- Shareholders kick against bank’s internal governance, shareholding structure
- Aggrieved investors take objections to court
- Nigerian Breweries to raise N600bn through rights issue
A fresh round of squabbles is currently rocking the board of First Bank of Nigeria, a development shareholders fear poses a major threat to the bid by the first generation financial institution to strengthen its capital base in line with the recent directive of the Central Bank of Nigeria to all banks operating in the country to recapitalize.
The current crisis rocking the bank stems from protests by shareholders who are kicking against the bank’s internal governance and shareholding structure, as a result of which some of them have taken their grievances to the court.
One of such is the case of Olusegun Samuel Onagoruwa v. FBN Holdings Plc in Suit No. FHC/L/CP/1271/2022), which is challenging the capacity of the Board of Directors of FBN to appoint new persons to fill vacant slots.
Onagoruwa in his suit is seeking “an order setting aside, nullifying, annulling and/or quashing the appointments and approvals of Mr. Olusola Adeeyo, Mr. Viswanathan Shankar, Mrs. Remilekun Adetola, Mr. Anil Dua and Mrs. Fatima Ibrahim as Non-Executive Directors of First Bank of Nigeria Limited made on March 20, 2024, by FBN Holdings Plc during the pendency of this action and in defiance of the subsisting order of this Honourable Court made on the 15th day of July, 2022.”
The motion also seeks an order restraining the above-named non-executive directors from acting or taking any steps as non-executive directors of the ban.
The current court case follows similar four other cases pending at the Federal High Court in Lagos and Abuja challenging the internal governance of FBN Limited, in addition to existing court injunctions restraining the bank from holding the last two Annual General Meetings which the bank went ahead to hold.
According to one of the workers union leaders in the bank, “as the tenure of the imposed directors is expiring, the same illegitimate management of FBN, whose legitimacy is being challenged, has gone further, during the pendency of the cases challenging their competence to lead the bank, to arbitrarily appoint further five independent directors. Where they derived the power from remains a mystery.
“Mismanagement and manipulation of shares are also being alleged in some of the cases pending against the bank while the legality of the AGMs and the imposed board of directors remain a challenge.” The union leader expressed the fear that the spate of litigations and board squabbles currently rocking the bank may bring a quick collapse of the over 100-year- old bank.
Also speaking on the development, a shareholder, Olalekan Babalola, said “it is imperative for the authorities to find a solution to this lingering crisis as Nigeria cannot afford another major bank’s collapse at this critical time when President Bola Tinubu is working hard to revamp the nation’s crumbling economy. This is because the current crisis will definitely impede the bank from getting the new Central Bank’s capitalisation threshold.”
He called for urgent resolution of all court cases in the overall interest of depositors, shareholders and other stakeholders of the bank before further damage is done to the oldest Nigerian bank.
With billionaire Femi Otedola in the saddle as its new Chairman, First Bank of Nigeria Holdings Plc on March 21, 2024 appointed two new non-executive directors for the holding company and three new non-executive directors for the First Bank.
Updating the Nigerian Exchange Group of recent development within the bank, the company’s Secretary, Adewale Arogundade, announced the appointment of Olusola Adeeyo and Viswanathan Shankar as non-executive director and independent non-executive director respectively in FBN Holdings.
The company also announced Remilekan Odunlami as non-executive director for First Bank while Anil Dua and Fatima Ali were appointed as independent non-executive directors.
The appointments of the five new directors are subject to the approval of the Central Bank of Nigeria.
Adeeyo, a former banker and ex-Chairman of AXA Mansard Insurance Plc, is currently the Chairman of Astral Waters Limited, a water bottling and delivery company.
Shankar, the Chief Executive Officer of private equity investments firm Gateway Partners, previously served as the CEO of Standard Chartered Plc.
Odunlami has served as Director at CitiBank Nigeria Limited and FirstBank.
She currently sits on the Board of Access Pensions Limited as an Independent Non-Executive Director and the Board of Rand Merchant Bank Limited as a Non-Executive Director.
Also, Dua has sat on the Board of Dangote GSP Offshore FZE, Seychelles International Mercantile Banking Corporation, Heirs Holdings Oil and Gas Limited, Matador Investment Management Limited and Africa Property Development Managers Limited.
Ali, founder of Santi Food and Beverage Limited, currently sits on the Board of Reconnect Health Development Initiative International, a mental health charity organisation.
Late January, First Bank of Nigeria Holdings Plc appointed Otedola, the 20th richest man in Africa as its new Chairman.
With his appointment, Otedola, also the Chairman of Geregu Power, succeeded Ahmad Abdullahi.
Otedola was first appointed to the Board of FBN Holdings Plc on August 15, 2023 as a Non-Executive Director.
Nigerian Breweries to raise N600bn through rights issue
Meanwhile, the Nigerian Breweries Plc has announced that it would be raising up to N600bn via Rights Issue.
In a corporate notice filed with the Nigerian Exchange Limited on Wednesday, which was signed by its Company Secretary, Uaboi G. Agbebaku, it was revealed that the decision to raise capital was made at the Board of Directors meeting held on Tuesday.
Part of the notice read, “The board resolved to recommend to shareholders at the next Annual General Meeting the raising of up to N600bn capital by way of Rights Issue, subject to regulatory approvals.
“Due to the negative impact of the devaluation of the naira and the high cost of funds on the company’s capital structure, especially on the company’s debts, the proceeds from the Rights Issue will help to reduce the huge debt burden arising thereby leading to a healthier balance sheet.
“Coupled with ongoing cost savings and other operational efficiency efforts, the board is optimistic about steering the company back to the path of sustainable profitability in the near future.”
Another resolution that the board would be seeking shareholders’ approval for at its next AGM scheduled for later this month would be an increase in the company’s share capital to take care of the new shares to be allotted under the Rights Issue.
Nigerian Breweries Plc, in its audited results for the year ended December 2023, announced that it suffered a N153bn foreign exchange loss due to the devaluation of the naira.
For the period under review, the company grew its revenue by 8.9 per cent to N599.64bn from N550.64bn. Net finance expense rose significantly by 449.7 per cent to N189.19bn, dragging the brewer to a loss of N106.31bn, from a gain of N13.19bn at the end of 2022.
While lamenting about the macroeconomic headwinds, the NB board of directors expressed a preparedness to tap into its decades of experience operating in Nigeria to weather the current economic climate.
“In a difficult operating environment, the Board will ensure that the Company builds on its more than 77 years of experience of operating in Nigeria to cope with current realities.
“The company will continue to be resilient and forward-thinking leveraging our broad portfolio, strong supply chain footprint, and passionate workforce to drive long-term value creation for its shareholders and other stakeholders,” the board said.
