Godwin Emefiele, governor of the Central Bank of Nigeria
(CBN), has announced the reinstatement of Sola Adeduntan, as the managing
director and chief executive officer of First Bank of Nigeria Limited.
He also ordered the immediate removal of all directors of
FBN Limited and FBN Holdings Plc.
Emefiele gave this directive during a media briefing on
Thursday.
Here is the governor’s message in full.
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. This
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:
i. Change of management team under the CBN’s supervision
with the appointment of a new Managing Director/ Chief Executive Office in
January 2016.
ii. 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
iv. 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:
i. Immediate removal of the all directors of FBN Ltd and FBN
Holdings Plc
ii. The appointment of the following persons as directors in
FBN Ltd and FBN Holdings Plc Holdco
1.Chairman – Remi Babalola
2.Dr. Fatade Abiodun Oluwole
3.Kofo Dosekun
4.Remi Lasaki
5.Dr Alimi Abdulrasaq
6.Ahmed Modibbo
7.Khalifa Imam
8.Sir Peter Aliogo
9.UK Eke – Managing Director Bank
1. Chairman – Tunde Hassan-Odukale
2. Tokunbo Martins
3. Uche Nwokedi
4. Adekunle Sonola
5. Isioma Ogodazi
6. Ebenezer Olufowose
7. Ishaya Elijah B. Dodo
8. Sola Adeduntan – Managing Director
9. Gbenga Shobo – Deputy Managing Director
10. Remi Oni – Executive Director
11. 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.
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