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Why CBN Moved Against First Bank Directors, Otudeko

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The need to protect over 31 million customers of First Bank of Nigeria and its minority shareholders are some of the reasons why the Central Bank of Nigeria (CBN) moved to oust the former board of the holding company FBN Holdings and the bank itself (First Bank of Nigeria).

The CBN Governor Godwin Emefiele made this known in a press conference yesterday given to address some of the issues thrown up by the abrupt removal of the Adesola Adeduntan as CEO of First Bank as announced by the bank this week.

“The CBN considers itself a key stakeholder in management changes involving First Bank of Nigeria, due to the forbearances and close monitoring by the bank over the past 5 years aimed at stemming the slide in the growing concern status of First Bank,” Emefiele said.

Emefiele said it was surprising for the CBN to learn through media reports that the board of directors of First Bank of Nigeria limited 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 First Bank of Nigeria sent 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 decided to query the board of directors on the unfortunate development at the bank, according to Emefiele.

FBN Holdings is one of the systemically important bank in Nigeria, given its historical significance having been established in 1894, large customer base and high interconnectedness with other financial service providers.

First Bank of Nigeria had over 31 million customers, deposit base of over N4.2 trillion, shareholder funds N618 billion and NIBBS instant payment processing capacity of 22 percent of the industry.

“It was important to protect the minority shareholders who have no voice and over 31 million customers who see First Bank as a safe haven for their hard earned savings.”

Oba Otudeko angle

The CBN Governor Emefiele said he spoke with Oba Otudeko a major shareholder controlling about 10 percent of First Bank, not to interfere with the running of the bank by engineering the removal of its CEO Sola Adeduntan, which was rebuffed by Otudeko.

Otudeko also refused to pick the calls of 2 other major shareholders of the Bank, according to Emefiele.

“We will not allow a shareholder who feels that he cannot subject himself to regulatory control and authority to remain as a Director of the bank. We didn’t have any choice but to take this decision,” Emefiele said.

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