The apex banking industry regulatory authority,
regulatory authority, the Central Bank of Nigeria (CBN) on Thursday weilded the big stick, by ordering the immediate sack of all the directors of both First Bank of Nigeria (FBN) Limited and FBN Holdings PLC.
The sack, which takes immediate effect, followed last Wednesday’s purported management changes at the two affiliates.
The CBN governor, Godwin Emefiele, who announced the removal of the directors also announced the approval of the immediate appointment of their successors.
He also gave clarifications why the decision by the management of First Bank of Nigeria Ltd (FBN) to carry out management changes cannot stand.
Those appointed into the Board of the FBN Holdings PLC include Remi Babalola as Chairman, along with Fatade Oluwole, Kofo Dosekun, Remi Lasaki, Alimi Abdulrasaq, Ahmed Modibbo, Khalifa Imam and Peter Aliogo, as directors, with UK Eke as Managing Director.
The Board of FBN has Tunde Hassan-Odukale as Chairman, with Tokunbo Martins, Uche Nwokedi, Adekunle Sonola, Isioma Ogodazi, Ebenezer Olufowose, Ishaya Elijah B. Dodo as directors. Sola Adeduntan was named Managing Director; Gbenga Shobo, Deputy Managing Director; Remi Oni, Executive Director, and Abdullahi Ibrahim, Executive Director.
Reiterating CBN’s commitment to ensure the stability of the financial system, Emefiele urged depositors, creditors and other stakeholders not panic, assuring
that the decisions were to strengthen the bank and position it as a banking industry giant.
in view of its failure to meet normal regulatory requirements for a bank with a status that is fast sliding as a going concern, the Central Bank of Nigeria (CBN) said on Thursday.
On Wednesday, the bank announced the appointment of Gbenga Shobo as its new managing director/chief executive officer with immediate effect.
Shobo, who was until his appointment the bank’s deputy managing director, was to succeed the current oxxupier of the office, Adesola Adeduntan, who is proceeding on retirement after exceeded the tenure limits for chief executives, having been in the position since 2016.
The board of the bank also announced the appointments of Abdullahi Ibrahim as deputy managing director and Ini Ebong, Seyi Oyefeso, Bashirat Odunewu and Segun Alebiosu as executive directors subject to regulatory approvals.
However, the CBN, the apex regularory authority of the country’s banking sector, responsible for granting approvals for such appointments withheld action.
Clarifying the apex bank’s decision, its governor, Godwin Emefiele, expressed surprise that the CBN had to learn through media reports about the appointments by the board of directors of FBN.
Although the CBN governor conceded the authority of the FBN Board to make changes in its management team, but he said such a decision was subject to the approval of CBN as a key stakeholder.
On why the management changes cannot stand, Emefiele said due to the forbearance issues affecting FBN and the close monitoring of its activities over the last five years to stem further slide in its status as a going concern, it was necessary the CBN was carried along in the process.
“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,” the CBN governor said.
Emefiele said the decision was of concern to the apex banking sector regulatee, considering that FBN was 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.
FBN, the CBN governor said, 3 has over 31million customers, with deposit base of over N4.2trillion, shareholders funds of N618billion and Nigeria Inter-Bank Settlement System (NIBSS) instant payment processing capacity of 22 percent of the country’s banking industry.
Justifying CBN’s decision not approve the changes, Emefiele desscribe it as its “imperative to protect the minority shareholders, that have no voice to air their views” and to protect the over 31million customers of the bank.
He said FBN maintained healthy operations till 2016 financial year when the CBN’s target examination revealed it 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 FBN, the CBN governor said, were traced to bad credit decisions, significant and non-performing insider loans and poor corporate governance practices.
Besides, hs said FBN and FBN Holding Plc shareholders lacked the capacity to recapitalize the bank to minimum requirements despite pressures from CBN.
To maintain financial stability, given its systemic importance, Emefiele said CBN stepped in to perform its regulatory functions, including change of management team under the CBN’s supervision in January 2016.
Other regulatory interventions, he said, inxluded grant of the regulatory forbearances to enable FBN work out its non-performing loans by providing for write off of at least N150billion from its earning for four consecutive years.
Other dscisions included granting of concession to insider borrowers to restructure their non-performing credit facilities under very stringent conditions; renewal of the forbearances on a yearly basis between 2016 and 2020.
Although the measures yielded some positive results, in terms improved profitability, liquidity and CAR and significant reduction in NPLs, Emefiele said the insider-related facilities remained a problem.
“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 said.
Consequently, the CBN approved the immediate removal of all directors of FBN Limited and FBN Holdings Plc and the appointment of their successors.
Those appointed into the Board of the FBN Holdings PLC include Remi Babalola as Chairman, along with Fatade Oluwole, Kofo Dosekun, Remi Lasaki, Alimi Abdulrasaq, Ahmed Modibbo, Khalifa Imam and Peter Aliogo, as directors, with UK Eke as Managing Director.
The Board of FBN has Tunde Hassan-Odukale as Chairman, with Tokunbo Martins, Uche Nwokedi, Adekunle Sonola, Isioma Ogodazi, Ebenezer Olufowose, Ishaya Elijah B. Dodo as directors. Sola Adeduntan was named Managing Director; Gbenga Shobo, Deputy Managing Director; Remi Oni, Executive Director, and Abdullahi Ibrahim, Executive Director.
Reiterating CBN’s commitment to ensure the stability of the financial system, Emefiele urged depositors, creditors and other stakeholders not panic, assuring
that the decisions were to strengthen the bank and position it as a banking industry giant.
