FBN Holdings Plc, owners of one of Nigeria’s most respected banks and its oldest, First Bank of Nigeria Ltd, has some of its majority shareholders currently locked in an ownership tussle for the majority shares or issued share capital (as it’s also referred to) of the company.
Last Friday, Nairametrics reported that billionaire investor, Femi Otedola secured over 5% ownership of the bank following a protracted purchase of the shares over the last few months. Following the report, the bank issued a press release claiming it had not received any official notification that any shareholder has purchased substantial interest in the it.
However, the next day, the bank issued a press release on the Nigerian Exchange confirming that it had now received notification from Mr Otedola that he has purchased about 5.07% ownership of its issued share capital in his name and through an investment vehicle, Calvados Holdings.
Incidentally, on Friday the 23rd of October, a letter purportedly written by FBNH and addressed to the CAC claimed that First Bank Chairman and owner of Leadway Assurance, Mr Tunde H. Odukale, owned 5.36% of FBNH. Strangely the letter was not published on the Nigerian Exchange where such notifications are meant to be made public suggesting this may have been deliberate. The authenticity of the letter is still not clear.
The bizarre nature of the letter could make one infer that this letter was issued to sow doubts among shareholders and investors of the bank as regards who owns the most shares. It also sets up a needless cold war between the Odukales and Otedola for the battle of majority shareholding of the bank. Is this confusion needed for a bank that has just had its board appointed by the CBN?
One would expect that this is when regulators stamp their authority to immediately protect minority shareholders, bondholders and investors in the bank of any tussle between major shareholders of the bank. Nigeria’s Security and Exchange Commission (SEC) can demand that the bank or even the Stock Exchange immediately clarify who actually owns the majority shareholding of the bank. The Financial Reporting Council of Nigeria (FRCN) can also weigh in on this matter considering its statutory role in ensuring the authenticity of financial statements of listed and public companies.
It is pertinent to note that the last half-year interim report of the bank clearly stated that no shareholder owned up to 5% of the bank. The financial statement is the legal source of truth for the financials and shareholding of any organization. Thus, FRCN can step in to ask for clarification from the bank. We are currently in another earnings season so it’s likely this matter will be addressed when the FRCN approves the financial statements.
The Nigerian Exchange which also has regulatory oversight for listed companies on its exchange can in the best interest of investors also demand that the bank clarify the issue of who is its majority shareholder. The fact that we only have one letter issued by the bank stating only one entity owned over 5.07% and another being shared online and in some dailies that another shareholder owns 5.36% is enough reason for the Exchange to take action.
While we wait, shares of the bank continue to be in demand on the market, hitting a high of N12.9 per share during intraday trade on Monday. Nairametrics reported a block trade of about 286 million crossed during the day. It is unclear who bought or sold but sources suggest it was between the same entity.
In the meanwhile, foreign investors are on the sidelines watching as shareholders of one of Nigeria’s largest banks jostle for who takes eventual control. Corporate governance and transparency have often been a sore area for Nigeria’s Capital Market and this is another example of how not to regulate. Investors expect swift action when it comes to matters of shareholdings and protection of minority rights where “elephants” are jostling.
Will SEC, FRCN and NGX do their jobs?
Quote: “We are currently in another earnings season so it’s likely this matter will be addressed when the FRCN approves the financial statements.”
Does FRCN now approve unaudited quarterly FS? I doubt it.
In that case, neither the regulators nor FBN Holdings should wait till the submission of the Final audited FS (that’s months away) before providing clarity around this critical matter.