Nigeria’s apex bank, the Central Bank of Nigeria (CBN) and the First Bank Nigeria Limited appear to be heading on a collision course following the CBN’s query yesterday of the board of First Bank Nigeria Limited over the removal of the Managing Director/Chief Executive of the bank, Dr. Adesola Adeduntan.
The CBN said in the query that the action was without regulatory approval adding that the move has “dire implications for the bank and also portends significant risks to the stability of the financial system,” according to a report by Thisday.
The apex bank made its position known in a letter dated April 28, 2021, and 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 5 pm Thursday (today).
The Board of Directors of First Bank had earlier on Wednesday announced the appointment of Mr. Gbenga Shobo as the new Managing Director/Chief Executive Officer (CEO) of the bank.
However, in a swift reaction, 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 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 Central Bank noted that 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 5 pm on April 29, 2021,” it added.
Recall that the Board of Directors of First Bank had earlier on Wednesday announced that the appointment of Shobo, its Deputy Managing Director as its Managing Director/Chief Executive Officer (CEO) took immediate effect.
According to a statement, the appointment was subject to regulatory approval.