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In a bid to forestall the circumstances that led to Central Bank of Nigeria (CBN) clamping down on FBN Holdings in 2015 when Oba Otudeko was the chairman, majority shareholders of FBN Holding are weighing options to prevent Oba Otudeko from taking over the financial institution.
This is in order to avoid a repeat of the financial crisis that occurred during his time as chairman in 2015 when the Tier 1 Bank was plunged into a deep financial crisis on the back of an unprecedented non performing loan portfolio when the NPL ratio materially breached regulatory threshold.
Recall that the Central Bank of Nigeria (CBN) in 2021 had clamped down on FBN Holdings, accusing the Board of the firm, led then by Otudeko, of recklessly issuing and obtaining loans, thereby, affecting the capital liquidity ratio of the company.
“The insiders who took loans in the bank, with controlling influence on the board of directors, failed to adhere to the terms for the restructuring of their credit facilities which contributed to the poor financial state of the bank.
“The bank has not also divested its non-permissible holdings in non-financial entities in line with regulatory directives,” CBN explained the financial mess FBN Holdings was in then.
In a bid to prevent the collapse of FBN Holdings and its subsidiary bank, CBN sacked Otudeko and other board directors of the company.
The ouster of Otudeko and other directors led to the restructuring of First Bank, the banking subsidiary, led by the current Managing Director and Chief Executive Officer, Mr Sola Adeduntan.
FBN Holdings’ board under Otudeko had moved against Adeduntan before they were sacked by the CBN. They had initially appointed him but later sacked him – a move that saw CBN criticise the company publicly.
Following their sack, CBN reappointed Adeduntan, others, to lead the affairs of FBN Holdings and banking subsidiary, First Bank, to end the financial crisis CBN claimed led to its decision to remove the board.
The new board of First Bank backed by some majority shareholders; Femi Otedola, Oye Hassan Odukale, Mike Adenuga, and the family of Late Azeez Arisekola Alao has worked tirelessly to restructure and reposition the FBN Group in the last two years.
With the Group exiting the financial mess, Otudeko is attempting to make a return by acquiring over 13% stake in FBN Holdings through Barbican Capital Limited.
Otudeko’s return bid has sent shivers down the spine of FBN Holdings and First Bank board, as his return could lead to their exit and throw a spanner in the works, thereby, creating uncertainty around the growth prospects of FBN Holdings in the long term.
Note that under Otudeko, the capital market’s confidence in FBN Holdings slumped significantly, with the firm’s share depreciating by 61.06% between 2013, a year after he was appointed FBN Holdings board chairman, to 2021, when he exited.
This wiped off N405.97 billion in the market valuation of the company, leading to significant loss in shareholders’ investments, as FBN Holdings market capitalisation fell to N258.80 billion, from N664.78 billion.
However, following Otudeko’s exit, the value of shareholders investments rose by 154.50%, raising the company’s valuation to N658.67 billion, as of Monday, from N258.80 billion, indicating the capital market renewed their interests after Otudeko left FBN Holdings.
In order to protect the growth under Nnamdi Okonkwo, the FBN Holdings GMD/CEO and Adeduntan, the majority shareholders, all of whom have a combined stake of over 27%, are considering regulatory rules to stop Otudeko’s takeover.
Otudeko was once described as a known chronic debtor and is indebted to Ecobank Nigeria Plc to the tune of sixteen billion (N16B) for which there is a subsisting Supreme Court judgment against him.
Also, the regulatory bodies, CBN, Nigerian Exchange Limited, and Securities and Exchange Commission are monitoring the takeover attempt of Otudeko.
