martins
3. Uche Nwokedi
4. Adekunle Sonola
5. Isioma Ogodazi
6. Ebenezer Olufowose
7. Ishaya Elijah B. Dodo
8. Sola Adeduntan – Managing Director
9. Gbenga Shobo – Deputy Managing Director
10. Remi Oni – Executive Director
11. Abdullahi Ibrahim – Executive Director
12.0 The CBN hereby reassures the depositors, creditors and other stakeholders of the bank of its commitment to ensure the stability of the financial system. There is therefore no cause for panic amongst the banking public, given that the actions being taken are meant to strengthen the bank and position it as a banking industry giant.
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