Disgruntled Shareholders May Dismantle FBN Holdings Gains as Bank Gets Injunction Against General Hydrocarbons, ThisDay Owner Over $225m Indebtedness

…push falsehoods against Chairman Otedola

FBN Holdings is consolidating its risk management strategy as well as undoing the lax loan underwriting standards of the past leadership with a recent order of mareva injunction issued against the assets of General Hydrocarbons Limited and Nduka Obaigbena, the Publisher of This Day newspaper for a total claim of two hundred and twenty-five million, eight hundred and two thousand, three hundred and seventy-five dollars ($225,802,379.69).

Court documents seen by MoneyCentral shows that the order: “restrained all commercial banks in Nigeria from releasing or dealing in any manner with any monies and/or whatever assets due to the defendants in the case, including Mr. Obaigbena and General Hydrocarbons, with any of the Banks, wherever situate up to the Plaintiffs/Applicants total claims of $225.8 million being the indebtedness on the Defendaants account with the Plaintiffs/Applicants.”

The interim ORDER also restrained Obaigbena who is a Director in General Hydrocarbons from transferring or dissipating any interest in the assets of the company wherever located in Nigeria, movable or immovable, pending the determination of the Motion or Notice of General interlocutory injunction.

The order was issued by the presiding judge of the Federal High Court, Lagos on 30^th December, 2024 with the Plaintiffs Being First Bank of Nigeria Limited and FBN Quest Trustees Limited.

FBN Holdings improves risk management with Chairman Otedola’s leadership

FBN Holdings Plc beat profit estimates for the third-quarter (Q3) of 2024 as the lender continues to benefit from rising interest rates as well as digital income, which validates copious investment in the latest technology.

The lender led by its Chairman Femi Otedola uses the resources of shareholders in generating higher earnings that makes it easier to meet the minimum rate of returns required by equity owners.

For the first nine months through September 2024, FBN Holdings’ profit after tax (PAT) surged by 125.80 percent to N533.87 billion from N234.72 billion the previous year.

The Bank earned N873.93 billion in Net interest income (NII) — what it generates from lending minus what it pays for deposits — in the nine months through September, which is 132.70 percent higher than 2023’s N375.53 billion.

The return on average equity (ROAE) rose to 32.80 percent in September 2024, from 26.60 percent as at September 2023.

FBN Holdings one of Nigeria’s largest financial holding companies in terms of banking assets was for a long time best known for its value destruction, before the current Chairman Femi Otedola engineered an activist takeover of the firm to the chagrin of some other long term shareholders, who tried to resist the reform minded Otedola but were left licking their wounds.

Over one 10-year period pre the Otedola era, FBN Holdings stock had crashed by 91% between a rights offer at N33 per share mostly bought by retail investors in 2007 and lows of N2.96 per share hit in March of 2017.

Today, FBN Holdings stock trades at a N31 per share. The stock was up 19.1 percent in 2024 alone.

In 2024, Otedola emerged the Chairman Board of Directors of FBN Holdings.

The previous Chairman of First Bank, Ibukun Awosika and Obafemi Otudeko, the chairman of FBN Holdings were both removed from their positions by the Central Bank of Nigeria (CBN) in April 2021.

Insider related loans at FBN Holdings had been problematic, according to the CBN.

“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 Holdings lacked the capacity to recapitalize the bank to minimal requirements,” the CBN said in 2021.

FBNH Holdings asset quality was a key concern for investors during the Otudeko era, with the Bank’s gross nonperforming loan (NPL) ratio escalating to 24.4% at Full Year (FY) 2016, 22.8% in FY 2017, and 24.7% in FY 2018.

This was largely driven by rising delinquent loans, particularly within the troubled oil and gas sector, where the bank was highly exposed.

FBN Holdings has seen a stunning reversal in its fortunes over the past 3 years. Profitability has surged while return on equity (ROE), a measure of how efficient a corporation is at generating profit from money that investors have put into the business, has risen to more a respectable level as at December 2023, to the delight of investors.

FBN Holdings return on equity surged tenfold from an embarrassing 2.1% in 2016 to 21.9% in 2023.

Disgruntled shareholders may dismantle recent FBN Holdings Gains

Some of the disgruntled former majority shareholders of FBN Holdings may be seeking to turn around the hands of time with recent campaigns of calumny directed at the Chairman of the Bank Femi Otedola.

This is happening as the bank is moving to raise billions of naira in capital to comply with the CBN new capital requirements as well as invest for future growth.

Trading in Rights Issue of 5,982,548,799 Ordinary Shares of 50 Kobo each at ₦25.00 per share in FBN Holdings PLC late last year. The rights Issue is expected to raise N150 billion.

The primary use of proceeds raised is to enable the company recapitalize its banking subsidiaries, First Bank of Nigeria Limited by injecting fresh equity (i.e. Tier 1 Capital) into the banks to shore up their Capital Adequacy Ratios (CAR).

On completion of the Rights Issue, assuming all provisionally allotted Ordinary Shares are fully taken up, the Company will have a market capitalization of N1.047 trillion.

“By supporting the Rights Issue through accepting your rights, the Company will be well positioned to achieve its strategic objectives and to deliver improved returned to all stakeholders, going forward. I therefore enjoin you to carefully consider this investment opportunity and take up your rights, in full, as the Company continues to harness imminent opportunities and deliver on its promises,” Olufemi Otedola, CON, Chairman of FBN Holdings said.

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