On Wednesday, 28 April, the Mrs Ibukun Awosika-led Board removed Mr. Adesola Adeduntan and replaced him with Gbenga Shobo as new managing director and chief executive officer. Less than 24 hours after that, the corporate axe of Godwin Emefiele, Central Bank of Nigeria (CBN) Governor swirled and swept off Awosika and company. Emefiele, therefater reinstated Adedutan and his team.
Awosika, on Friday, however, reacted to her removal in an Instagram post. In her words: “In early 2013, I was moved from FBN Life Insurance Ltd, to assume the chairmanship of FBN Capital working with a brilliant team led by Kayode Akinkugbe as the Managing Director,” she wrote.
“We worked hard to build the institution, bought Kakawa Discount House which I was again asked by the Group to Chair. We eventually merged the companies to create the FBN quest Merchant Bank Group, which I chaired until my appointment as Chairman of First Bank of Nigeria on January 1st 2016.
“For over five years, I have worked with a dedicated team of board and management, with the support of Central Bank of Nigeria to rebuild and restructure the institution for its future. This included cleaning up institution for its future. This included cleaning up non performing loans, establishing good operational governance systems and processes, building controls and an effective and robust risk management system.”
“I am confident we have brought First Bank of Nigeria to a place where it is more than able to deliver utmost value to its stakeholders and the nation at large.
“As a board, we acted in what we clearly believed to be in the best interest of the bank and we had great plans and aspirations for where the bank could go to in its future, building on all the work that has already been done in the last five plus years.
“Without a shadow of doubt, I will unequivocally state that I have always acted in honor and integrity with the utmost interest of the institution, all our stakeholders and the Nation.”
However, she failed to address all the allegations hauled at her and the former Board by Emefiele.
The CBN Governor said:
“ 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.
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:
- Immediate removal of the all directors of FBN Ltd and FBN Holdings Plc.
- The appointment of the following persons as directors in FBN Ltd and FBN Holdings Plc…”
Below is Emefiele’s full statement to the Media:
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:
- Change of management team under the CBN’s supervision with the appointment of a new Managing Director/ Chief Executive Office in January 2016.
READ: CBN issues ultimatum to First Bank of Nigeria on divesting its interest in Honeywell Flour Mills
- 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.
- 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:
- Immediate removal of the all directors of FBN Ltd and FBN Holdings Plc.
- The appointment of the following persons as directors in FBN Ltd and FBN Holdings Plc
Holdco
- 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
Bank
- 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.
