August 18, 2022

Reporters’ Diary

Factual Reportage

CBN decision on First Bank will boost investors’ confidence

The former Managing Director of the Citizens International Bank, Mr Okechukwu Unegbu, has commended the Central Bank of Nigeria (CBN) for taking action to arrest an imminent drift in the operations of the First Bank of Nigeria (FBN).

Unegbu, who is also  a past president of Chartered Institute of Bankers of Nigeria (CIBN) said that CBN’s action had restored confidence of both local and foreign investors in FBN, adding that it also rejuvenated stakeholders’ confidence in the banking industry.

“The action by the CBN is commendable, and it has proven to local and foreign investors, as well as other stakeholders, that the Nigerian banking sector is healthy.

“If CBN had not taken the step it took there probably would have been a run on the bank, with investors losing interest. The action by the CBN has rekindled confidence,” he said.

He said that the idea of the sacked board members of the bank approving “insider-loans” was criminal, adding that the former FBN board needed to be prosecuted.

He urged the CBN to be more proactive in future to nip such unprofessional excesses in the bud.

” The idea of insider-loan in itself is a criminal offence. It is an abuse of confidence by the directors; the CBN has helped local and foreign investors to regain confidence in FBN.

“But the apex bank should go further by prosecuting them for such unethical banking behaviour.

“They should be made to explain their roles in the bank, and this should be done before the dust settles, so that they are not able to cover their tracks,” he said.

The financial expert urged Nigerian banks to always play by the rules and avoid cutting corners.

“The banks are usually very careless, they usually do not consider the facilities they give. They approve facilities without due diligence.

“The CBN has now set a precedence, and I am sure no bank will want to fall into its trap. Most of the banks will be very careful now; they will show more interest in their directors,” he said.

The CBN recently announced the removal of Mrs Ibukun Awosika as Chairman of the board of FBN and Mr Oba Otudeko as Chairman of the board of the subsidiary, FBN Holdings Plc.

The apex bank also approved the appointment of Tunde Hassan-Odukale as Chairman of FBN and Remi Babalola as Chairman of FBN Holdings Plc.

CBN Governor, Godwin Emefiele, said that the action was to protect 31 million customers and minority shareholders of First Bank.

“First Bank of Nigeria is one of Nigeria’s systemically important banks, given its historical significance, balance sheet size, large customer base and high level of interconnectedness with other financial service providers.

“CBN reassures First Bank of Nigeria depositors, creditors and other stakeholders of the bank of its commitment to ensure the stability of the financial system,” Emefiele had said.

The CBN had earlier raised concerns over the bank’s failure to comply with regulatory directives on divesting its interest in Honeywell Flour Mills.

The concerns were contained in a letter dated April 26 and addressed to Awosika.

The apex bank instructed First Bank to diversify the equity investments in all non-permissible entities such as Honeywell Flour Mills and Bharti Airtel Nigeria Limited within 90 days.