VICTORIA ONU, ABUJA
THE Central Bank of Nigeria has explained the reason for its regulatory intervention in First Bank of Nigeria Plc.
The apex bank had in a bid to ensure the sanctity of the financial system fired the entire members of the board of First Bank Plc.
The CBN Governor, Godwin Emefiele, announced the decision during a press briefing in Abuja.
Before the sacking of the board, the apex bank had on Wednesday queried the Board of the bank for removing Adesola Adeduntan as the Managing Director/Chief Executive Officer, and appointing Gbenga Shobo as MD/CEO designate without regulatory approval.
The CBN had also faulted the appointment of Abdullahi Ibrahim as deputy managing director, as well as the appointment of Ini Ebong, Segun Alebiosu, Seyi Oyefeso and Bashirat Odunewu, as executive directors.
But Emefiele during a press briefing said FBN was 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 the last assessment of the CBN, the governor said FBN had over 31 million customers, with deposit base of N4.2trn, shareholders funds of N618bn and NIBSS instant payment processing capacity of 22 per cent of the industry.
He said, “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 immediate removal of the all directors of FBN Ltd and FBN Holdings Plc.”
The CBN Governor also announced the appointment of various individuals as directors in FBN Ltd and FBN Holdings Plc
For FBN Holdings, it appointed Mr Remi Babalola as Chairman while UK Eke is the Managing Director.
Other members of the board are Dr.Fatade Abiodun Oluwole; Kofo Dosekun; Remi Lasaki; Dr Alimi Abdulrasaq; Ahmed Modibbo; Khalifa Imam; and Sir Peter Aliogo.
For First Bank Plc, the apex bank appointed Tunde Hassan-Odukale as Chairman, Sola Adeduntan (Managing Director); Gbenga Shobo (Deputy Managing Director); Remi Oni (Executive Director) and Abdullahi Ibrahim (Executive Director).
Other members of the board are Tokunbo Martins, Uche Nwokedi, Adekunle Sonola, Isioma Ogodazi, Ebenezer Olufowose and Ishaya Elijah B. Dodo.
To the CBN, Emefiele said it was only imperative to protect the minority shareholders that had no voice to air their views as well as the protection of the over 31 million customers of the bank who see FBN as a safe haven for their hard-earned savings.
He said 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 and non-performing loans ratio substantially breaching acceptable prudential standards.
He added, “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 recapitalise the bank to minimum requirements. These conclusions arose from various entreaties by the CBN to them to recapitalize.
“The CBN stepped in to stabilise the bank in its quest to maintain financial stability, especially given FBN’s systemic importance as enumerated earlier.”
He gave some of the regulatory actions taken by the CBN in this regard to include change of management team under the CBN’s supervision with the appointment of a new Managing Director/ Chief Executive Office in January 2016; and grant 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.
The CBN also provided the bank with grant of concession to insider borrower to restructure their non-performing credit facilities under very stringent conditions as well as renewal of the forbearances on a yearly basis between 2016 and 2020 following thorough monitoring of progress towards exiting from the forbearance measures
The CBN Governor stated, “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.
“Notwithstanding the significant improvement in the bank’s financial condition with positive trajectory of financial soundness indicators, the insider related facilities remained problematic.
“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.”
Emefiele reassured 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,” he added.
