CBN sacks First Bank board, reinstates ousted MD, Adeduntan

The Central Bank of Nigeria (CBN), yesterday, sacked the boards of First Bank Nigeria Limited and its holding company, FBN Holdco, citing insider abuse and corporate governance breakdown as reasons.

The apex bank also set up interim boards, reinstalling the ousted Managing Director/ Chief Executive, Dr. Sola Adeduntan. The interim board chairman of the bank, according to CBN, will be Tunde Hassan-Odukale. Other members of the bank subsidiary are Tokunbo Martins, Uche Nwokedi, Adekunle Sonola, Isioma Ogodazi, Ebenezer Olufowose, Ishaya Elijah Dodo, Gbenga Shobo, Remi Oni and Abdullahi Ibrahim.

The board of the holding company is chaired by Remi Babalola while the managing director is U.K. Eke. Other members are Dr. Fatade Abiodun Oluwole, Kofo Dosekun, Remi Lasaki, Dr. Alimi Abdulrasaq, Ahmed Modibbo, Khalifa Imam and Peter Aliogo.

The change was the climax after hours of horse-trading and corporate war over the appointment of a new managing director. The board of directors of First Bank had on Wednesday announced the appointment of Gbenga Shobo as its Managing Director/Chief Executive. Shobo was to replace Adeduntan, who was appointed in 2016.

Following the appointment, the CBN made futile efforts to compel the board to reverse its decision and reinstate the ousted chief executive. The apex bank issued a query to the board when it failed to heed its advice.

CBN said the board’s move had a dire consequence for the bank and “portends significant risks to the stability of the financial system” in the query letter.

“The CBN notes with concern that the action was taken without due consultation with the regulatory authorities, especially given the systemic importance of First Bank Ltd.

“The CBN was not made aware of any report from the board indicting the Managing Director of any wrong-doing or misconduct; there appears to be no apparent justification for the precipitate removal.

“We are particularly concerned because the action is coming at a time the CBN has provided various regulatory forbearances and liquidity support to reposition the bank, which has enhanced its asset quality, capital adequacy and liquidity ratios amongst other prudential indicators,” the regulator said.

The bank wondered how Adeduntan, whose tenure was yet to expire, could have been removed in the circumstance. CBN also noted that in four years, the bank was yet to perfect its books on the shares of Oba Otudeko in FBN Holdco, which was used as collateral for the restructured credit to Honeywell Flour Mills contrary to the conditions precedent for the restructuring.

The CBN insisted that the board of FBN “explain why disciplinary action 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 in the media” in the letter signed by the Director of Banking Supervision, Haruna Mustafa.

Sources said the removed board had a back-and-forth with the CBN without shifting ground on the change. Founder of Independent Shareholders Association of Nigeria, Sir Sunny Nwosu, described the decision as unfair, stating that the dissolution would send a wrong signal to depositors and shareholders.

Nwosu said the dispute would affect the holding company’s share price. He urged the CBN to ensure that the dispute is settled within a short period to avoid a knock-on effect. President of the New Dimension Shareholders Association, Patrick Ajudua, said shareholders are satisfied with the action taken by the CBN.