Ibrahim Apekhade Yusuf in this report examines the lingering leadership crisis that is threatening the corporate existence of First Bank of Nigeria Holdings, the oldest bank in Nigeria, where shareholders have expressed angst and heightened fears over the fate of the bank.
The bitter, old rivalry between the top echelons of the FBN Holdings family may have been rekindled with the recent emergence of Mr Femi Otedola as the chairman of the Board.
The Nation can authoritatively report that the appointment of Otedola to the high ranking office has pitted him with billionaire businessman, Oba Otudeko, who towers like a colossus in the business circles both within the country and globally.
Crux of the matter
In its audited accounts for 2023, First Bank Holdings placed Femi Otedola, the bank’s chairman, as the single largest shareholder with a 9.41 percent stake in the financial institution, according to corporate filings on the Nigerian Exchange Group (NGX).
This became possible after he purchased the group’s shares valued at N18.9 billion.
According to the corporate filings, the billionaire paid N21.91 per share or N6.935 billion for 316,506,776 shares.
He then bought an additional 546,674,034 shares through Calvados Global Services Limited, his holding company, for N21.97 per share — totalling N12.01 billion.
With this, the number of shares recently acquired totalled 863,180,810.
The fresh acquisition has increased Otedola’s shares (direct and indirect) in FBN Holdings to 3,380,462,950 — from 2,517,282,140 shares.
This means the businessman is now the highest shareholder in the company, overtaking Barbican Capital Limited, owned by Oba Otudeko, which has 3,110,400,619 direct shares.
The appointment came two years after the investor became the firm’s single largest shareholder in December 2021, when he increased his stake to 7.57 percent.
A month after the appointment, FBN Holdings named Barbican Capital Limited as its majority shareholder — making Otedola the second major shareholder at the time.
But according to available information sourced from the Central Securities Clearing System (CSCS), Barbican Capital which is originally linked with the Oba Otudeko-owned Honeywell Group was named as the largest single shareholder with a 15.01 percent stake.
Besides, records kept by the bank’s registrars, Meristem Registrars & Probate Services Ltd, further confirmed that Barbican Capital as the single largest shareholder with 5,386,397,202 shares (5.38 billion) shares as of May 23, 2024.
Expectedly, Barbican Capital had sued First Bank Holdings for what it described as misrepresentation of its shareholding status in its audited financial statement, following a curious U-turn from the figures published in its unaudited statement where it allotted the right shareholding to Barbican Capital.
FBN Holdings had in a statement published on the Nigerian Exchange group (NGX) on Tuesday, August 13, said it will not comment on the matter “outside the court.”
The genesis of the crisis
The genesis of the crisis can be traced to the credit crunch that hit the nation’s financial sector when majority of the institutions got their fingers badly burnt during crumbling oil market, with many enmeshed in non-performing loans (NPLs), a development which threatened the stability of the FBN portfolio.
As to be expected, that crisis would later consume Adesola Adeduntan, the then managing director of the bank, who was sacked.
The CBN’s response was swift and unprecedented. Within 24 hours, the apex bank dissolved the boards of both First Bank and its parent company, FBN Holdings. The CBN governor, wielding his power with an iron fist, cited non-compliance with the terms of restructured insider loans granted to the Honeywell Group as the catalyst for this drastic action. The loans, the CBN declared, must be repaid within 48 hours—a demand that sent shockwaves through the corporate landscape.
The Honeywell angle
Interestingly, the Honeywell Group had been fingered as one of the major beneficiary of the loan, which was not due for repayment until 2026, but the CBN made a volte face, requesting immediate repayment.
As fate would have it, Honeywell Group not only met the CBN’s demands but did so in record time, fully repaying its obligations by May 2022—four years ahead of schedule.
The speed and efficiency of this repayment underscored the group’s financial might but that also raised eyebrows.
Godwin Emefiele, the CBN governor at the time had, on multiple occasions, directed liquidity support to Heritage Bank, despite internal concerns from First Bank’s board members.
The same governor had also urged First Bank to consider acquiring Heritage and Polaris Banks, a proposal that was met with scepticism, if not outright resistance, from First Bank’s leadership. These moves were seen by many as attempts to leverage First Bank’s resources for external gain, rather than for the bank’s own stability and growth.
