NewsMixed Reactions Trail Sack of First Bank’s Board, Reinstatement of Dethroned MD

Mixed Reactions Trail Sack of First Bank’s Board, Reinstatement of Dethroned MD

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BEVERLY HILLS, April 30, (THEWILL) – Members of Nigeria shareholders’ associations have expressed divergent views on the sudden dissolution of the boards of First Bank of Nigeria (FBN) Holdings Plc and First Bank Limited by the Central Bank of Nigeria (CBN).

Leaders of the organised investors’ groups who spoke to THEWILL also differed in the decision of the CBN to reinstate Dr Sola Adeduntan as managing director of First Bank Limited, twenty-four hours after the bank announced his removal and the appointment of Mr Gbenga Shobo as Adeduntan’s successor.

The National President, Progressive Shareholders Association of Nigeria, Mr Boniface Okezie, described the CBN’s action as inappropriate and setting a wrong precedent.

He argued that the CBN should have directed First Bank to reverse the appointment of Mr Shobo if it did not follow due process because the board has the authority to decide on who to retain or remove.

“The CBN has no right to dissolve the board of the Holding Company because it is a different entity from First Bank Limited which is a subsidiary of the Holco (Holdings Company).

“The board has to discharge its responsibility to the shareholders because there is no smoke without fire.

“If the board has strong reasons to remove the managing director after the AGM, there is nothing wrong about that because it is acting within its regulatory authority,” Okezie said in a telephone chat.

Mr Okezie further recalled that similar actions were taken by the CBN concerning other banks in the past which he recalled did not augur well for the continued operations of those banks.

He said the development led to the erosion of investors’ assets in the affected banks.

“No one is indispensable; Adeduntan was not the only one to be removed in the bank or within the industry; many have come and gone.

“What the CBN has done amounts to usurping the powers of the board; it has no powers to dissolve the board of the Group as this is likely to affect investors’ confidence in the bank.

“This will lead to a run on the bank and people will lose confidence in the Holco which is not good for an economy that is severely challenged,” Okezie said .

On her part, the National Co-ordinator, Pragmatic Shareholders Association of Nigeria (PSAN), Mrs Bisi Bakare, argued that the CBN had the right to dissolve the board of First Bank Limited but not that of FBN Holdings Plc.

She expressed surprise at the development which happened barely forty-eight hours after their last AGM of the bank.

“We are surprised at this development because we were all at the AGM on Tuesday and the board did not bring any matter against the MD to the notice of the shareholders.

“I can’t see the hurry in removing Adeduntan when he still has about eight months to serve.

“I believe he must have done something that did not please Oba Otudeko who is chairman (of FBNH Plc); but Oba Otudeko is not the owner of the bank.

“It is quite unfortunate because Adeduntan has turned that bank around after many years that the bank was just struggling.

“I support the dissolution of the board of First Bank Limited by the CBN, if there is a strong reason for that; but CBN has no right to dissolve the board of FBN Holdings because it is not part of the apex bank’s regulatory entity.

The Chairman, Ibadan Zone Shareholders Association, Mr. Eric Akindiro, stated that the CBN has the right to take the action it did, if in its wisdom the need exists for that. He declined further comment on the ground that he had not sufficiently followed the development.

A Lagos-based investment analyst who would not want his name published expressed surprise at the public reactions to the CBN action because, according to him, the apex bank must have acted in the public interest.

“The CBN must have seen what we do not see because something must have led to the decision to immediately dissolve the boards of the Group.

“Nigerians are full of greed; I suspect greed and injustice on the part of those running the affairs of the bank; the ripple effects are what we are now seeing.

“Capitalism has no friend; it strikes mercilessly if you attempt to stand on its way. Nigerian businessmen are capitalists to the core. With time, we shall know what led to this ‘tsunami’ at First Bank today”, he told THEWILL in a telephone chat on Thursday.

The board and management changes at the Nigeria’s premier financial services institution followed a series of corporate governance issues that led to the removal of Dr Adeduntan on Wednesday, April 28, about eight months to the end of his tenure, and twenty-four hours after the Group’s recent Annual General Meeting (AGM).

The CBN subsequently queried the Board of the First Bank for removing Dr. Adeduntan without regulatory approval.

The query was contained in a letter dated April 28, 2021 signed by the CBN Director, Banking Supervision, Mr Haruna Mustafa, and addressed to the bank’s Chairman, Mrs Ibukun Awosika.

“The removal of a sitting MD/CEO of a systemically important bank that has been under regulatory forbearance for five to six years without prior consultation and justifiable basis has dire implications for the bank and also portends significant risks to the stability of the financial system.

“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 CBN Governor, Godwin Emefiele in a television broadcast Thursday, announced the sack of the entire board of directors of FBN Holdings Plc and its subsidiary First Bank of Nigeria Ltd.

Mr Emefiele cited insider abuse, insider credit and breakdown of corporate governance as the reason behind the sacking of the board of FBN Holdings,

The CBN governor further announced the reinstatement of Dr Sola Adeduntan as the Managing Director of the interim Board after he was removed by the now sacked board of First Bank Plc.

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