On the 29th April, the Central Bank of Nigeria announced that it has fired all the board directors of First Bank Nigeria and her subsidiary FBN Holdings Plc.
Behind this harsh action by the CBN lies an inner war between some members of the board and the Governor of CBN, Mr. Godwin Emefiele.
What is the cause for the battle?
It is known that Dr. Otudeko acquired a loan facility from First Bank of Nigeria worth around N75 billion for his subsidiary, Honeywell Flour Mills. Allegedly, the loan has been non-performing for years and CBN suspects that First Bank did not follow diligence in securing collateral for the loan facility is there is a default on the loan. CBN even purports that this act by First Bank is deliberate, and is influenced by Dr. Otudeko, who is also a board member of its subsidiary FBN Holdings Plc.
The CBN Governor claims that FBN refused to comply with their directive to divest her interests in the Honeywell Mills Flour, despite several reminders. In response to this insubordination, a memo was sent to the Chairman of First Bank Nigeria, Ibukun Awosika, probing her about the refusal of the board to comply with regulatory directives.
The memo, dated 26th April 2021, directed Honeywell Mills to repay its entire loan owed FBN within 48 hours. It states, “Consequently, the company (Honeywell Flour Mills) 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.”
They also ordered First Bank to diversify the equity investments in Honeywell Flour Mills and Bharti Airtel in 90 days.
It is as a result of this memo that the Chairman of First Bank and Otudeko, who are, allegedly in sync, pushed for the removal of the Managing Director and CEO of First Bank, Dr. Adeshola Adeduntan, replacing him with Gbenga Shobo.
Adeduntan is believed to be the inside man for Godwin Emefiele hence posed a problem for the shady dealings of Dr. Otudeko and his allies. He was said to have been used by the CBN Governor to stop several insider loans within the bank leading to an ongoing battle between Godwin and Otudeko. So, Adedutan had to go.
The announcement of his removal was done on the 28th of April, corresponding to the deadline given to FBN concerning their loan to Honeywell Flour Mills.
CBN responded with a query to the FBN Chairman, Awosika, demanding an explanation for taking such an action without their approval.
This is what they had to say to the media about this, “Ordinarily the board is vested with the authority to make changes in the management team subject to CBN approval. 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 5 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 FBN, 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. 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 light of the foregoing that the CBN queried the board of directors on the unfortunate developments at the bank.”
They also state that the tenure of Adeduntan has not yet expired so there is no reason why he should be removed. They instructed Otudeko and other stakeholders to reinstate Mr. Adeduntan but their directive was ignored.
This is what led to the action by CBN to remove all directors of First Bank and her subsidiary, FBN Holdings Plc which includes Awosika and Dr. Otudeko.
They also, reinstated Mr Adeduntan as the MD/CEO of First Bank.