But last year November marked another pivotal moment in the ongoing saga, when key shareholders and top executives were summoned to a meeting with the CBN, where Deputy Governor Philip Ikeazor led discussions aimed at charting a path forward.
Honeywell Group, a major shareholder, provided comprehensive documentation to verify its 15 percent stake. Yet, in February 2024, the CBN acknowledged only 8.67 percent of this holding, citing the lack of supporting documents for the remaining shares—a discrepancy that Honeywell contested vigorously. Despite submitting additional documentation, including bank statements and contract notes for most of the remaining shares, the CBN is yet to clarify the status.
Apparently miffed by the turn of events, Honeywell turned to the courts. The company sought legal protection against what it perceived as an attempt by FBN Holdings to undermine its shareholding. The discovery that dividends on the disputed shares had been withheld only fueled Honeywell’s resolve. This, the company argued, was an abuse of power by FBN—a move that had no basis in law and was designed solely to weaken Honeywell’s position.
In a notice on July 7, 2023, FBN Holdings said it received a notification also dated July 7, 2023, from Honeywell Group Limited, that its affiliate, Barbican Capital, acquired 4,770,269,843 units of shares or 13.3 percent stake — indicating the return of Otudeko to the financial institution he once chaired before he was sacked by the Central Bank of Nigeria (CBN) in April 2021.
The acquisition resulted in Otedola losing his spot as the largest investor in FBN Holdings, as his stake held in the company was around 5.57 percent.
Despite acknowledging Barbican Capital’s investment, in the 2023 third quarter financial statements, FBN Holdings retained Otedola as its majority investor, with Otudeko’s name and company missing from the list of shareholders with 5 percent and above stake.
The exclusion of Otudeko followed the controversy that surrounded Barbican Capital’s investment, as Ecobank warned FBN Holdings against accepting the acquisition by Otudeko, over an alleged N13.5 billion debt.
The statement showed Otedola slightly increased his direct shares to 40.03 million, representing 0.11 percent stake, from 10 million (0.03 percent) in 2022, while his indirect shares stood at 1.98 billion (5.54 percent), bringing his total shares to 2.02 billion and stake to 5.65 percent as of the end of last year.
Tunde Hassan-Odukale is the third largest shareholder with 1.59 billion shares representing 4.45 percent stake. He increased his investment in FBN Holdings from 1.58 billion shares or 4.42 percent stake held in 2022.
In a letter dated July 7, 2023, Ecobank accused Otudeko of “diverting his assets and that of the Honeywell Group of companies through the said Barbican Capital Limited, in order to frustrate the enforcement of the judgment of the Supreme Court against him.”
However, Otudeko said the Supreme Court did not award N13.5 billion judgment debt against him and asked FBN Holdings to disregard Ecobank’s request for it to reject his acquisition.
This was followed by protest from some of FBN Holdings’ shareholders at the company’s headquarters, with placards reading: ‘Oba Otudeko, First Bank is not your property, and ‘First Bank is Greater than you, Otudeko’.
An insider’s perspective
According to an insider, who asked not to be named because he didn’t have the authority to speak on the matter, he said, “The crises rocking First Bank Holdings Plc and its subsidiaries are multifaceted and multi-dimensional ranging from non-performing loans granted to insiders to the sacking of the former Board of the holding company as well as the relatively poor performance of the Bank when compared with other Banks in the industry. Another crisis of the Bank is the issue of who owns the largest holding in the company which has been a fight among Oba Otudeko, Otedola, and the Odukales.”
Pressed further, he said, “Recently, just before the revocation of licence of Heritage Bank Limited, the Central Bank of Nigeria (CBN) repaid First Bank the indebtedness Heritage Bank Limited due to the Bank. This cleared the doubt about the seemingly unjustifiable sacking of the Former Board of the Bank. Please remember, that the former Board of the Bank led by Oba Otudeko sacked the former Managing Director of the Bank, Dr. Adesola Adeduntan due to an undocumented Guarantee of CBN on Heritage Bank loan. Sequel to his removal by the Board, CBN led by Godwin Emefiele sacked the Board of the Bank which now threw open the non-performing loan granted to the insider of the bank. This clearly shows the muse of the power of Regulators when anyone challenges their decisions.
