From the unfolding information it may be apt to say that Oba Otudeko and the insider loan involving his company, Honeywell Plc and First Bank is the fulcrum of the crisis that nearly snowballed into all manner of troubles for the economy, given the fact that the bank can be said to be too big to fail.
But when the Central Bank of Nigeria intervened in the matter, many felt that the apex bank’s removal of all the directors and reinstatement of the CEO, Dr Kola Adedutun, earlier sacked by the elsewhile board was too drastic.
Some experts asked:
1). Does CBN has the power to sack Board of Directors of a Bank that is not officially declared insolvent for contravening its guidelines of not seeking approval for appointment of a new MD?
2). Is that offence grave enough to sack the Board and, we guess the Executive of the Holding Company too?
3) We have read in the past of CBN not ratifying non-compliant appointment of Bank MDs until compliance. Why is this difference?
4). Is the real reason for sacking of the Board non-notification of a new MD or pushing the current MD to retire as FBN never said “sacked officially” or the need to deal with Oba Otudeko for obtaining disclosed loan from the Bank?
5). Does the entire Board has to suffer for the Chairman’s non-performing loan?
6). Is instructing to recall a non-performing loan within 48 hours the role of CBN in banking regulation or is that the best way for a restructured facility? Whether insider or non-insider loan, shouldn’t CBN’s role stop at only instructing perfection within a reasonable time frame rather than unrealistic 48 hours loan recall?
7). Is there an underwater petition or allegations from the current MD that the job he was appointed by the Board in 2016 (or appointed by CBN not the Board as CBN declaration is now portraying) is now being threatened by the Board that did not allow perfection of the loan and being forced to resign or retire before December 2021?
8). Curiosity, is it a banking offence to be told by the Board to retire before the end of your tenure and replaced by your DMD even if you notify CBN of your intention?
9). Shouldn’t CBN have given ultimatum to Oba Otudeko to make his loan performing or step down from the Board.
10).Insider dealing – Is a loan publicly declared as granted to related parties or directors at arms length basis and requested for restructuring deemed to be insider dealing – fraudulent and contravenes Securities and Exchange Commission (SEC) guidelines on using privileged information for stocks manipulation or is a Nigerian version of describing loans granted to Board members at privileged rate or conditions not known to CBN, Board members etc officially?
Finally, it seems a sectional tussle within the Board as we could see Tunde Hassan-Odukale, member of the sacked Board appointed as Chairman of the Bank.
The CBN Governor, Mr. Godwin Emefiele, at a press conference in Abuja,exposed the fact that the bank’s problems was a long running one which was not new,saying the apex bank took the actions in order to preserve the stability of the bank and protect minority shareholders and depositors. Former Minister of State for Finance, Mr. Remi Babalola, replaced Mr. Oba Otudeko as Chairman of FBN Holdings.
The CBN appointed new directors on the FBN Holdings’ board, including Fatade Oluwole, Kofo Dosekun, Remi Lasaki, Alimi Abdulrasaq, Ahmed Modibbo, Khalifa Imam and Peter Aliogo. Mr. U. K. Eke retains his position as Managing Director of FBN Holdings.
First Bank Nigeria Limited Chairman, Hassan-Odukale, replaced Mrs. Ibukun Awosika. Other board members include Tokunbo Martins, Uche Nwokedi, Adekunle Sonola, Isioma Ogodazi, Ebenezer Olufowose, Ishaya Elijah B. Dodo and Adeduntan. Also, Gbenga Shobo, deputy Managing Director; and Remi Oni and Abdullahi Ibrahim, Executive Directors, are members of the reconstituted board.
“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 five 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 First Bank, 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,” he explained.
Emefiele revealed that: “Our last assessment shows that First Bank has over 31 million customers, with a deposit base of N4.2 trillion, shareholders’ funds of N618 billion and NIBSS instant payment (NIP) processing capacity of 22 per cent 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 31 million customers of the bank who see First Bank as a safe haven for their hard-earned savings.
