The Central Bank of Nigeria may reinstate ousted Dr Sola Adeduntan as MD/CEO of First Bank Ltd as the controversy surrounding his removal rages on.
Multiple sources with knowledge of the matter informed Nairametrics that the Godwin Emefiele led central bank is pressuring the bank behind the scenes to reinstate Adeduntan against the wishes of the Board of Directors of the bank. Another reliable source informed Nairametrics that the apex bank may issue a letter to First Bank Ltd., reinstating Adeduntan if the bank does not reverse his removal.
Nairametrics reported earlier that the Central Bank of Nigeria had issued the Board of First Bank Ltd, one of Nigeria’s oldest banks a query for the removal of its CEO citing failure of the bank to obtain its approval.
“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 CBN also claimed that the tenure of Mr Adedutan was yet to expire (bank MD’s have a maximum 10 years) and that they were also not aware of any misconduct of the former MD and as such there was no justification for his removal.
However, sources in First Bank informed Nairametrics that the bank has a policy of replacing its MD/CEO’s every 6 years and maintained it did not break any CBN rules. The bank replaced Dr Adeduntan with Gbenga Shobo (58 years in June) as the new MD/CEO in a press release. Shobo was before now the former Deputy Managing Director of the Bank.
It is unclear how this matter will be settled however several analysts’ opinions obtained by Nairametrics suggest the current impasse is not unconnected to an earlier letter sent to the bank by the CBN regarding the loan of Director and Shareholder of the bank Oba Otudeko.
As the banking sector regulator, the CBN approves appointments of Bank MD/CEOs but it is unprecedented for the CBN to interfere with matters of a bank like First Bank, the oldest in the country. However, the CBN has in the past removed MD/CEOs of banks and has gone as far as firing the entireBoard of the banks. But such cases were often preceded by a crisis in the bank and followed by the nationalization of the bank. First Bank is neither in a crisis nor being nationalized.
This is a power play between the CBN and Oba Otudeko – period. It has nothing to do with protecting minority shareholders or depositors. The stronger case from CBN’s point of view is about insider dealings – the web of entanglements between the bank, it’s larger than life Board director Oba Otudeko and his Companies-Honeywell. But the CBN says it has been closely monitoring the bank for the past five years – how come it hasn’t been able to enforce compliance on insider requirements for all of five years, if it is such an important stakeholder as it claims? It even makes the positions of Uk Eke and Adeduntan horribly untenable. These two individuals were at the helm of affairs of FBNH and First Bank when the insider infractions took place. Isn’t adhering to key regulatory requirements a key performance metric of CEOs of financial institutions? They should have gone with the other directors of the Bank – except the CBN has some other information about these two men that it is not disclosing to the public. Otherwise, the apex regulator is unwittingly contradicting itself. The CBN, says it is concerned about the stability of the financial sector and that First Bank is systemically important to that sector. Doesn’t it know that by this action, it is sending a dangerous signal to the market on how “truly” independent Nigerian financial institutions are especially with respect to their internal governance systems? First Bank has been the gold standard in succession planning over the years – a testament to this is that even Adeduntan’s proposed replacement was the Deputy Managing Director – the Bank has always had a “deep bench”. The Nigerian financial sector is already overburdened with a very high level of risk, regulatory risk from an overbearing Central Bank is one more risk that the sector can ill afford. Caveat: these comments are informed solely by logical reasoning and publicly available information only.