“Regarding the holdings of FBNH, in the recent media report where Barbican Capital Limited claims to have about 15% of the Bank, and filed a lawsuit that its holdings are not well presented in its Financial Statements of the Company. This case is in court and we cannot talk about it but the holdings can truly be verified through Central Securities Clearing System Plc (CSCS) and the Registrars and the reconciliation can be done. CBN verification of the holdings should not take forever unless there are other issues which are not publicly known. Investment in the capital market is the most transparent transaction in the world.
“From the foregoing, if Barbican Capital Limited truly owns about 15%, it shows clearly that the company is the largest shareholder of the bank. Apart from Barbican Capital Limited, what about other possible account names not consolidated into Barbican capital but owned by the shareholders of Barbican or affiliates/stakeholders of the company?”
“In my opinion, an investor who has been investing in a company for over three decades cannot but have a larger stake than somebody who just came yesterday and started learning the Boardroom politics of the company. Let us give honour to whom honour is due without attaching any sentiment.”
Heightened fears by shareholders over leadership crisis
At a time when the majority of the banks are trying to raise fresh capital in line with the CBN’s mandate, many of the shareholders are hard pressed to believe that their investment is being threatened as a result of the crisis that is brewing in the bank.
Expectedly, a coalition of minority retail shareholders in FBN Holdings Plc had impressed on regulatory authorities to take cursory look into alleged attempts by certain individuals to undermine the oldest financial services group in the country.
Shareholders who reportedly staged a solidarity protest at the Marina, Lagos head office of FBN Holdings said several petitions have been submitted to the regulatory bodies concerning clandestine plots to frustrate the board and management of the group, and make the first-tier bank vulnerable.
According to shareholders, there was ample evidence before the Central Bank of Nigeria (CBN), Securities and Exchange Commission (SEC) and other regulatory bodies to take actions and look into the crisis.
They alleged that there were moves to frustrate the forthcoming annual general meeting (AGM) of the group, scheduled for next week, and the plan to expand the capital base of the banking group.
The inability of FBN Holdings to hold AGM will expose the group to several defaults and sanctions for breach of corporate governance practices and extant rules at the capital market.
The group, unlike other competitors that are taking proactive measures to beef up their capital base, will also not be able to increase its capital, the key measurement of a financial services group.
At the forthcoming AGM, beside the ordinary businesses of consideration and approval of annual financial accounts and reports, dividend payment and audit committee among others, FBN Holdings also plans to seek shareholders’ approval to increase its share capital, raise new equity funds and appoint new directors.
Chairman, Trusted Shareholders Association of Nigeria, Alhaji Mukhtar Mukhtar, who spoke on behalf of other minority shareholders, said they were calling on the regulators to take cognisance of the roles and institutional importance of FBN Holdings and act to protect the group from aggressive moves by some individuals to undermine the group.
He said AGM is a statutory meeting and attempt by some individuals to stop the group’s general meeting amounts to direct sabotage, especially when such meeting has been duly convened in line with requisite corporate governance rules.
He pointed out that FBN Holdings has an important, systemic function in the economy of Nigeria as one of the few banks that stabilise most of the monetary and fiscal policy and banking practices as a whole. Mukhtar urged the regulators to allow the financial institution to grow by enforcing best practices and by resolving the looming crisis.
“We are here to register our displeasure, our discontent, our disapproval and rejection of the attempt by some shareholders to prevent the AGM of FBN Holdings from holding and thereby preventing some resolutions from being passed. We want the AGM to proceed and the resolutions passed.
“I think this is very improper. It is not right that some people who have benefited from the political economy of this country, are the ones holding this institution to ransom.
“So I think those people that have gone to court in order to stop the AGM from holding know that it is illegal. They know that we have precedents, AGMs are statutory meetings, nobody can stop it. Nobody can stop any activity from holding.
“We have instances from the past whereby some aggrieved individuals or parties or shareholders approached the court in order to stop the conduct of the AGM. But the judges told them that this is a statutory meeting, they cannot stop.
