CBN to issue formal statement on FirstBank crisis shortly

The Central Bank of Nigeria (CBN) on Thursday said it would issue a formal statement on the crisis going on in First Bank of Nigeria shortly.

Osita Nwanisobi, spokesman and acting director, CBN’s Corporate Communications Department, disclosed this to BusinessDay on the phone at 10.57 Thursday morning.

“I am trying to get some perspective around this and will issue a formal statement very shortly,” Nwanisobi said.

First Bank of Nigeria had on Wednesday announced the appointment of Gbenga Shobo as managing director/chief executive officer.

The appointment, which should take effect on Wednesday, followed the acclaimed retirement of Adesola Adeduntan, who has led the bank since January 2016.

However, the appointment has triggered a controversy as the CBN, in a letter addressed to Ibukun Awosika, chairman of First Bank, said due consultations were not done before the new appointment was made and that the bank did not allow Adeduntan’s tenure to end before making a new appointment.

In the letter signed by Haruna B. Mustafa, Director of Banking Supervision, 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 Ltd.

Given that Adeduntan’s tenure is yet to expire and the CBN said it was not made aware of any report from the Board indicting the managing director of any wrongdoing 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,” CBN said.

“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,” it said.

The apex bank said 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,” the CBN said.

“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 5pm on April 29, 2021,” it said.