CBN explains sacking of First Bank Board

Central Bank of Nigeria (CBN) has explained that its recent action in sacking the management of First Bank Nigeria Ltd (FBN), was to protect 31 million customers and minority shareholders of First Bank.

Godwin Emefiele, Governor of Central Bank of Nigeria,

In a series of tweets via its Twitter handle, Thursday, the CBN through its Governor, Mr Godwin Emefiele, also in a statement made available to the media, stated that the bank was in ‘grave financial condition, necessitating a change of management.’

”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.

”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. This conclusions arose from various entreaties by the CBN to them to recapitalize,” Emefiele stated.

It would be recalled that the CBN had announced the removal of Mrs Ibukun Awosika as Chairman of the board of FBN; as well as Mr Oba Otudeko as Chairman of the board of FBN Holdings. Also, it had announced the removal of all the directors of both entities.

In their place, the apex bank had approved the appointment of Tunde Hassan-Odukale as Chairman of First Bank of Nigeria Limited (FBN). The CBN also approved the appointment of Remi Babalola as Chairman of FBN Holdings Plc.

Furthermore, the CBN also reinstated Sola Adeduntan as Managing Director; Gbenga Shobo as Deputy Managing Director; as well as Remi Oni and Abdullahi Ibrahim as Executive Directors of FBN Limited.

Adeduntan was earlier removed by the Awosika-led board. He had been replaced with Sobo as managing director, a move the apex bank condemned as not following due process.

In the letter signed by Director of Banking Supervision, Haruna Mustafa, the apex bank said: “We further noted that after four years the bank is yet to perfect its lien on the shares of Mr. Oba Otudeko in FBN Holdings which collateralised the restructured credit facilities for Honeywell Flour Mills contrary to the conditions precedent for the restructuring of the company’s credit facility.”

The bank instructed First Bank to diversify the equity investments in all non-permissible entities; such as Honeywell Flour Mills and Bharti Airtel Nigeria Limited within 90 days.

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