CBN queries First Bank’s leadership change without approval, demands justification

*The Central Bank of Nigeria states with no report from the Board of First Bank of Nigeria, indicting its Managing Director/Chief Executive Officer of any wrongdoing or misconduct, there seems to be no apparent justification for ‘precipitate removal’ of Dr. Adesola Adeduntan, without due regulatory consultations and approval

Isola Moses | ConsumerConnect

For suddenly effecting a change in the leadership of the financial institution, the Central Bank of Nigeria (CBN) has questioned the Board of Directors of First Bank of Nigeria Limited for removing Dr. Adesola Adeduntan as Managing Director/Chief Executive Officer (CEO) without regulatory consultations and approval.

The Bankers’ Bank’s query is contained in a letter dated April 28, 2021, and signed by Mr. Haruna Mustafa, Director of Banking Supervision Department of CBN.

The country’s apex bank the query letter to Mrs. Ibukun Awosika, Chairman of the Board of Directors of First Bank.

Mr. Mustafa said that the deposit money bank (DMB) had effected a change of Management without due consultations and requisite approval by the regulatory authorities, especially given the systemic importance of the commercial bank in the economy.

The CBN Director of Banking Supervision disclosed that Dr. Adeduntan’s tenure of office has yet to expire.

The banking regulator’s letter read in part: “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.”

According to the CBN, “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 December 31, 2021.”

Mustafa stressed that the removal of a sitting MD/CEO of a systemically important bank was not good.

He further noted: “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.

The regulator added: “In the meantime, you are directed to desist forthwith from taking any further public/media comments on the matter.

“Your comprehensive response on the foregoing should reach the Director, Banking Supervision Department, on or before 5 p.m. on April 29, 2021.”

It was learnt that First Bank of Nigeria Wednesday, April 28, 2021, had announced the appointment of Mr. Gbenga Shobo as the new Managing Director and Chief Executive Officer.

Mrs. Awosika, Chairman of the Board, said that the appointment was “subject to all regulatory approvals,” according to agency report.

The Chairman announced that Shobo succeeds Adeduntan, who would be leaving the bank in accordance with the bank’s “term limit for its chief executive” after successfully leading the bank since January 2016.

Awosika stated that the decisions would take effect from April 28.

She said: “We are proud to announce Gbenga Shobo as our new Managing Director/Chief Executive Officer.

“His appointment has proven the resilience of our succession planning mechanisms and the value we place on our long-standing corporate governance practices, which underpin the institution’s enduring sustainability and 127-year legacy.

Awosika noted “Shobo 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.”

The Chairman added: “The 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.”

Awosika disclosed that First Bank also appointed Mr. Abdullahi Ibrahim as the Deputy Managing Director.

According to her, Mr. Ini Ebong, Mr. Segun Alebiosu, Mr. Seyi Oyefeso, and Mrs. Bashirat Odunewu were also appointed as Executive Directors of First Bank.

The Board Chairman reportedly said Wednesday, that these decisions were “subject to all regulatory approvals.”

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