The Central Bank of Nigeria (CBN) has queried the Board of Directors, First Bank of Nigeria Limited for appointing a new Managing Director/Chief Executive Officer, removing Dr. Adesola Adeduntan, without regulatory approval.
First Bank on Wednesday announced the appointment of Gbenga Shobo as its new Managing Director and Chief Executive Director. Chairman of the Board of Directors First Bank, Mrs. Ibukun Awosika said the appointment was subject to all regulatory approvals.
Confirming the query, a top central bank staff who preferred not to be named because he was not authorized to speak for the bank said the query is contained in a letter dated April 28, 2021, signed by the CBN Director, Banking Supervision, Haruna Mustafa.
The confirmed letter addressed to the chairman of First Bank, Ibukun Awosika said First Bank did not allow Mr Adeduntan’s tenure to end before making a new appointment. The action according to the CBN, was taken without due consultations with the regulatory authorities, especially given the systemic importance of the commercial bank.
“The CBN was not made aware of any report from the board indicting the managing director of any wrongdoing 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.”
“It is also curious to observe that the sudden removal of the MD/CEO was done about eight months to the expiration of his second tenure which is due on Dec. 31, 2021,” the letter added.
Mustafa noted that the removal of a sitting MD/CEO of a systemically important bank was not good “In light of the foregoing, you are required to 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 meantime, you are directed to desist forthwith from making any further public/media comments on the matter. Your comprehensive response on the foregoing should reach the Director, Banking Supervision Department, on or before 5p.m. on April 29, 2021,” he said.
The board chairman, said that Mr Shobo succeeds Mr Adeduntan who would be leaving the bank in accordance with the bank’s term limit for its chief executive after successfully leading the bank since January 2016.
“These decisions will take effect from today, April 28, 2021, we are proud to announce Gbenga Shobo as our new Managing Director/Chief Executive Officer. His appointment has proven our resilience of our succession planning mechanisms and the value we place on our long-standing corporate governance practices, which underpin the institution’s enduring sustainability and 127-year legacy.”
Incidentally, there are allegations in some quarters that the CBN was also unhappy with First Bank over its reluctance in handling issues related its one-time Chairman, Dr. Oba Otudeko who is the current Group Chairman of First Bank Holding Company.
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 expressed concern that First Bank has not complied with regulatory directives to divest its interest in Honey Well Flour Mills despite several reminders.
CBN Governor, Godwin Emefiele
The strongly-worded letter signed by the same 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.