Moody’s Reviews First Bank For Downgrade Over Board Sack.
Ratings agency Moody’s is to assess First Bank Nigeria following the sack of its board if directors and that of its parent body and the appointment of new directors last week by the Central Bank of Nigeria(CBN).
The agency in a statement Thursday said the review will borders on alleged corporate governance issues that have the bank on the spot.
“The review will focus primarily on an assessment of evolving governance considerations at the bank, specifically, corporate governance developments”, the agency said in a statement.
The CBN last Thursday wielded the big axe to nip the crisis at the First Bank by sacking the entire members of the Board of Directors of First Bank Holdings Plc and appointing Remi Babalola, former Executive Director to lead the bank out of the current situation that engulfed it for two days.
The apex bank intervention led to the appointment of Babalola, a former Finance minister who by the appointment has now staged a comeback to familiar terrain,.
He takes over the chairmanship of the FBN Holding, a position that was hitherto held by Oba Otudeko, the promoter of Honeywell Flours.
Tunde Hassan-Odukale Is also appointed the new chairman of the bank, replacing Ibukun Awosika in the new restructuring of the bank by the apex bank.
The CBN Governor, Godwin Emefiele also announced other members of the board of the Holding Company to include Fatade Abiodun Oluwole, Kofo Dosekun, Remi Lasaki, Alimi Abdulrasaq, Ahmed Modibbo, Khalifa Imam, Peter Aliogo and U.K Eke as the Managing Director
The new board members on the Holding Company replaced Oye Hassan-Odukale, Non-Executive Director, Chidi Anya, Non-Executive Director, Hamza Wuro Bokki, Non-Executive Director, Debola Osibogun, Non-Executive Director, Omatseyin Ayida, Non-Executive Director, Adesola Adeduntan, and Non-Executive Director, Cecilia Akintomide, Independent Non-Executive Director.
Sola Adeduntan, who survived the initial removal, retained his position as the managing director of the First Bank while members of the bank’s board include, Tokunbo Martins, Uche Nwokedi, Adekunle Sonola Isioma Ogodazi, Ebenezer Olufowose, Ishaya Elijah B. Dodo, Gbenga Shobo – Deputy Managing Director, Remi Oni – Executive Director, and Abdullahi Ibrahim – Executive Directo
Those removed from the board of First Bank Limited include the Chairman, Ibukun Awosika,, Abdullahi Ibrahim,, Lateef Akande Bakare, Olusola A. Owuru, Ijeoma E. Jidenma, Lawal Kankia Ibrahim, Obafemi, Adedamola Otudeko, Ado Yakubu Wanka and Oluwande Muoyo
The new structure came following CBN’s rejection of the ouster of Adesola Adeduntan and the subsequent appointment of Gbenga Shobo as the new Managing Director without regulatory approvals.
“Ordinarily the board is vested with the authority to make changes in the management team subject to CBN approval. However, the CBN considers itself a key stakeholder in management changes involving FBN due to the forbearances and close monitoring by the Bank over the last 5 years aimed at stemming the slide in the going concern status of the bank.
It was therefore surprising for the CBN to learn through media reports that the board of directors of FBN, a systemically important bank under a 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 FBN sends 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 queried the board of directors on the unfortunate developments at the bank.
FBN is one of the systemically important banks in the Nigerian banking sector given its historical significance, balance sheet size, large customer base and high level of interconnectedness with other financial service providers, amongst others.
According to CBN last assessment, FBN has over 31 million customers, with a deposit base of N4.2 trillion shareholders funds of N618 billion and Nigerian Interbank Settlement System NIBSS instant payment (NIP) processing capacity of 22 per cent of the industry.
The bank is thus seen by the apex regulator as not only to protect the minority shareholders that have no voice to air their views but also important to protect the over 31m customers of the bank who see FBN as a safe haven for their hard-earned savings.
The bank maintained healthy operations up until the 2016 financial year when the CBN’s target examination revealed that the bank was in grave financial condition with its capital adequacy ratio (CAR) and non-performing loans ratio (NPL) substantially breaching acceptable prudential standards.
These problems arose from bad credit decisions, significant and non-performing insider loans, and poor corporate governance practices.
The shareholders of the bank and FBN Holding Plc also lacked the capacity to recapitalize the bank to minimum requirements. These conclusions arose from various entreaties from the CBN that the bank should recapitalise.
“The CBN stepped in to stabilize the bank in its quest to maintain financial stability, especially given FBN’s systemic importance as enumerated earlier, according to Emefiele who stated that regulatory action taken by the apex bank in this regard included. under the CBN’s supervision the appointment of a new Managing Director in January 2016.
FBN Holding in a bid to restore investors and customers’ confidence said it was cooperating with the CBN and other regulators to ensure that full operation at the bank continues.
The lender assured that it was in full compliance with the apex bank, adding that the operations of the Bank and the Holdco are not hampered or hindered and are in fact running smoothly.
“We wish to confirm that the Bank and the Holding Company are both cooperating with the Central Bank of Nigeria and other regulators while the operations of the Bank and the Holdco are not hampered or hindered and are in fact running smoothly.
“We wish to reassure the investing public, our esteemed customers and other stakeholders in the words with which the Governor of the Central Bank of Nigeria
concluded his press conference on 29 April 2021.
The CBN hereby reassures the depositors, creditors and other stakeholders of the bank of its commitment to ensuring
the stability of the financial system.
There is therefore no cause for panic amongst the banking public, given that the actions being taken are meant to strengthen the bank
and position it as a banking industry giant.”But it appears Moody’s is not getting any of that, as it said the downgrade review process would focus on how the bank evolves with its Corporate governance. .
“The review will focus primarily on an assessment of evolving governance considerations at First Bank, specifically corporate governance developments,” Moody’s said in a statement.”
Meanwhile, amidst the Moody’s threat to downgrade First Bank rating, shares of the Bank rose Thursday on the Nigerian Stock market, albeit marginally.
First Bank’s trading activities on the Nigerian Exchange Limited (NGX) show that its share price climbed by 0.68 percent, when its share price jumped to n7.35 Kobo from N7.3 Kobo per share.
The Bank’s market capitalisation also appreciated by N1.794 billion to close at N263.830 billion up from N262.035 billion, representing a 0.68 percent gain. While it’s outstanding shares are at 35,895,292,792.00.
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