“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.”
Emefiele said as a result of the above CBN changed its management team under the CBN’s supervision with the appointment of a new Managing Director/Chief Executive Officer in January 2016 and granted regulatory forbearances to enable the bank work out its non-performing loans through provision for write off of at least N150 billion from its earning for four consecutive years; as well as granting of concession to insider borrower to restructure their non-performing credit facilities under very stringent conditions.
According to him these measures ”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.
Disclosing that “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 three years despite several regulatory reminders. The bank has not also divested its non-permissible holdings in non-financial entities (Honeywell) in line with regulatory directives.”
On the issue of Otudeku and the unfolding problems at the bank, he said: “The truth is that, yes, even before we issued a query… to the chairman of the board and copied all the directors and shareholders, the initial attempt to remove the Managing Director, Dr. Sola Adeduntan, was leaked to me by an interested party in the course of the board meeting.
“When I heard about this, I had first to call the chairman of the holding company, Mr. Oba Otudeko. He picked my call and I reminded him about the regulatory intervention and forbearance regime in the bank and that the decision to make such sweeping changes would require prior approval of the CBN.
“I pleaded with him to step down the decision and that we could hold the meeting to discuss the issues. The current Managing Director was running on a tenure that is expected to expire on December 31, 2021. And as far as we are concerned, there was no need for such changes.
“And I repeat that given our regulatory intervention and forbearance regime, we felt that if there was any misconduct on the part of Dr. Sola Adeduntan that he should have been queried, the CBN should have been informed and the CBN should have been party to such an action to punish Dr. Adeduntan.
“We were not informed of any misconduct, nor were we informed of any query; indeed, the CBN has been satisfied working with Dr. Adeduntan on a stabilisation regime for First Bank since 2016.
“He had played his role to the best of our knowledge, the best that could be done of a professional banker. He had insisted on governance being put in place and we suspect that it is because he has stood his ground on certain decisions that are not in favour of major shareholders in the bank that they felt hurt and thought he should be removed.
“This is against what we stand for. This is a bank where depositors’ funds are almost ten times shareholders’ funds. And like I said earlier, our interest is to protect depositors and minority shareholders who have no voice in this business.”
The CBN Governor maintained that he spoke ”to Dr. Oba Otudeko; he refused to grant my entreaties. I had cause to call two of his major shareholders to ask him to ask the board not to take such decisions without the approval of the CBN, but he refused to pick the calls of these shareholders who are co-owners of the bank…..I called him a second time and heard one of the shareholders listening to me on another line, begging Dr. Otudeko that he should not take that decision, he insisted on taking that decision.
“We hung up the phone and I sent that shareholder back to the office of Mr. Oba Otudeko to appeal to him to please suspend the decision to remove the MD. He refused to see the shareholder.
“I feel we had done our best and that we would not allow a shareholder who feels that he cannot subject himself to regulatory control and authority to remain as a director of the bank.
“So, we didn’t have any choice but to take this decision. As we speak, the chairman of the bank was queried, Ibukun Awosika, we are yet to receive any response. In any case, I would imagine that response is no longer necessary.”
The sacked Chairman of First Bank Nigeria Limited, Mrs. Ibukun Awosika, has said that she acted in honour and integrity with the interest of the institution, all its stakeholders and the nation during her 11-year reign at the bank.
Awosika, wrote this in an article she titled: ‘My FBN Group Journey,’ posted on instagram, a social media platform explained: “As a board, we acted in what we clearly believed to be in the 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 acted in honour and integrity with the utmost interest of the institution, all our stakeholders and the nation.”
Meanwhile, CBN is insisting that Otudeko clear the insider loan with the bank and that the bank should divest from Honeywell. These actions will hopefully resolve the matter with Ecobank Plc were its being alleged that same collaterals were used for monies loaned from both banks.
