CBN fires all directors of First Bank Holdings, reinstates Sola Adeduntan as MD

THE Central Bank of Nigeria (CBN) has issued a query to the Board of First Bank Ltd, over the removal of its CEO.

The Board of Directors of First Bank of Nigeria Limited, had on Wednesday revealed that it had appointed Gbenga Shobo as its Managing Director/Chief Executive Officer (CEO). The bank’s Chairman, Ibukun Awosika, had disclosed the appointment in a statement.

A query letter from the central bank to First Bank however expressed concern that the appointment of the new MD/CEO, Shobo, was done without the approval of the apex bank.

The letter read: “The attention of the Central Bank of Nigeria (CBN) has been drawn to media reports that the Board of Directors has approved the removal of the current Managing Director of the bank, Dr. Sola Adeduntan, and appointed a successor to replace him. The CBN notes with concern that the action was taken without due consultation with the regulatory authorities, especially given the systemic importance of First Bank Ltd.”

The Apex bank also claimed that the tenure of the removed MD of the bank, Mr. Adedutan, was yet to expire and that it unaware of any misconduct of the former MD, hence, the bank had no justification to remove him.

“Given that the tenure of Dr. Adeduntan is yet to expire and 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.”

Reports have it that First Bank has a maximum of 6 years tenure for its MDs in line with its succession plans. FBN also claimed the CBN is meddling in its internal affairs as the removal of the MD is in line with its succession plans and also does not exceed CBNs maximum of 10 years.

The CBN however stated, in the leaked letter, that it had provided First Bank with “regulatory forbearance” which can be interpreted as a bailout subliminally indicating that it has a say in the bank’s operations.

“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. The removal of a sitting MD/CEO of a systemically important bank that has been under regulatory forbearance for 5 to 6 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.”

This face-off comes on the heels of the CBN’s ultimatum to First Bank to call in a credit facility extended to Honeywell Flour Mills.