As the country’s oldest bank, First Bank is strategic to the survival of the Nigerian banking sector and hence it is too big to fail, said the Governor of the Central Bank of Nigeria (CBN), Mr Godwin Emefiele on Tuesday at the just-concluded Monetary Policy Meeting in Abuja.
He spoke against the backdrop of the on-going struggle for control of First Bank by Tunde Hassan-Odukale and billionaire Femi Otedola. Speculations have been rife over which shareholders own more than 5 per cent of FBN Holdings Plc, the financial holding company of First Bank of Nigeria Ltd, one of the largest banks in Nigeria and the oldest at over 125 years.
Mr Hassan-Odukale had come to lay claim to a 5.36 per cent interest in the group in what the FBN Holdings hierarchy called “cumulative equity stake” through direct and indirect shareholding days after Mr Otedola openly declared his holding of 5.07 per cent, a move, which was queried by the Nigerian Stock Exchange.
“If anything happens to First Bank, it means something has happened to the Nigerian banking system,” Mr Emefiele said.
“That is why we are taking advice on how to get the bank afoot seriously.”
According to Premium Times report, Otedola had quietly been amassing shares in the bank, and his move to be declared the biggest individual shareholder in First Bank Holding Company has met with opposition from the bank’s top hierarchy.
Last week, the National Pension Commission (PenCom) faulted the management of First Bank Holdings for ascribing Mr. Tunde Hassan-Odukale as the single-largest shareholder in the company. It said in a statement that funds invested by Leadway Pensure Limited in the shares of FBN Holdings Plc. belong to Retirement Savings Account holders, and not a third party as FBN Holdings earlier claimed.
PenCom dismissed the claim, basing its position on the fact that the equity investments in the parent company of First Bank had been made from a pool of contributors’ funds under management.
Reacting to struggle, Emefiele said the CBN bank’s regulatory intervention brought First Bank to its profitable ways.
“Six years ago, like I said, because of an aggressive build-up of non- performing loans, the share price of First Bank was about N2. We took it up. Then, everybody was running away from the shares of First Bank.
“We have cleaned the balance sheet now, people are seeing that the money making machine, First Bank, is back on its feet. They are in the race for profitability. They are now competing for the shares of First Bank. Why should I quarrel about that? “I am happy to see that they are competing for the shares. Of course, we all know that First Bank is so large that no single person can own it. In running the banks, they should see themselves as representing others.”
“Naturally, returns are sent to CBN about individual shareholders. And of course, if our position is not in tandem with that of SEC, we will talk to SEC about it.”
Mr Emefiele assured that with regard to the running and operations of the bank, the apex bank will take pre-eminence in ensuring that the right things are done.
Recall that the apex bank had in April 29, sacked the Boards of Directors of First Bank of Nigeria Limited and the FBN Holdings Plc. because of what it described as “a complete breakdown of governance and insider abuse by shareholders and we felt we have to stamp our authority and then give them a chance to continue to be MD.”
First Bank has over 31 million customers, with deposit base of N4.2 trillion, shareholders’ funds of N618 billion and NIBSS Instant Payment, NIP, processing capacity of 22 per cent of the industry.
Justifying the apex bank sacking of First Bank, Emefiele said “To us at the CBN, not only is it imperative to protect the minority shareholders, which have no voice to air their views, also important, is the protection of the over 31 million customers of the bank who see FBN as a safe haven for their hard-earned savings.
“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.