By Eric Elezuo

In the last 72 hours, Nigeria’s oldest bank, which also prides itself as Nigeria’s biggest bank, First Bank of Nigeria Limited, has been in the eye of the storm as a result of the purported removal of its Managing Director/Chief Executive Officer, Dr. Adesola Adeduntan. The hitherto stormy atmosphere lends credence to the saying that when it rains, it pours.

In what appears to be a well orchestrated coup, the bank’s board of directors unanimously moved and effected the removal of the MD, whose term expiration, unfortunately was still eight months away on December 31, 2021. The speed of the removal, and the intention therein caused a lot of eyebrows to be raised.

The Central Bank of Nigeria (CBN), which acted promptly noted that “It is also curious to observe that the sudden removal of the MD/CEO was done about eight months to the expiry of his second tenure which is due on December 31, 2021.

“The removal of a sitting MD/CEO of a systematically important bank that has been under regulatory forbearance for 5 to 6 years without prior consultation and justifiable basis has dire implications for the bank and also portends significant risks to the stability of the financial system.”

Further investigations reveal that the act was perpetrated under the leadership of the duo of Oba Otudeko, who was the Chairman of First Bank of Nigeria Holdings, and Mrs Ibukun Awosika, who was the Chairman of First Bank of Nigeria Limited albeit without the approval of the regulatory agency, the CBN.

The Central Bank of Nigeria rose to the challenge, querying the board, and seeking explanation to what led to the removal. It further gave the board till 5pm on Thursday April 29, 2021 to respond to the query. The response was not forthcoming as at the agreed time, and the apex bank wielded the big stick, sacking all members of the board, replacing them with fresh members as interim board, and reinstating the ousted MD, Adeduntan. Thus bringing to an abrupt end the hegemonic reign of Oba Otudeko and Ibukun Awosika and their boards. This explains the lost by the duo of a thriving empire, FirstBank.

Prior to the sack, a can of worms was unearthed, proving illegal transactions that pitted the Dr. Oba Otudeko against the bank, and by extension, the CBN. The revered former Chairman was said to have been highly indebted to the bank through internal borrowings divested to other concerns different from the FirstBank approved businesses. This financial machinations were crippling the bank over the years, according to the CBN.

“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,” CBN noted.

In a letter dated April 26, 2021 with serial No: BSD/GBB/CON/FBN/01/028 titled RE: AUDITED IFRS ACCOUNTS FOR THE FINANCIAL YEAR ENDED DECEMBER 31, 2020, the CBN had expressed its concern that First Bank has not complied with regulatory directives to divest its interest in Honey Well Flour Mills despite several reminders.

The strongly-worded letter signed by Haruna B. Mustapha, Director of Banking Operations and copied to all Board members and Major Shareholders continued “We further noted that after 4 years the bank is yet to perfect its lien on the shares of Mr. Oba Otudeko in FBN Holdco which collaterized the restructured credit facilities for Honey Well Flour Mills contrary to the conditions precedent for the restructuring of the company’s credit facility.

“Given the bank’s failure to perfect the pledge and satisfy condition for regulatory approval, the restructuring has thus been invalidated and the credit facilities now payable immediately.

“Consequently, the company is required to fully repay its obligations to the bank within 48 hours failing which the CBN will take appropriate regulatory measures against the insider borrower and the bank.

“Furthermore, the Bank notes the untenable delay in resolving the long standing divestment from Barti Airtel Nigeria Limited in line with extant regulations of CBN”

The CBN also instructed that it must divest from all non permissible entities such as Honey Well and Barti Airtel within 90 days.

In addition, First Bank was instructed to provide evidence of compliance in accordance with the timelines stated above to the Director of Banking Supervision.

The letter was followed by yet another titled “Purported  Management Change At First Bank Nigeria Limited”, which totally frowned at the said removal of Adeduntan, with Otudeko also as a major player.

It has instructed First Bank to explain why disciplinary measures should not be taken against the Board for hastily removing the MD/CEO and failing to give prior notice to the CBN before announcing the management change to the media.

The CBN’s big stick, which was carried out by the Governor, Godwin Emefiele, was wielded during a live television broadcast, where he disclosed 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.” This, he further revealed was as a result of insider manipulations, and has been well managed by the CEO. It was therefore, unfathomable why he was removed.

It won’t be wrong to say that Otudeko’s waterloo is as a result of Honeywell’s inability to repay its loan obligation within the 48 hours given by the CBN and the ‘kangaroo’ approach employed in the change of baton, which saw Adeduntan briefly sacked. The sack was CBN’s way of taking “appropriate regulatory measures against the insider borrower and the bank”.

