* Why Adeduntan is hot under the collar
These are not the best of times for one of Nigeria’s financial powerhouses, First Bank Nigeria Plc. The bank is on fire and has ran into troubled waters with the Central Bank of Nigeria (CBN).
The CBN is unhappy with First Bank over the financial machination of its one-time Chairman, Dr. Oba Otudeko who incidentally is the current Chairman of First Bank Holding Company. That is not all, the nation’s apex bank has also frowned at the sudden announcement Mr Gbenga Shobo as the new GMD/CEO of the bank without due process.
In a letter dated April 26, 2021 with serial No: BSD/GBB/CON/FBN/01/028 titled RE: AUDITED IFRS ACCOUNTS FOR THE FINANCIAL YEAR ENDED DECEMBER 31, 2020, the CBN expressed its concern that First Bank has not complied with regulatory directives to divest its interest in Honey Well Flour Mills despite several reminders.
The strongly-worded letter signed by Haruna B. Mustapha, Director of Banking Operations and copied to all Board members and Major Shareholders continued “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 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 standing divestment from Barti Airtel Nigeria Limited in line with extant regulations of CBN”
The CBN also instructed that it must divest from all non permissible entities such as Honey Well and Barti Airtel within 90 days.
In addition, First Bank was instructed to provide evidence of compliance in accordance with the timelines stated above to the Director of Banking Supervision.
When it rains it pours and the heat is seriously on First Bank as the CBN has also written another letter titled “Purported Management Change At First Bank Nigeria Limited”.
Also signed by Haruna B. Mustafa, this particular letter noted that CBN’s attention has been drawn to media reports that the Board of Directors has approved the removal of the current Managing Director of the bank, Dr. Sola Adeduntan and appointed a successor.
The apex bank stated that it was concerned that this action was taken without due consultation with the regulatory authorities especially given the systemic importance of First Bank Ltd.
The Bank noted that since Adeduntan’s tenure was yet to expire and there was no report from the Board of any infraction, there therefore appears to be no apparent justification for the removal.
The CBN said it was particularly concerned because the purported removal of Adeduntan was coming at a time the CBN has provided various liquidity support to reposition the bank.
Adding “It is also curious that to observe that the sudden removal of the MD/CEO was done about eight months to the expiry of his second tenure which is due on December 31, 2021.
“The removal of a sitting MD/CEO of a systematically important bank that has been under regulatory forbearance for 5 to 6 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.
It has instructed First Bank to explain why disciplinary measures 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 to the media.
The bank is expected to respond on or before 5pm on Thursday, April 29, 2021.
There is no doubt that these are trying times for the Nigeria’s oldest bank, we would keep you posted on how this drama unfolds in the next couple of days.
Source- TheBoss Newspaper
