The CBN has sacked the entire members of the board of First Bank of Nigeria.
The Governor of the Central Bank of Nigeria, Godwin Emefiele has announced the sack of the entire board of directors of FBN Holdings Plc and its subsidiary First Bank of Nigeria Ltd. The announcement was made via a television broadcast in the early evening of Thursday, April 29.
Godwin Emefiele cited insider abuse, insider credit and breakdown of corporate governance as the reason behind the sacking of the board of FBN Holdings, Nigeria’s largest bank. The CBN governor further announced the reinstatement of Dr Sola Adeduntan as the Managing Director of the interim Board after he was removed by the now sacked board of First Bank Plc.
According to the Governor, “First Bank of Nigeria is one of Nigeria’s systemically important banks given its historical significance, balance sheet size, large customer base and high level of interconnectedness with other financial service providers.”
Following the sacking of the board, the CBN appointed the following people as directors of the holding company, FBNH, Dr. Fatade Abiodun Oluwole, Kofo Dosekun, Remi Lasaki, Dr Alimi Abdulrasaq, Ahmed Modibbo, Khalifa Imam, Sir Peter Aliogo, and UK Eke (Managing Director) as Directors of FBN Holdings Plc. Remi Babalola was appointed as Chairman.
For First Bank Ltd, Tokunbo Martins, Uche Nwokedi, Adekunle Sonola, Isioma Ogodazi, Ebenezer Olufowose, Ishaya Elijah B. Dodo were appointed directors while Tunde Hassan-Odukale was appointed Chairman.
The CBN also confirmed the reinstatement of Sola Adeduntan as Managing Director; Gbenga Shobo as Deputy Managing Director; and Remi Oni and Abdullahi Ibrahim as Executive Directors of First Bank of Nigeria Limited. Gbenga Shobo was just yesterday announced as MD/CEO of First Bank setting the stage for the CBN intervention; while Remi Oni would soon proceed on terminal leave having been appointed Chairman of PENCOM.
In the press briefing, Mr Emefiele stated that the apex bank had been keeping close tabs on First Bank over the past 5 years having discovered that the bank was in “grave financial condition with its Capital Adequacy Ratio (CAR) and Non-Performing Loans ratio (NPL) substantially breaching acceptable prudential standards.”
According to Emefiele, “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 at December 31, 2020 revealed that insider loans were materially non-compliant with restructure terms (e.g. non perfection of lien on shares/collateral arrangements) for over 3 years despite several regulatory reminders. The bank has not also divested its non-permissible holdings in non-financial entities in line with regulatory directives.”
Emefiele also reassured First Bank of Nigeria depositors, creditors and other stakeholders of the bank of its commitment to ensure the stability of the financial system insisting that it acted to protect 31 million customers, minority shareholders of First Bank of Nigeria Ltd.
On Wednesday, the Board of Directors of First Bank of Nigeria Limited announced it had appointed Gbenga Shobo as its Managing Director/Chief Executive Officer (CEO). The appointment was disclosed in a statement made by the bank’s Chairman, Ibukun Awosika
However, in an apparent leak, a letter from the central bank to First Bank revealed a query from the former to the latter expressing concern that the appointment of Shobo was done without the approval of the apex bank.
“The attention of the Central Bank of Nigeria (CBN) 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 to replace him. The CBN notes with concern that the action was taken without due consultation with the regulatory authorities, especially given the systemic importance of First Bank Ltd.”
The CBN also claimed that the tenure of Mr. Adedutan was yet to expire (bank MD’s have a maximum 10 years) and that they were also not aware of any misconduct of the former MD and as such there was no justification for his removal.
Given that the tenure of Dr. Adeduntan is yet to expire and 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.”
