CBN Queries First Bank As CEO, Adesola Adeduntan Is ‘Purportedly Forced Out"

By Mod2   2 years ago   182
Business - Top Stories

13464692_4fd2498ccbn_jpeg5924984f207a5113b30baff12a8759e6

The Central Bank of Nigeria (CBN) yesterday queried the board of First Bank Nigeria Limited over the removal of the Managing Director/Chief Executive of the bank, Dr. Adesola Adeduntan, saying the action was without regulatory approval. The apex bank said the board’s move has “dire implications for the bank and also portends significant risks to the stability of the financial system.”

The central bank stated this in a letter dated April 28, 2021, signed by its Director, Banking Supervision, Mr. Haruna Mustafa, and addressed to the bank’s Chairman, Mrs. Ibukun Awosika, a copy of which was obtained by THISDAY.

CBN also demanded a comprehensive response on the matter from Awosika to be delivered to the banking sector regulator latest 5pm today.


The Board of Directors of First Bank had earlier yesterday announced the appointment of Mr. Gbenga Shobo as the new Managing Director/Chief Executive Officer (CEO).

But in a swift reaction, the CBN noted with concern that the action was taken without due consultation with the regulatory authorities, especially given the systemic importance of First Bank as well as given that the tenure of Adeduntan was yet to expire.

“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.


“It is also curious to observe that the sudden removal of the MD/CEO was done about eight months to the expiry of his second tenure, which is due on December 31, 2021.”

According to the central bank, 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 5pm on April 29, 2021,” it added.

Meanwhile, the banking sector regulator in another letter also signed by Mustafa, titled: “Re: Audited FIRS Accounts for the Financial Year Ended December 31, 2020,” revealed that the bank was yet to divest its interest in HoneyWell Flour Mills, Barti Airtel and other non-permissible interest.

The Chairman of FBN Holdings, the holding company of First Bank Nigeria Limited, Oba Otudeko is also the Chairman of Honey Well. He used to be the Chairman of Barti Airtel.

However, the CBN in the letter stated: “We are concerned that the bank has not complied with regulatory directives to divest its interest in Honey Well Flour Mills despite several reminders. We further noted that after four years the bank is yet to perfect its lien on the shares of Mr. Oba Otudeko in FBN Holdco, which collateralised 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 conditions for regulatory approval, the restructuring has thus been invalidated and the credit facilities now payable immediately.”

Consequently, the central bank has requested that HoneyWell, “ fully repays its obligations to the bank within 48 hours failing which the CBN will take appropriate regulatory measures against the insider borrower and the bank.”

It added: “Furthermore, the Bank notes the untenable delay in resolving the long outstanding divestment from Bharti Airtel Nigeria Ltd in line with extant regulations of the CBN. “Accordingly, you are required to divest the equity investments in all non-permissible entities such as Honey Well Flour Mills and Bharti Airtel Nigeria Limited within 90 days. Please you are to forward evidence of compliance in accordance with the timelines above to the Director of Banking Supervision.”

[NewsNaira]


Share this article!


Login to comment and earn


Hmm is good for him


(Quote) (Likes)
Emily Otuedon
2 years ago

OK. This issue should be sorted out 


(Quote) (Likes)

Waxcbmppmboywwixif


(Quote) (Likes)
Edem Friday
2 years ago

Hehs juge hgsj


(Quote) (Likes)
Emily Otuedon
2 years ago

Just wake up one day and your job is gone. Just like that


(Quote) (Likes)