FBN Holdings share price rises by 7.86% despite legal dispute with GHL

Despite an escalating legal dispute with General Hydrocarbons Limited (GHL), FBN Holdings recorded a 7.86% week-to-date (WTD) gain in its share price, closing at ₦30.20 for the week ending January 10, 2025.

This performance underscores the resilience of investor confidence, even as the controversy unfolds.

The ongoing conflict between FBN Holdings and GHL originates from a loan transaction initiated during the tenure of Oba Otudeko as chairman.

The deal tied to profits from Oil Mining License (OML) 120 was designed to reduce First Bank’s non-performing loans and minimize financial provisions in 2021. However, GHL has accused First Bank of failing to honor key terms of the agreement.

Adding to the friction, First Bank froze $225.8 million of GHL’s funds across various banks, a move GHL claims violates a prior court order. The Federal High Court in Lagos issued a Mareva injunction on December 30, 2024, freezing the funds, further escalating the legal battle. GHL, in response, has labeled the injunction unlawful and plans to challenge it.

The legal conflict has had ripple effects on GHL’s oil exploration and development activities under OML 120. Arbitration proceedings are ongoing, with mediators proposing significant changes to GHL’s leadership structure, including the appointment of new Chief Executive Officers (CEOs) and Chief Financial Officers (CFOs).

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First Bank has also suggested appointing an Independent Asset Manager under a new framework to oversee OML 120. However, GHL has rejected this proposal, perceiving it as an attempt by FBN to gain control of its assets and replace its management team.

Despite the challenges, FBN Holdings has shown a strong recovery trajectory. After opening 2024 at ₦23.55, the stock surged to ₦35.55 in the first quarter, fueled by bullish sentiment. However, regulatory uncertainties surrounding the Central Bank of Nigeria’s recapitalization mandate slowed the momentum, with the stock dropping to ₦23.90 by April 2024.

By July 2024, bearish sentiment deepened, driving the price to a low of ₦20.95. However, the stock rebounded in August, closing at ₦28.05 by December 2024 with a year-to-date gain of 19%.

This upward trend has continued into January 2025, with FBN Holdings closing at ₦30.20 on January 10, supported by robust trading volumes of 272 million shares for the month.

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Market analyst Samuel Olatunji commented on the stock’s resilience: “FBN Holdings’ performance reflects strong institutional confidence, despite the legal uncertainties. The market seems to be pricing in the bank’s long-term fundamentals rather than short-term challenges.”

Legal expert Barrister Tunde Adebayo weighed in on the ongoing dispute: “This case highlights the complexity of financial agreements tied to oil assets. Both parties have valid claims, but the prolonged litigation risks undermining operations and investor confidence in the sector.”

The legal battle between FBN Holdings and GHL remains unresolved, with both parties standing firm on their positions. While mediators push for a resolution, the dispute continues to delay critical oil exploration activities.

Despite these challenges, FBN Holdings’ stock performance demonstrates that the market remains optimistic about the bank’s ability to weather the storm, as investors await further developments in the high-stakes legal tussle.