The Boss investigation further brought out to the fore that the end of Otudeko’s reign may have marked the end of the Alhaji Alao Arisekola mafia with their tight grip on FirstBank. It would be recalled that back in 2008, the board’s ratification of the appointment of Sanusi Lamido Sanusi was not without the deft hand of business the mogul, Arisekola. Further revelation said that the elevation of Sanusi, an economist turned banker, was in consequence of a balancing act necessitated by Arisekola’s desire to further his interest in the bank.

It was observed that Arisekola who held substantial interest in FirstBank then, by rallying the support of members of the board for the appointment of Sanusi who took over from Mr. Moyo Ajekigbe, he would have positioned Dr. Ayoola Oba Otudeko, then a non-executive director of the bank to assume the influential office of the Chairman of the Bank’s Board of Directors. This happened seamlessly, and Otudeko has furthered the Arisekola mafia interest ever since to the chagrin of stakeholders, who spoke in clear terms for the end of the clique.

Announcing the firing of all the directors of First Bank of Nigeria Limited and First Bank of Nigeria Holdings Plc and the newly appointed persons to fill the positions, CBN governor, Godwin Emefiele detailed the process pre and post the historic sack.

He said the decision was taken by the management of CBN, the apex regulator of Nigeria’s financial sector, following the query which the CBN had earlier issued the Board of First Bank for removing Adesola Adeduntan as the Managing Director/Chief Executive Officer, without regulatory approval.

“Following further review of the situation and in order to preserve the stability of the bank so as to protect minority shareholders and depositors, the management of the CBN, in line with powers conferred on it by the Banks and Other Financial Institutions Act 2020, has approved and hereby directs as follows:

“The immediate removal of all the directors of First Bank of Nigeria Limited and First Bank of Nigeria Holdings Plc,” he said.

Relaying the fact that the CBN pleaded with the board members of First Bank severally not to remove Adeduntan, Emefiele noted that the pleas were ignored, even as the bank has been under regulatory forbearance intervention since 2016. He stressed that given the apex bank’s regulatory intervention and forbearance regime, if there was any misconduct on the part of Adeduntan, he should have been queried, and the apex bank informed to be part of Adeduntan’s punishment.

“We were not informed of any misconduct, neither were we informed of any query,” Emefiele stated, implying that the boards took the laws into their own hands.

“Given that 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.”

Insinuating that Adeduntan may have been removed because he took decisions that did not favour major shareholders, Emefiele said:

“We suspect, I like to use the word suspect, that it was because he had stood his grounds on certain decisions that are not in favour of major shareholders of the bank, that they felt and thought he should be removed.”

“This is against what we stand for. This is a bank where depositors fund is almost 10 times shareholders fund. Our interest is to protect depositors and minority shareholders who have no voice in this business.

“We granted of the regulatory forbearances to enable the bank work out its non-performing loans through provision for write-off of at least N150bn from its earning for four consecutive years.

“We would not sit idle and allow this to continue. I spoke to Oba Otudeko; he refused to grant my entreaties. I had course to call two of his major shareholders to call him to ask the board not to take such decision without the approval of the CBN.

“He insisted on taking that decision. We hung up the phone. I sent that shareholder back to the office of Oba Otudeko to appeal to him to please suspend the decision to remove the MD. He refused to see the shareholder.”

Apart from indebtedness from the inside and hatching an unauthorised sack process, Otudeko was also found guilty of recalcitrancy for refusing to subject himself to regulatory control and authority. The CBN could tolerate a man of his calibre, and had to take a decision.

On Awosika’s part, Emefiele said:

“As we speak, the chairman of the bank, Ibukun Awosika, was queried. We are yet to receive any response. In any case, I would imagine that that response is no longer necessary.”

He stressed that what transpired was as a result of “breakdown of governance and insider abuse by shareholders, and we felt that we needed to stamp our authority,” adding that the reappointment of Adeduntan and other directors was because they have proved to be reliable since 2016.

Emefiele ruled out any case of witch hunting from the apex bank saying that though the bank has the power to change leadership, but “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,” and that makes it completely unacceptable to hear via the media the removal of the CEO. 

“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 the light of the foregoing that the CBN queried the board of directors on the unfortunate developments at the bank,” he informed.

Emefiele said the CBN stepped in to stabilise the bank in its quest to maintain financial stability, especially given its systemic importance in 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 31 million customers, with deposit base of N4.2tn, shareholders funds of N618bn and NIBSS instant payment processing capacity of 22 per cent of the industry,” Emefiele said.

“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 FBN as a safe haven for their hard-earned savings.”

It is obvious that the last has not been heard of the brouhaha much as on Friday, the management of the bank released a corporate statement, pledging to adhere to all that the CBN has prescribed.

Time will tell!