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Financial Services

Former First Bank Chairman, Ibukun Awosika, reacts to sack of board by CBN

Awosika insists that the board acted in the best interest of the bank in its decisions, with great plans for the future.

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Ibukun Awosika

The immediate past Chairman of First Bank of Nigeria Ltd, Mrs Ibukun Awosika, has reacted to the sack of the board of directors of the bank by the Central Bank of Nigeria (CBN) over bad loans, corporate governance issues and others.

She insisted that the board acted in the best interest of the bank in its decisions adding that they had great plans and aspirations for where the bank could go in the near future, building on all the work that had already been done in the over 5 years since she became Chairman of the bank.

The reaction is contained in a statement issued by Awosika on her Instagram page on Friday, April 30, 2021.

While going through her sojourn on the board of First Bank and its subsidiaries, Awosika said, “I have always acted in honour and integrity with the utmost interest of the institution, all our stakeholders and the Nation.”

The statement from Awosika reads, “In October 2010, I was appointed to join the board of First Bank of Nigeria.

A few months later, I was appointed to chair the board of its startup FBN Life Insurance Limited (a joint venture with Sanlam of South Africa). As its pioneer Chairman, I had the privilege of working with a strong management team led by Val Ojumah.

Together with the rest of our team, we built a company that became profitable in twenty-four months and continues to be so.

In early 2013, I was moved from FBN Life Insurance Ltd, to assume the chairmanship of FBN Capital working with a brilliant team led by Kayode Akinkugbe as the Managing Director.

We worked hard to build the institution, bought Kakawa Discount House which I was again asked by the Group to Chair. We eventually merged the companies to create the FBN quest Merchant Bank Group, which I chaired until my appointment as Chairman of First Bank of Nigeria on January 1st 2016.

For over five years, I have worked with a dedicated team of board and management, with the support of  Central Bank of Nigeria to rebuild and restructure the institution for its future. This included cleaning up non-performing loans, establishing good operational governance systems and processes, building controls and an effective and robust risk management system.

I am confident we have brought First Bank of Nigeria to a place where it is more than able to deliver utmost value to its stakeholders and the nation at large.

As a board, we acted in what we clearly believed to be in the best interest of the bank and we had great plans and aspirations for where the bank could go in its future, building on all the work that has already been done in the last five plus years.

Without a shadow of doubt, I will unequivocally state that I have always acted in honour and integrity with the utmost interest of the institution, all our stakeholders and the Nation.”

In case you missed it

  • It can be recalled that 2 days ago, the CBN Governor, Godwin Emefiele, in a televised broadcast, announced the sack of the entire board of directors of FBN Holdings Plc and its subsidiary First Bank of Nigeria Ltd, citing insider abuse, insider credit and breakdown of corporate governance as the reason behind the action.
  • The CBN subsequently reinstated the removed Managing Director of the bank, Dr Sola Adeduntan, who was eased out by the board before the end of his tenure and without consultation with the apex bank.

Chike Olisah is a graduate of accountancy with over 15 years working experience in the financial service sector. He has worked in research and marketing departments of three top commercial banks. Chike is a senior member of the Nairametrics Editorial Team. You may contact him via his email- [email protected]

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    Financial Services

    Ratings agency, Moody’s reveals it is reviewing First Bank’s ratings

    Moody’s explained why it might downgrade First Bank’s ratings.

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    Moody’s Ratings agency said on Thursday that it has put First Bank of Nigeria on review for a downgrade after the central bank sacked the board of directors and replaced them with new directors.

    Moody’s made this statement in a report titled ‘Removal of Non-Executive Board Members Highlights Governance Shortcomings.’

    In a quote, Moody’s said:

    “Moody’s Investors Service, (“Moody’s”) has today placed all long-term ratings and assessments of First Bank of Nigeria Limited (First Bank) on review for downgrade. The review will focus primarily on an assessment of evolving governance considerations at First Bank, specifically corporate governance developments. The rating action follows the dissolution of First Bank’s board by the Central Bank of Nigeria (CBN), the bank’s primary regulator, on 29 April 2021. As a result of this action by the CBN, all the non-executive directors were removed while the executive management remained in place.”

