Tuesday, November 30, 2021

OTEDOLA EMERGES MAJORITY SHAREHOLDER IN FBN HOLDINGS

Billionaire businessman, Femi Otedola, is reported to have acquired the majority shares in FBN Holdings, owners of First Bank.

Otedola reportedly took over the bank with the acquisition of about ₦30 billion worth of shares, making him the single largest shareholder of the bank.

Consequently, Otedola, being the largest shareholder, holds the highest voting shares, giving him power to dictate the direction of the bank through his voting power.

According to sources who spoke on the subject matter, FBN holdings will soon make a public announcement on the historic purchase of the company shares on the floor of the Nigerian Stock Exchange by Otedola.

It was gathered that Otedola has been acquiring the shares of the bank through a vehicle, Calvados Global Services Ltd. It is also likely that there could be other vehicles associated with Otedola who may have also been mopping up shares.

FBNH currently has 34.7 billion of its shares floating freely, meaning it is held by diverse shareholders. This makes the shares easy to acquire on the stock exchange.

The latest audited account of FBN Holdings does not have any shareholder with up to 5% of the ownership of the banking behemoth.

It is understood that Otedola, through his proxies and investing vehicles, now owns over 5% of the bank, setting himself up to be the single largest shareholder of the bank.

It was gathered that Otedola decided to take over First Bank Nigeria because of the internal crisis rocking the bank.

The battle for the control of Nigeria’s oldest lender, among two power blocs dominated by key shareholders with interests in its ownership, was at the heart of the recent shake-up of the bank’s board.

One of the blocks is led by Nigeria’s second richest man, Mike Adenuga.

On April 29, the Central Bank of Nigeria dismissed the boards of the bank and its holding company, FBN Holdings, in a dramatic move that came a day after the bank appointed a new managing director. The regulator reinstated the former Managing Director of the bank, Adesola Adeduntan.

The regulator said First Bank, which has over 31 million customers with a deposit base of N4.2 trillion, shareholders’ funds of N618 billion, has for years been plagued by “bad credit decisions, significant and non-performing insider loans and poor corporate governance practices”.

It was learnt that a key reason for the crisis is the tussle for control of the bank between a block led by Oba Otudeko, who until recently was the chairman of FBN Holdings’ board, and Adenuga, who recently emerged as one of the biggest shareholders in the bank.

While Otudeko and Ibukun Awosika, his ally on the board of FirstBank of Nigeria Limited, were removed from their positions as chairmen of FBN Holdings and FirstBank respectively, Adeduntan, who represented the interest of a late Ibadan mogul and prominent shareholder, Arisekola Alao, was reinstated as the bank’s chief executive.

Adeduntan, 51, is viewed by the Otudeko block as now serving the interest of Adenuga. Insiders said Adenuga recently took over the significant shares of Alao, who died in 2014.

He was appointed First Bank’s managing director in 2016 to help the lender regain a sound financial footing after an avalanche of bad loans threatened to sweep it under.

The CBN’s intervention in the crisis, aimed at salvaging First Bank from a “grave financial condition”, meant N150 billion was written off in bad loans after shareholders failed to recapitalise the bank amid capital adequacy concerns.

The situation became problematic following a N75 billion loan facility by First Bank to Honeywell Flour Mills, in which Otudeko owns majority stake. The insider lending, said to be beyond the single-obligor limit particularly for a director, called the bank’s corporate governance to question.

Honeywell Flour Mills said in a statement that the loan has performed from inception till date, and in accordance with agreed terms, the facilities were adequately secured with collaterals at over 170% of Forced Sales Value and 230% at Open Market Value.

But the CBN said the bank failed to perfect its lien on Otudeko’s shares in First Bank, which were placed as collateral for the loan. A lien ensures the creditor (First Bank in this case) obtains the right to the property (Otudeko’s shares) if the borrower (Honeywell Flour Mills) fails to meet its debt repayment obligations.

“We further noted that after four years the bank is yet to perfect its lien on the shares of Mr. Oba Otudeko in FBN Holdco which collateralized the restructured credit facilities for Honeywell Flour Mills contrary to the conditions precedent for the restructuring of the company’s credit facility,” the CBN said.


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