The Central Bank of Nigeria (CBN) had in an official correspondence with the former Chairman of the First Bank Board of Directors, Ibukun Awosika, revealed the reason for its intervention in the first Bank Plc crisis, and why the apex bank fired the Chairman of the Board of First Bank Holdings, Oba Otudeko, and other board members.
The CBN in a correspondence with the First Bank Board Chairman, Ibukun Awosika, dated April 26, 2021, disclosed that the board of the bank ignored several reminders on the demand for explanation for not complying with regulatory rules in divesting the firm’s interests in Honeywell Four Mills, owned by Otudeko. The CBN, accordingly, nullified the deals and ordered immediate repayment of the loan.
The CBN, in addition, expressed dissatisfaction with the inability of the board to resolve the prolonged divestment from Bharti Airtel Nigeria Limited, Otudeko served as chairman.
The CBN further expressed apprehension that four years after, First Bank failed to perfect lien on Otudeko shares in FBN Holding Company which provided collateral in the restructured credit facilities for Honeywell Flour Mills, in contradiction to pre-existing conditions for the restructuring of the company’s credit facility.
accordingly, the CBN directed that the credit facility be repaid to the bank within 48 hours. The bank had cautioned that regulatory actions would be taken against those who approved the facility without delay, adding that both the borrower and the bank would be sanctioned.
“Given the bank’s failure to perfect the pledge and satisfy condition for regulatory approval, the restructuring has this been invalidated and the credit facilities now payable immediately.
“Consequently, the company is required to fully repay its obligations to the bank within 48 hours failing which the CBN will take appropriate regulatory measures against the insider borrower and the bank.
“Accordingly, you are required to divest the equity investments in all non-permissible entities such as Honeywell Flour Mills and Bharti Airtel Nigeria Ltd within 90 days,” the CBN had declared in a statement by CBN Director of Banking Supervision, Haruna Mustafa.
The CBN had earlier annulled the sack of the Managing Director, Sola Adeduntan, by the board led by Awosika, insisting that the action did not comply with due process.
The CBN insisted that its intervention is to protect the 31 million customers of First Bank of Nigeria Plc, as well as the minority shareholders.