Central Bank of Nigeria, CBN, has issued a query to the Board of First Bank of Nigeria Ltd, for the removal of its Managing Director/Chief Executive Officer.
The bank’s Board had on Wednesday revealed it had appointed Gbenga Shobo as its MD/CEO, as disclosed in a statement made by the bank’s Chairman, Ibukun Awosika.
In the query to the bank, CBN threatened the board with disciplinary actions if the decision to remove Dr. Sola Adeduntan was not reversed.
In the letter addressed to First Bank, the CBN queried the appointment of Shobo, stating that it was made without their approval, adding that the tenure of Mr. Adeduntan was yet to expire (bank MD’s have a maximum 10 years) even as they stated that they were also not aware of any misconduct of the former MD and as such there was no justification for his removal.
“The attention of the Central Bank of Nigeria (CBN) has been drawn to media reports that the Board of Directors has approved the removal of the current Managing Director of the bank, Dr. Sola Adeduntan, and appointed a successor to replace him. The CBN notes 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 the tenure of Dr. Adeduntan is yet to expire and the CBN was not made aware of any report from the Board indicting the Managing Director of any wrong-doing 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. 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. The removal of a sitting MD/CEO of a systemically important bank that has been under regulatory forbearance for 5 to 6 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,” part of the statement read.
Contrary to the 10 year policy, Heritage Times understood that First Bank has a maximum of 6 years tenure for its MDs in line with its succession plans and also does not exceed CBN’s maximum of 10 years.
On enquiry, we also learnt that leaving early is in line with First Bank’s succession planning. Given that when Adeduntan was appointed 6 years ago and a DMD role was created, the erstwhile First Bank Managing Director knew the DMD would succeed him and this is what has happened.
A school of thought also claim CBN’s action was due to First Bank’s support of Flutterwave and other fintech companies.
