Mr. Godwin Emefiele, Governor of CBN

CBN assures depositors, creditors of stability as Adesola Adeduntan resumes as MD/CEO of First Bank

*The Central Bank of Nigeria has fired all the Directors of First Bank of Nigeria, FBN Holdings Plc, and restored Dr. Adesola A. Adeduntan as the Managing Director/Chief Executive Officer of First Bank

*There is no cause for panic among depositors, creditors, and other stakeholders as the CBN actions are meant to strengthen First Bank and position it as a banking industry giant in the country ─Mr. Godwin Emefiele, Governor of CBN

Gbenga Kayode | ConsumerConnect

Sequel to the apex bank’s demonstration of responsibility in demanding an express explanation and justification for the financial institution’s abrupt change of Management team Wednesday, the Central Bank of Nigeria (CBN) Thursday, April 29 announced the dismissal of the Board of Directors, confirmed appointments of new Directors, and retained Dr. Adesola A. Adeduntan, FCA, as the substantive Managing Director (MD)/Chief Executive Officer (CEO) of First Bank of Nigeria (FBN) Limited.

Mr. Godwin Emefiele, Governor of CBN, who disclosed this development at a press conference Thursday evening, also announced the appointment of fresh Directors for both First Bank and FBN Holdings Plc (Holdco).

Emefiele reassured the banking public, creditors, and other stakeholders of the deposit money bank of the CBN’s commitment to ensuring the stability of the financial system in the country’s leading banking institution.

The bungled Management change without regulatory approval

ConsumerConnect reports the Bankers’ Bank’s intervention comes a day after the bank had announced the removal of Dr. Adeduntan as the MD/CEO and appointment of Mr. Gbenga Shobo, his Deputy as successor.

Mrs. Ibukun A. Awosika, former Chairman of the Board, had said that the appointment of Shobo, besides the appointments of new Executive Directors for the bank was “subject to all regulatory approvals.”

First Bank Headquarters in Lagos

The erstwhile Chairman announced that Shobo succeeded 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.

“We are proud to announce Gbenga Shobo as our new Managing Director/Chief Executive Officer,” Awosika stated.

The CBN, however, questioned the First Bank for the move Thursday, saying that it did not notify it of the decision to remove Adeduntan who had yet to complete his tenure of office.

Mr. Haruna Mustafa, Director of Banking Supervision Department of CBN, in a query is contained in a letter dated April 28, 2021, to First Bank stressed 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 had disclosed that Dr. Adeduntan’s tenure of office has yet to expire.

The letter noted that “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 among 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.

“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 apex bank, therefore, directed First Bank to provide a comprehensive response on the foregoing to reach the Director of Banking Supervision Department, on or before 5 p.m. April 29, 2021.

Reinstatement of Dr. Adeduntan as MD/CEO to take charge at First Bank

Earlier in his address titled: “Governor’s Statement On The Purported Management Change At The First Bank Of Nigeria Ltd”, at a press conference evening Thursday, April 29 in Abuja, FCT, Mr. Godwin Emefiele, Governor of Central Bank of Nigeria, noted that he addressed the banking public and other stakeholders in order to “clear any misconceptions” in respect of the purported change in the Management team of First Bank.

Dr. Adesola A. Adeduntan, FCA, Managing Director/Chief Executive Officer of First Bank of Nigeria

Emefiele disclosed 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, among others.”

He as well acknowledged that “ordinarily, the Board is vested with the authority to make changes in the Management team subject to CBN approval.”

But he added: “However, 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.”

According to the CBN, “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.”

The CBN Governor, in reinstating Dr. Adeduntan and announcing new Directors for First Bank, reassured the depositors, creditors, and other stakeholders of the deposit money bank of the CBN’s commitment to ensuring the stability of the financial system in the country.

The apex bank also ordered the immediate removal of all the Directors of First Bank of Nigeria Limited.

CBN’s regulatory interventions to stabilise FBN operations in past years

The Governor of CBN also noted that by regulator’s last assessment, FBN has over 31mllion customers, with a deposit base of N4.2trillion, shareholders’ funds of N618billion and NIBSS instant payment (NIP) processing capacity of 22 percent of the industry.

Emefiele stated: “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 31million customers of the bank who see FBN as a ‘safe haven’ for their hard-earned savings.”

The Bankers’ Bank disclosed that First 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 (NPL) ratio substantially breaching acceptable prudential standards.

On the reported slide in the bank’s operations and fortune in the recent past, the banking regulator said, “the problems at the bank were attributed to bad credit decisions, significant and non-performing insider loans and poor corporate governance practices.

“The shareholders of the bank and FBN Holdings Plc also lacked the capacity to recapitalise the bank to minimum requirements. These conclusions arose from various entreaties by the CBN to them to recapitalise.”

Emefiele further clarified that the “CBN stepped in to stabilise the bank in its quest to maintain financial stability, especially given FBN’s systemic importance as enumerated earlier.

According to him, 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 January 2016.

Another is granting of the regulatory forbearances to enable the bank to work out its non-performing loans through provision for write-off of at least N150billion from its earning for four consecutive years.

The Bank as well granted concession to insider borrower to restructure their non-performing credit facilities in First Bank under very stringent conditions.