Full statement of Emefiele’s sacking of FBN Holdings Board
CBN GOVERNOR’S STATEMENT ON THE PURPORTED MANAGEMENT CHANGE AT THE FIRST BANK OF NIGERIA LTD
1.0 Good afternoon ladies and gentlemen.
2.0 The media has been awash with commentaries on the purported management changes at First Bank of Nigeria Ltd (FBN) and the related regulatory inquiry by the Central Bank of Nigeria (CBN) to the Board of First Bank of Nigeria Limited. It has therefore become necessary for me to address the public to clear any misconceptions.
3.0 Ordinarily the board is vested with the authority to make changes in the management team subject to CBN approval. 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.
It was therefore surprising for the CBN to learn through media reports that the board of directors of FBN, a systemically important bank under regulatory forbearance regime had effected sweeping changes in executive management without engagement and/or prior notice to the regulatory authorities. 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.
4.0 As you may be aware, 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, amongst others. By our last assessment, FBN has over 31m customers, with deposit base of N4.2trn, shareholders funds of N618bn and NIBSS instant payment (NIP) processing capacity of 22% of the industry.
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 31m customers of the bank who see FBN as a safe haven for their hard-earned savings.
5.0 The 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 ratio (NPL) substantially breaching acceptable prudential standards.
6.0 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 Holding Plc also lacked the capacity to recapitalize the bank to minimum requirements. These conclusions arose from various entreaties by the CBN to them to recapitalize.
7.0 The CBN stepped in to stabilize the bank in its quest to maintain financial stability, especially given FBN’s systemic importance as enumerated earlier. Regulatory action taken by the CBN in this regard included:
i. Change of management team under the CBN’s supervision with the appointment of a new Managing Director/ Chief Executive Office in January 2016.
ii. Grant of the regulatory forbearances to enable the bank work out its non-performing loans through provision for write off of at least N150b from its earning for four consecutive years.
iii. Grant of concession to insider borrower to restructure their non-performing credit facilities under very stringent conditions.
iv. Renewal of the forbearances on a yearly basis between 2016 and 2020 following thorough monitoring of progress towards exiting from the forbearance measures.
8.0 The measures had yielded the expected results as the financial condition of FBN improved progressively between 2016 when the forbearance was initially granted to the current financial year. For instance, profitability, liquidity and CAR improved whilst NPL reduced significantly.
9.0 Notwithstanding the significant improvement in the bank’s financial condition with positive trajectory of financial soundness indicators, the insider related facilities remained problematic.
10.0 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 at December 31, 2020 revealed that insider loans were materially non-compliant with restructure terms (e.g. non perfection of lien on shares/collateral arrangements) for over 3 years despite several regulatory reminders. The bank has not also divested its non-permissible holdings in non-financial entities in line with regulatory directives.
11.0 Following further review of the situation and in order to preserve stability of the bank, so as to protect minority shareholders and depositors, the Management of the CBN in line with its powers under BOFIA 2020 has approved and hereby directs:
i. Immediate removal of the all directors of FBN Ltd and FBN Holdings Plc.
ii. The appointment of the following persons as directors in FBN Ltd and FBN Holdings Plc
- Chairman – Remi Babalola
- Dr. Fatade Abiodun Oluwole
- Kofo Dosekun
- Remi Lasaki
- Dr Alimi Abdulrasaq
- Ahmed Modibbo
- Khalifa Imam
- Sir Peter Aliogo
- UK Eke – Managing Director
- Chairman – Tunde Hassan-Odukale
- Tokunbo Martins
- Uche Nwokedi
- Adekunle Sonola
- Isioma Ogodazi
- Ebenezer Olufowose
- Ishaya Elijah B. Dodo
- Sola Adeduntan – Managing Director
- Gbenga Shobo – Deputy Managing Director
- Remi Oni – Executive Director
- Abdullahi Ibrahim – Executive Director
12.0 The CBN hereby reassures the depositors, creditors and other stakeholders of the bank of its commitment to ensure the stability of the financial system. There is therefore no cause for panic amongst the banking public, given that the actions being taken are meant to strengthen the bank and position it as a banking industry giant.