First Bank Crisis Deepens As CBN Fires Directors, Reinstates Adeduntan As MD

• The shareholders of the bank and FBN Holding Plc lacked the capacity to recapitalize the bank to minimum requirements.
  
  The Central Bank of Nigeria (CBN) has fully weighed in on the fiscal and leadership crisis rocking First Bank Holding and First Bank Nigeria Limited.

As part of the effort to reposition the and save it from going under, the apex financial institution on Thursday sacked all board members/directors of First Bank Holding and First Bank Nigeria Limited.

CBN Governor, Godwin Emefiele, announced their query on Thursday when he addressed the media.

Emefiele also disclosed that the removed managing director of the Bank, Adesola Adeduntan, has been reinstated

The apex bank declared that the appointment of Gbenga Shobo was unethical as it lacked its approval.

Emefiele said CBN has been involved in management changes involving First Bank in the last 5 years to halt the decline regarding the status of the bank.

The Governor expressed surprise that First Bank carried out a  comprehensive reform in executive management and chose to sideline the regulatory body.

He noted that the action sends a negative signal to the market on the stability of leadership on the board and management.

The CBN confirmed First Bank has over 31 million customers, with a deposit base of N4.2trillion, shareholders funds of N618billion and NIBSS instant payment (NIP) processing capacity of 22% of the industry.

Emefiele said the bank maintained healthy operations up until 2016 when the CBN’s target examination revealed grave financial condition with its capital adequacy ratio (CAR) and non-performing loans ratio (NPL) substantially breaching acceptable prudential standards.

The problems, according to him, were caused by bad credit decisions, significant and non-performing insider loans and poor corporate governance practices.

Emefiele added that the shareholders of the bank and FBN Holding Plc lacked the capacity to recapitalize the bank to minimum requirements.

The CBN chief recalled the steps that were taken to stabilize the bank in its quest to maintain financial stability.

“Change of management team under the CBN’s supervision with the appointment of a new Managing Director/ Chief Executive Office in January 2016;

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“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;

“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.”

Emefiele lamented that despite the significant improvement in First Bank’s financial condition with positive trajectory of financial soundness indicators, the insider related facilities remained problematic.

He disclosed how insiders who took loans, 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.

The CBN’s recent target examination as at December 31, 2020 revealed 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.

After a review of the situation, the CBN, with powers under BOFIA 2020, ordered the immediate removal of all directors of FBN Ltd and FBN Holdings Plc.

The apex bank announced the appointment of the following persons as directors in FBN Ltd and FBN Holdings Plc:

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For First Bank: Chairman – Tunde Hassan-Odukale; Tokunbo Martins; Uche Nwokedi; Adekunle Sonola; Isioma Ogodazi; Ebenezer Olufowose; Ishaya Elijah Dodo; Sola Adeduntan – Managing Director; Gbenga Shobo – Deputy MD; Remi Oni – ED; Abdullahi Ibrahim – ED.

For FBN Holdings: Chairman – Remi Babalola; Dr. Fatade Abiodun Oluwole; Kofo Dosekun; Remi Lasaki; Dr Alimi Abdulrasaq; Ahmed Modibbo; Khalifa Imam; Sir Peter Aliogo, Urum Kalu ‘UK’ Eke – MaManaging Director.

Emefiele assured the depositors, creditors, other stakeholders of the bank and all Nigerians its commitment to ensure the stability of the financial system.