CBN sacks Otudeko, Awosika from FBN Holdings, First Bank board

 

 

The Central Bank of Nigeria (CBN) has waded into the crises rocking the FBN Holdings Plc and First Bank of Nigeria Limited over untimely removal of First Bank of Nigeria Managing Director without regulator approval.

The board of FBN Holdings which is the parent company of First Bank of Nigeria Limited announced removal of Mr. Sola Adeduntan, Managing Director and replaced him with Mr. Gbenga Shobo on Wednesday.

The CBN Governor, Mr. Godwin Emefiele at the press briefing in Abuja on Thursday announced removal of Mr. Oba Otudeko, the FBN Holdings Chairman and Mrs. Ibukun Awosika, Chairman of First Bank of Nigeria Limited from the board.

Expressing socked over replacement of Managing Director of First Bank Limited and non-compliance of the boards with CBN directive, Emefiele said the board is vested with the authority to make changes in the management team subject to CBN approval.

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 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 a 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.”

He further that, 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 31 million customers, with a 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.”

He stated that, 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.

Emefiele noted that, the problems at the bank were attributed to bad credit decisions, significant and non-performing insider loans and poor corporate governance practices, stressing that the shareholders of the bank and FBN Holding Plc also lacked the capacity to recapitalize the bank to minimum requirements. These conclusions arose from various entreaties by the CBN to them to recapitalize.

“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: Change of management team under the CBN’s supervision with the appointment of a new Managing Director/ Chief Executive Officer in January 2016.

Grant of the regulatory forbearances to enable the bank to work out its non-performing loans through provision for write-off of at least N150 billion from its earning for four consecutive years. Grant of concession to insider borrower to restructure their non-performing credit facilities under very stringent conditions

Renewal of the forbearances on a yearly basis between 2016 and 2020 following thorough monitoring of progress towards exiting from the forbearance measures
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, Emefiele said.

He said, following a further review of the situation and in order to preserve the 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 immediate removal of all directors of FBN Ltd and FBN Holdings Plc.

He however announced the appointment of Mr. Remi Babalola as the chairman and UK Eke, Managing Director of FBN Holdings Plc with Dr. Fatade Abiodun Oluwole, Kofo Dosekun, Remi Lasaki, Dr Alimi Abdulrasaq, Ahmed Modibbo, Khalifa Imam, Sir Peter Aliogo as directors while Tunde Hassan-Odukale is the new chairman of FBN Limited and Tokunbo Martins, Uche Nwokedi, Adekunle Sonola, Isioma Ogodazi, Ebenezer Olufowose and Ishaya Elijah B. Dodo as director, while Sola Adeduntan remain the Managing Director, Gbenga Shobo as Deputy Managing Director, Remi Oni as Executive Director and Abdullahi Ibrahim also Executive Director of the bank.

The CBN hereby reassures the depositors, creditors and other stakeholders of the bank of its commitment to ensuring the stability of the financial system.