The internal wrangling that led to management changes in Nigeria’s premier bank, First Bank Plc, is unravelling, showing that a loan to Honeywell Flour Mills may have created problems that led to the replacement of Dr Adesola Adeduntan, the Managing Director\/Chief Executive Officer.
Worse for the bank, which has kept a relatively clean sheet for years, it has also got a query for the replacement of its top gun.
An April 26 memo from the CBN Director, Banking Supervision, Mr Haruna Mustafa, to the Chairman of the bank tells the story tells the story. It reads:
“RE: AUDITED IFRS ACCOUNTS FOR THE FINANCIAL YEAR ENDED DECEMBER 31 , 2020
“Your letter dated March 30, 2021 on the above subject refers.
“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 4 years the bank is yet to perfect its lien on the shares of Mr. Oba Otudeko in FBN Holdco which collaterized 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 condition for regulatory approval, the restructuring has thus been invalidated and the credit facilities now payable immediately.
“Consequently, the company is required 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.
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.
Classified as Confidential
“Accordingly, you are required to divest the equity investments in all non-permissible entities such as Honey Well Flour Mills and Bharti Airtel Nigeria Ltd within 90 days.
Please you are to forward evidence of compliance in accordance with the timelines above to the Director of Banking Supervision.”
Meanwhile, in another development, 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\u00a0letter\u00a0dated April 28, 2021 signed by the CBN Director, Banking Supervision, Mr Haruna Mustafa, and obtained by the News Agency of Nigeria (NAN).
The\u00a0letter\u00a0was addressed to the bank\u2019s Chairman, Mrs Ibukun Awosika.
Mustafa said that the action was taken without due consultations with the\u00a0regulatory\u00a0authorities, especially given the systemic importance of the commercial bank.
He noted that the tenure of Adeduntan has yet to expire.
\u201cThe CBN was not made aware of any report from the board indicting the managing director of any wrongdoing or misconduct; there appears to be\u00a0no\u00a0apparent justification for the precipitate removal.
\u201cWe are particularly concerned because the action is coming at a time the CBN has provided various\u00a0regulatory\u00a0forbearances and liquidity support to reposition the bank, which has enhanced its asset quality, capital adequacy and liquidity ratios amongst other prudential indicators.
\u201cIt\u00a0is 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\u00a0on\u00a0Dec. \u00a031, 2021,\u201d he added.
Mustafa noted that the removal of a sitting MD\/CEO of a systemically important bank was not good.
\u201cThe 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.
\u201cIn light of the foregoing,\u00a0you\u00a0are 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.
\u201cIn the meantime,\u00a0you\u00a0are directed to desist forthwith from making any further\u00a0public\/media comments\u00a0on\u00a0the matter. Your comprehensive response\u00a0on\u00a0the foregoing should reach the Director, Banking Supervision Department,\u00a0on\u00a0or before 5p.m. on April 29, 2021,\u201d he said.
NAN reports that First Bank\u00a0on\u00a0Wednesday announced the appointment of Mr Gbenga Shobo as the new Managing Director and Chief Executive Director.
Awosika said that the appointment was subject to all regulatory approvals.
She said that Shobo succeeds Adeduntan who would be leaving the bank in accordance with the bank\u2019s term limit for its chief executive after successfully leading the bank since January 2016.
“These decisions will take effect from today, April 28, 2021,\u201d Awosika said.
\u201cWe are proud to announce Gbenga Shobo as our new Managing Director\/Chief Executive Officer.
\u201cHis appointment has proven our resilience of our succession planning mechanisms and the value we place on our long-standing corporate governance practices, which underpin the institution\u2019s enduring\u00a0sustainability\u00a0and 127-year legacy.
\u201cShobo has had a successful career in the bank and elsewhere culminating in his appointment as the deputy managing director in 2016 prior to his appointment as the managing director.
\u201cThe board is confident that Shobo has the experience and the understanding of the bank and the know-how to lead the bank through this next phase of growth, which is focused on positioning First Bank as the preeminent bank in our chosen market, delivering value to our stakeholders,\u201d she added.
Awosika said that the bank also appointed Mr Abdullahi\u00a0Ibrahim\u00a0as the Deputy Managing\u00a0 Director.
According to her, Mr Ini Ebong, Mr Segun Alebiosu, Mr Seyi Oyefeso and Mrs Bashirat Odunewu were also appointed as executive directors.
She noted that these decisions were subject to all regulatory approvals.
\u25aa\ufe0eAdditional report by NAN
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