Boardroom ‘’War’’ In FirstBank, CBN Moves In
There is an ongoing boardroom ”war” in FirstBank as the Bank has announced the appointment of Mr Gbenga Shobo as its Managing Director to replace Dr Adesola Adeduntan.
The board of First Bank Nigeria Limited may, however, face sanctions from the Central Bank of Nigeria, CBN, over the removal of Adeduntan as Managing Director/Chief Executive Officer and subsequent appointment of Shobo as replacement on Wednesday.
Already, the Central Bank of Nigeria, CBN, has queried the Bank for embarking on such a big decision without informing it and getting approval.
The apex bank in a letter after the news broke of the appointment on Wednesday queried the board of First Bank Nigeria Limited for embarking on such corporate decisions without its approval.
The CBN bank said the board’s move has “dire implications for the bank and also portends significant risks to the stability of the financial system.”
The central bank stated this in a letter dated April 28, 2021, signed by its Director, Banking Supervision, Mr. Haruna Mustafa, and addressed to the bank’s Chairman, Mrs. Ibukun Awosika.
CBN also demanded a comprehensive response on the matter from Awosika to be delivered to the banking sector regulator latest 5pm on Thursday (today).
The CBN noted with concern that the action was taken without due consultation with the regulatory authorities, especially given the systemic importance of First Bank as well as given that the tenure of Adeduntan was yet to expire.
“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.
“We are particularly concerned because the action is coming at a time the CBN has provided various regulatory forbearance 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.”
According to the central bank, the removal of a sitting MD/CEO of a systemically important bank, “that has been under regulatory forbearance for five to six 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.
“In light of the foregoing, you are required to explain why disciplinary action should not be taken against the Board for hastily removing the MD/CEO and failing to give prior notice to the CBN before announcing the management change in the media.
“In the meantime, you are directed to desist forthwith from making any further public/media comments on the matter. Your comprehensive response on the foregoing should reach the Director, Banking Supervision Department on or before 5pm on April 29, 2021,” it added.