    The Governor of the Central Bank of Nigeria, Godwin Emefiele, had last week announced the sack of the entire board of directors of FBN Holdings Plc and its subsidiary, First Bank of Nigeria Ltd following the initial removal of its MD/CEO Dr Sola Adeduntan. Following his sacking of the board, he set up a new board for the bank holding company and its subsidiary and also reinstated Adeduntan as MD/CEO.

    Moody’s mentioned that the regulatory actions demanded of First Bank by the CBN introduces a clould of uncertainty over the outlook of the bank. For example, the CBN had asked the bank to divest from its holdings in two listed companies while also recovering its loans from one of them.

    “The review for possible downgrade reflects the rating agency’s view that the removal of all non-executive directors of the bank’s board by the regulator demonstrates corporate governance shortcomings and weaknesses in board oversight. The bank also needs to implement regulatory directives concerning the resolutions of loans to, and shareholding in non-banking related parties, which reportedly had not been executed in the recent past.

    Moody’s notes that the outcomes of these developments are uncertain at this point, and the final and long-term governance, reputational and financial implications of the events for First Bank are also unclear.”

    The central bank directive sacking the board of the bank also retained its executive management perhaps suggesting that the CBN had confidence in the ability of the MD and his team to manage the bank. Moody’s also noted this in its briefing.

    “While the bank’s executive management team remained the same, the rating agency believes these developments could distract management’s focus on implementing the bank’s strategic plan and road to recovery. First Bank management’s immediate key target was to reduce nonperforming loans (NPLs) to levels comparable with domestic peers. The rating agency recognises that, in the context of asset risks, the bank took steps to reduce its stock of problem loans, with its reported NPL ratio falling to 7.7% at year-end 2020 from 25.9% in 2018.”

    Will Moody’s downgrade First Bank?

    The rating agency explained that the decision to downgrade will depend on how strong the bank’s corporate governance structure is and whether the CBN will impose additional sanctions. If any of these crystallizes, it could downgrade its ratings.

    “The bank’s long-term deposit ratings can be downgraded if flaws in the bank’s governance systems exist, and if the CBN imposes additional sanctions on the bank, including, but not limited to, conditions to address any vulnerabilities that may be discovered. Financial output that is less than anticipated could also result in a rating downgrade.”

    Moody’s, however, poured water on any optimism around a rating upgrade.

    Given the review for downgrade and the pessimistic outlook on the government of Nigeria, there is a slim chance that First Bank’s ratings will be upgraded. Stronger solvency progress than currently reflected in the ratings, combined with a stabilization of the sovereign outlook, could result in the outlook being stabilized.

    Why is rating important?

    Corporate Organizations desire positive ratings because of the effect it has on their ability to raise capital as well as the cost of capital. A high credit rating typically attracts positive investor sentiments helping organizations tap the debt and equity markets, especially from institutional investors.

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    Business

    Insurance companies paid N4 billion in claims after EndSARS protests – NIA

    The NIA chief assured that some insurance operators were still working to settle genuine claims as most claims from insured businesses had been paid.

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    Insurance companies paid N4 billion in claims after EndSARS protests - NIA

    The Nigerian Insurers Association (NIA) says Insurance companies paid N4 billion in claims to over 2000 businesses affected by the aftermath of the EndSARS protest after hoodlums took to the streets.

    This was disclosed by Mr Ganiyu Musa, Chairman, NIA, on Thursday in Lagos.

    The NIA chief assured that some Insurances operators were still working to settle genuine claims as most claims from insured businesses had been paid.

    READ: Marginal oilfield: Bid winners allowed to make payments in naira – Minister

    “The number of insured businesses that were affected at the last count was about 2,000 insured loss and the industry has settled N4 billion claims out of N4.5 billion in respect of the #EndSARS protests.

    Once they are documented and completed, we have the commitment of our members that the claims will be paid timely,” he said.

    He added that the association would continue ensuring members pay genuine claims to clients.

    What you should know

    Recall Speaker of the House of Representatives, Femi Gbajabiamila disclosed that Lagos State will need about N1 trillion for the reconstruction and repair of the properties and infrastructure that was vandalized and destroyed by hoodlums.

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