Both board members and directors of First Bank Holding and First Bank Nigeria Limited have been fired by the Central Bank of Nigeria (CBN).
Godwin Emefiele, the Governor of the Central Bank of Nigeria (CBN), revealed this decision to fire the First Bank board members and directors to the media on Thursday.
Adesola Adeduntan, the Managing Director of First Bank, has also been reinstated, according to an announcement by CBN Governor Emefiele.
The appointment of Gbenga Shobo was made without the permission of the CBN, according to the apex bank.
CBN has been involved in management changes in the First Bank in the last 5 years, according to Emefiele.
The Governor was taken aback by the fact that First Bank made changes to its senior management without consulting or notifying the authorities.
He believes the action sends a misleading warning to the public about the board’s and management’s stability.
First Bank has over 31 million customers, according to the CBN, with a deposit base of N4.2 trillion, shareholder assets of N618 billion, and an NIBSS instant payment (NIP) processing power of 22% of the market.
The bank, according to Emefiele, ran a stable business until 2016, when the CBN’s aim inspection uncovered a dire financial situation, with its capital adequacy ratio (CAR) and non-performing loans ratio (NPL) far above reasonable prudential expectations.
Bad credit decisions, large and non-performing insider loans, and weak corporate governance procedures, he claims, are to blame for the issues.
Emefiele went on to say that the bank’s owners and FBN Holding Plc lacked the ability to recapitalize the bank to meet minimum capital standards.
In order to preserve financial stability, the CBN’s leader recalled the measures taken to stabilize the bank.
“Change of management team under the CBN’s supervision with the appointment of a new Managing Director/ Chief Executive Office in January 2016;”
“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.”
Despite a substantial change in First Bank’s financial situation and a promising trend of financial soundness metrics, Emefiele regretted that insider linked facilities remained troublesome.
He revealed how insiders who took loans and had a dominant position on the board of directors refused to follow the terms of their credit facility reform, contributing to the company’s weak financial condition.
After many regulatory warnings, the CBN’s latest aim review as of December 31, 2020 showed insider loans were materially non-compliant with restructure conditions (e.g. non-perfection of lien on shares/collateral arrangements) for over three years.
Following a summary of the case, the CBN used its authority under BOFIA 2020 to require that all directors of FBN Ltd and FBN Holdings Plc be removed immediately.
The apex bank has appointed the following individuals as directors of FBN Ltd and FBN Holdings Plc:
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 – Managing Director.
Emefiele reaffirmed his contribution to the financial system’s stability to depositors, borrowers, other bank owners, and all Nigerians.