UPDATED: CBN sacks First Bank directors, reinstates Adeduntan as MD/CEO
The Central Bank of Nigeria (CBN) has sacked some key board members of First Bank Nigeria (FBN) and First Bank of Nigeria Holding Plc.
Among those affected are chairmen of the twi entities Mr. Oba Otudeko of FBN Holdings and Mrs Ibukun Awosika of FBN.
The CBN, in a swift sanction, appointed replacements for all those sacked on Thursday.
Addressing journalists on the development in Abuja, CBN Governor Godwin Emefiele, explained why the apex bank wielded the hammer.
According to him: “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”.
Emefiele also revealed: “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.
According to him: “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, the CBN Governor, explained “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 Emefiele said: “Also lacked the capacity to recapitalise the bank to minimum requirements. This conclusions arose from various entreaties by the CBN to them to recapitalise”.
However the CBN, he said, stepped in to stabilise FBN with the “appointment of a new Managing Director/ Chief Executive Office in January 2016”.
Other interventions employed to save FBN from collapse, the Governor highlighted, 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 earning for four consecutive years”.
Another is the granting of concession to insider borrower to restructure their non-performing credit facilities under very stringent 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”.
Despite these interventions to save FBN, Emefiele said he was shocked to hear of the sack of the Managing Director Sola Adeduntan from media reports after he had made entreaties to the Chairman of FBN Holding Plc Oba Otudeko not to.
Emefiele said an interested party leaked information to him about plans to sack Adeduntan.
To stop the move, he said he called Oba Otudeko and “spoke to him that such changes will require CBN approval”.
Again he said he pleaded with Oba Otudeko, sent a shareholder to also plead with him not to go ahead with the decision but they went ahead all the same.
He described FBN as a systemically important bank in the banking 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 noted that “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 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”.
According to Emefiele, “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 five years aimed at stemming the slide in the going concern status of the bank”
Emefiele announced appointments of the following: FBN Holdings Chairman – Remi Babalola, Dr. Fatade Abiodun Oluwole, Kofo Dosekun, Remi Lasaki, Dr Alimi Abdulrasaq, Ahmed Modibbo, Khalifa Imam, Sir Peter Aliogo and UK Eke – Managing Director
For the Bank: Chairman – Tunde Hassan-Odukale, Tokunbo Martins, Uche Nwokedi, Adekunle Sonola, Isioma Ogodazi, Ebenezer Olufowose, Ishaya Elijah B. Dodo, Sola Adeduntan – Managing Director, Gbenga Shobo – Deputy Managing Director, Remi Oni – Executive Director and Abdullahi Ibrahim – Executive Director.