Nigerian Regulator Ousts First Bank’s Board for Hiring New CEO
(Bloomberg) -- Nigeria’s central bank removed the boards of FBN Holdings Plc and its main subsidiary First Bank Nigeria Ltd. for appointing a new chief executive officer without regulatory approval.
The Central Bank of Nigeria ousted Gbenga Shobo as CEO of First Bank Nigeria and reinstated former head, Adesola Adeduntan, a day after it queried the appointment, Governor Godwin Emefiele said at a media briefing on Thursday. FBN Holdings shares were unchanged at 6.90 naira as of 2:22 p.m. in Lagos on Friday, after plunging as much as 9.4%.
The central bank’s first ouster of a bank’s board since 2016 is aimed at protecting minority shareholders and customers, according to Emefiele. First Bank is considered a systemically important bank and has been supported by the regulator to help it reduce its bad loans. The lender’s delinquent debt surged to 24% in 2016.
The central bank is trying to ensure the stability of the bank, Ayodeji Ebo, an analyst at Chapel Hill Denham said by phone from Lagos. “If there is any problem, it will not just affect the bank but other organizations in the financial system.”
The regulator decided to reinstate Adeduntan because it has worked with him since 2016 to restore the bank to a healthy position after it accumulated bad loans that threatened its existence, Emefiele said. It also named Remi Babalola as Chairman of FBN Holdings and Tunde Odukola as the chairman of the banking subsidiary.
First Bank, Nigeria’s oldest lender and the third-largest by assets, has over 31 million customers, deposits of 4.2 trillion naira ($10.3 billion) and a 22% share of the country’s instant payments processing capacity, Emefiele said.
Adeduntan, who was due to retire in December this year, was forced out on Wednesday against the wishes of the central bank, which warned the board it would take disciplinary action if the move wasn’t explained.
The ousted chairman of FBN Holdings, Oba Otudeko, rejected an appeal from the central bank not to let go Adeduntan, Emefiele said. “We will not allow a shareholder who feels he will not subject himself to regulatory control and authority to remain as a director of the bank,” he said.
Read: Nigerian President Signs Amended Banking Bill Into Law
Under a new banking act, the central bank has the power to acquire the shares of any failing lender to the level that guarantees its control of the bank.
The board tussle could slowdown the bank’s recovery in recent years. First Bank’s bad loan ratio improved to 7.7% last year from more than 20% in 2018, following the restructuring and write-offs of corporate debts. The lender’s capital adequacy ratio, which has hovered around the regulator’s 15% threshold improved to 17% in 2020 from 15.5% the year earlier.
First Bank’s operations have not been hampered or hindered by the central bank’s actions, Seye Kosoko, company secretary said in a statement Friday.
“We wish to confirm that the bank and the holding company are both cooperating with the central bank and other regulators,” he said.
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