The Costly Board Crisis at First Bank

But for the timely intervention of the Central Bank for Nigeria in the avoidable board squabbles at First Bank of Nigeria, the relative confidence and stability observed in the banking system in recent times would have been seriously shaken. James Emejo writes

It all began with the news that the erstwhile Board of Directors of First Bank of Nigeria Limited, which was chaired by Mrs. Ibukun Awosika, had approved the appointment of Mr. Gbenga Shobo to succeed Mr. Adesola Adeduntan as the new Managing Director/Chief Executive of the bank.

Adeduntan was ousted after leading the bank since January 2016, but when still within the term limit of his tenure, which is due to expire in December this year.

The appointment of a new chief executive was immediately celebrated by the public and depositors, who thought the move was in tandem with good corporate governance of FBN. But little did anyone know the underbelly issues that led to the change, until the CBN, the apex regulatory institution in the financial industry, interpreted the change as a sort of palace coup to oust him.

The apex bank, immediately issued the board a rather damning query over the unpopular leadership manoeuvres.

The content of the query apparently deflated the board’s ego and exposed the bank’s frailties.

Essentially, the CBN had raised stern objection to the removal of Adeduntan, as his tenure ought to elapse in December – and not getting the requisite approval from the apex bank prior to the board change, further violated laid down rules.

In the CBN’s correspondence to the board, it further argued that, given that FBN had been on a sort of life support in term of regulatory forbearances and other sorts of financial and regulatory support since 2016, it was particularly wrong for the former board to attempt any board changes without with the knowledge of the regulatory body.

While the board was yet to offer explanation for its action, but rather perceived the inquisition by the CBN as unnecessarily meddling in its internal issues – the apex bank, understanding the consequences of the ensuing development on the financial system- especially as this could cause among other things, a run on FBN, decided to wield the big stick to save the situation.

The CBN would not fold its arms and allow things to spiral out of control given that FBN is one of the systemically important banks whose action could rock the boat and destabilise the country’s financial landscape.

On Thursday, however, the CBN removed all directors of FBN and those of its parent company, FBN Holdings Plc, with immediate effect, to stave off a boardroom crisis that had led to the retirement of Adeduntan on Wednesday.

The CBN Governor, Mr. Godwin Emefiele, at a press conference in Abuja, further announced the reinstatement of Adeduntan.

He said the apex bank took the actions in order to preserve the stability of the bank and protect minority shareholders and depositors.

He also announced the appointment of a former Minister of State for Finance, Mr. Remi Babalola, who replaced Mr. Oba Otudeko as Chairman of FBN Holdings.

Otudeko had been chairman of First Bank for 12 years before assuming the position of Chairman Holdings Company in 2010.

Also in the sweeping changes, the CBN also appointed other new directors on the FBN Holdings’ board including Fatade Oluwole, Kofo Dosekun, Remi Lasaki, Alimi Abdulrasaq, Ahmed Modibbo, Khalifa Imam and Peter Aliogo.

Mr. UK Eke retains his position as Managing Director of FBN Holdings.

First Bank Nigeria Limited now has as Chairman, Tunde Hassan-Odukale, who replaced Mrs. Ibukun Awosika.

Other board members are Tokunbo Martins, Uche Nwokedi, Adekunle Sonola, Isioma Ogodazi, Ebenezer Olufowose, Ishaya Elijah B. Dodo and Adeduntan.

Gbenga Shobo, deputy managing director; and Remi Oni and Abdullahi Ibrahim, executive directors, are members of the reconstituted board.

The CBN had on Wednesday queried the…