Other interventions, according to him, are renewal of the forbearances on a yearly basis between 2016 and 2020, following thorough monitoring of progress towards exiting from the forbearance measures.

The CBN Governor said the measures had yielded the expected results as the financial condition of FBN improved progressively since 2016 when the forbearance was initially granted to the current financial year.

For instance, profitability, liquidity and CAR improved whilst NPL reduced significantly, said he.

The CBN, however, noted that despite what it described as “the significant improvement in the bank’s financial condition with the positive trajectory of financial soundness indicators,” the insider-related facilities remained problematic in the financial institution.

It is stated that 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 of December 31, 2020 revealed that insider loans were materially non-compliant with restructuring terms (e.g. non-perfection of lien on shares/collateral arrangements) for over three years despite several regulatory reminders, according to Emefiele.

He added that First Bank of Nigeria has not also divested its non-permissible holdings in non-financial entities in line with regulatory directives.

CBN sacks Boards of FBN Limited, FBN Holdings Plc, and appoints new Directors

CBN Governor Emefiele also announced that subsequent to a further review of the situation on the ground, and in order to preserve the stability of First Bank, in order to protect minority shareholders and depositors, the Management of the CBN in line with its powers under BOFIA 2020 has approved and hereby directs the “immediate removal of all Directors of FBN Limited and FBN Holdings Plc.

ConsumerConnect reports the sacked Directors of the bank’s Board are Mrs. Ibukun A. Awosika (Chairman), and other Directors, including Lateef A. Bakare, Urum K. Eke (MFR), Lawal K. Ibrahim, Ijeoma E. Jidenma, Obafemi A. Otudeko, Olusola A. Oworu and Ado Y. Wanka.

But the CBN has retained and re-appointed ’Remi O. Oni and Abdullahi M. Ibrahim as Executive Directors on the new Board of Directors of the bank.

According to Emefiele, the CBN makes the fresh appointment of the following persons as Directors in First Bank of Nigeria Limited and FBN Holdings Plc respectively: For First Bank, are Tunde Hassan-Odukale (Chairman), Adesola Adeduntan, FCA (Managing Director/Chief Executive Officer), Gbenga Shobo (Deputy Managing Director), ’Remi O. Oni (Executive Director), and Abdullahi M. Ibrahim  as Executive Director).

Other newly appointed Directors of First Bank are Mrs. Tokunbo Martins, Uche Nwokedi, Adekunle Sonola, Ms. Isioma Ogodazi, Ebenezer Olufowose and Ishaya Elijah B. Dodo.

As regards the new leadership of FBN Holdings Plc, the apex bank has made new Board appointments of Mr. Remi Babalola (Chairman), U.K.Eke (Managing Director), while Directors are Dr. Fatade Abiodun Oluwole, Kofo Dosekun, Remi Lasaki, Dr. Alimi Abdulrasaq, Ahmed Modibbo, Khalifa Imam and Sir Peter Aliogo.

The CBN has reassured the depositors, creditors, and other stakeholders of the bank of its commitment to ensuring the stability of the financial system in the leading financial institution in the country.

“There is, therefore, no cause for panic among the banking public, given that the actions being taken are meant to strengthen the bank and position it as a banking industry giant,” said Emefiele.

FBN Holdings upholds CBN’s directives as Adeduntan resumes as MD/CEO

Meanwhile, in line with the Central Bank of Nigeria’s pronouncements on sweeping changes in the Management teams of the Bank Thursday night, FBN Holdings has in a statement Friday, April 30, 2021, has confirmed it accepted the CBN’s directive to reinstate Dr. Adesola Adeduntan as the Managing Director/Chief Executive Officer of First Bank of Nigeria Limited.

The statement said: “We refer to the Central Bank of Nigeria Limited (CBN) pronouncement on the reconstitution of the Board of Directors of First Bank of Nigeria Limited.

“Further to the press conference held by the Governor of the Central Bank of Nigeria, Mr. Godwin Emefiele, CON, on Thursday, 29 April, 2021, the Boards of FBN Holdings Plc and First Bank of Nigeria Limited were dissolved and reconstituted, pursuant to its power under Banks and Other Financial Institutions Act (BOFIA) 2020.”

“Dr. Adesola Adeduntan has since resumed work as CEO in line with the directives of the CBN,” FBN Holding stated.

The statement further said: “We can confirm that the bank is cooperating with the Central Bank of Nigeria and other regulators while the operations of the bank are not hampered or hindered in any way and are in fact running smoothly.

While reassuring the public, its customers and stakeholders, the FBN Holdings also quoted the CBN Governor’s words concluding his press conference in Abuja Thursday night, that “the CBN hereby reassures the depositors, creditors and other stakeholders of the bank of its commitment to ensuring the stability of the financial system…. There is, therefore, no cause for panic among the banking public….”

ConsumerConnect reports the First Bank of Nigeria is a Nigerian bank and financial services firm, and the country’s third biggest bank.

The financial institution has its headquarters in Lagos, Nigeria, and international presence in London, United Kingdom (UK), Paris in France; Johannesburg in South Africa; Beijing in China; Abu Dhabi in UAE; and Kinshasa in DR Congo.

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