The Central Bank of Nigeria, CBN, has queried the Board of the First Bank of Nigeria Plc for removing Dr Adesola Adeduntan, the Managing Director/Chief Executive Officer, without regulatory approval.
The query is contained in a letter dated April 28, 2021, issued by the CBN Director, Banking Supervision, Haruna Mustafa and sent to the bank’s Chairman, Ibukun Awosika.
Mustafa said Adeduntan was removed without due consultations with the regulatory authorities, especially given the systemic importance of the commercial bank.
He noted that Adeduntan’s tenure is yet to expire.
“The CBN was not made aware of any report from the board indicting the managing director of any wrongdoing or misconduct; there appears to be no apparent justification for the precipitate removal.
“We are particularly concerned because the action is coming at a time the CBN has provided various regulatory forbearances and liquidity support to reposition the bank, which has enhanced its asset quality, capital adequacy and liquidity ratios amongst other prudential indicators.
“It is also curious to observe that the sudden removal of the MD/CEO was done about eight months to the expiration of his second tenure which is due on Dec. 31, 2021,” he added.
Mustafa noted that the removal of a sitting MD/CEO of a systemically important bank was not good.
“The removal of a sitting MD/CEO of a systemically important bank that has been under regulatory forbearance for five to six years without prior consultation and justifiable basis has dire implications for the bank and also portends significant risks to the stability of the financial system.
“In light of the foregoing, you are required to explain why disciplinary action should not be taken against the board for hastily removing the MD/CEO and failing to give prior notice to the CBN before announcing the management change in the media.
“In the meantime, you are directed to desist forthwith from making any further public/media comments on the matter. Your comprehensive response on the foregoing should reach the Director, Banking Supervision Department, on or before 5p.m. on April 29, 2021,” he said.
The apex bank in another by Mustafa, titled: “Re: Audited FIRS Accounts for the Financial Year Ended December 31, 2020,” revealed that the bank was yet to divest its interest in HoneyWell Flour Mills, Bharti Airtel and other non-permissible interest.
The Chairman of FBN Holdings, the holding company of First Bank Nigeria Limited, Oba Otudeko is also the Chairman of Honeywell. He used to be the Chairman of Bharti Airtel.
“We are concerned that the bank has not complied with regulatory directives to divest its interest in Honey Well Flour Mills despite several reminders.
“We further noted that after four years the bank is yet to perfect its lien on the shares of Mr. Oba Otudeko in FBN Holdco, which collateralised the restructured credit facilities for Honey Well Flour Mills contrary to the conditions precedent for the restructuring of the company’s credit facility.
“Given the bank’s failure to perfect the pledge and satisfy conditions for regulatory approval, the restructuring has thus been invalidated and the credit facilities now payable immediately,” said the CBN.
Consequently, the central bank has requested Honey Well to “fully repay its obligations to the bank within 48 hours failing which the CBN will take appropriate regulatory measures against the insider borrower and the bank.”
It added: “Furthermore, the Bank notes the untenable delay in resolving the long outstanding divestment from Bharti Airtel Nigeria Ltd in line with extant regulations of the CBN.
“Accordingly, you are required to divest the equity investments in all non-permissible entities such as Honey Well Flour Mills and Bharti Airtel Nigeria Limited within 90 days. Please you are to forward evidence of compliance in accordance with the timelines above to the Director of Banking Supervision.”
The Board of Directors of First Bank on Wednesday appointed Gbenga Shobo as its Managing Director/Chief Executive Officer with immediate effect.
Shobo was the bank’s Deputy Managing Director.
Also appointed was Abdullahi Ibrahim as Deputy Managing Director, while Mr. Ini Ebong, Mr. Segun Alebiosu, Mr. Seyi Oyefeso and Mrs. Bashirat Odunewu, were appointed Executive Directors.
All fresh appointments were subject to regulatory approval.
Mrs. Awosika said: “We are proud to announce Gbenga Shobo as our new MD/CEO. His appointment has proven the resilience of our succession planning mechanisms and the value we place on our long-standing corporate governance practices, which underpins the institution’s enduring sustainability and the 127-year legacy”.
The statement explained that Shobo has had a successful career in the bank and elsewhere, culminating in his appointment as Deputy Managing Director.
But all that may now be put on hold as a major boardroom manoeuvre appears to be at play among the three dominant shareholding groups, who are now weighing their options.
Otudeko and his allies with 10 per cent shareholding might be up against an emerging alliance between Oye Odukale (10 per cent) and Mike Adenuga (6 per cent).
Odukale and Adenuga may push for the return of the ousted CEO with the ultimate aim of sacking the board presently controlled by Otudeko.