“They are trying to prevent the bank from holding AGM and considering some resolutions, which is to raise more capital for the banking business. You can agree with me that banking business is about capital. If there is no capital, business will collapse. And for the banking industry, capital is very, very important,” Muktar said.
He said the regulators have the mandate to protect institutions from abuses.
“The regulators should come in. They cannot continue in their complacent behaviour in the face of abuse. They must ignite some certain regulatory powers, they can suspend the shares of those people who attempt to hold this bank to ransom. We cannot allow this bank to die therefore, the regulatory authorities must act now because they just cannot be quiet,” Muktar said.
Also shareholders under the aegis of Association of the Rights of Nigerian Shareholders (AARNS) hailed the success of the processes to hold the AGM as scheduled as a victory for corporate governance and shareholders’ protection.
They noted that the approval to proceed with the AGM as further demonstrated that the courts and regulators will not allow people to interrupt company’s meetings “due to the selfish interest of some shareholders”.
“We will continue to appeal to major shareholders to resolve their differences in the interest of the organisation, in addition to calling on the regulators to ensure they do their best to protect our investments,” AARNS stated.
National Coordinator, Independent Shareholders Association of Nigeria (ISAN), Mr. Moses Igbrude, had said resorting to court to stop the statutory AGM was bad because there were no operational issues or infringements within the company to warrant such a move.
He appealed to major shareholders to sheathe their swords and work for the unity of the bank by putting their resources and expertise in the service of the bank.
Chairman, Pragmatic Shareholders Association of Nigeria, Mrs. Bisi Bakare said the bank was more important than any individual’s interest, berating the attempt to use court to stop the AGM as a bad move.
She noted that as a major financial group, anything that happens to FBNH will affect the whole economy, creating massive distress and huge unemployment.
Chairman, Ibadan Zone Shareholders Association (IBZA), Mr. Eric Akinduro, said going to court to stop the AGM now was not the best for the company and investors.
According to him, the investors of FBN Holdings had over the years suffered a lot and as such would not tolerate anything that would further endanger their investments.
“Looking at the company where it is today, we are not happy but we believe things are getting better particularly when you consider the second quarter result. So, the best thing is for the company to move forward. The idea of going to court should not arise now. The proposed agenda for the AGM is a good step to move the bank forward.
“If there is any misunderstanding, this could be resolved in line with good corporate governance rather than jeopardising our investments. Many of our members in the past knew how much we were getting on dividends yearly from FBN, but today the bank is a shadow of itself. We are not happy when our investment value is deteriorating,” Akinduro said.
Shareholders under the auspices of Trusted Shareholders Association of Nigeria (TSAN) had alleged that Otudeko was the one behind the court order that initially stopped the AGM.
Chairman, Trusted Shareholders Association of Nigeria (TSAN), Alhaji Muktar Muktar, pleaded with Otudeko to join hands with other investors to reposition the FBNH.
AGM still a stalemate
The Lagos Federal High Court presided over by Justice Akintayo Aluko had last Thursday reinstated an order prohibiting FBN Holdings from conducting its 12th Annual General Meeting (AGM) until a motion for an interlocutory injunction, filed by an aggrieved shareholder, Tohir Folorunsho Ismaila, is resolved.
This was due particularly as a result of FBN Holdings’ failure to file its responses to the suit, as previously directed by the court.
It may be recalled that on August 13, 2024, Justice Aluko had granted an ex-parte motion to restrain FBN Holdings from holding its AGM scheduled for August 22, 2024. The motion was filed by Professor Taiwo Osipitan (SAN), alongside Mrs. Olayemi Badewole (SAN) and Adetola Ogunlewe Esq., representing the petitioner, Ismaila.
In the suit marked FHC/L/CP/1428/2024, the court issued an interim injunction, stating: “An Order of Interim Injunction restraining the Respondent, its Directors, Secretary, or agents from holding or hosting the 12th Annual General Meeting, scheduled for August 22, 2024, via any medium, pending the determination of the Petitioner’s Motion on Notice for Interlocutory Injunction, is hereby granted.”
Additionally, the court restrained FBN Holdings from passing any resolutions at the AGM or issuing any notices for general meetings until the motion on notice is addressed.
Justice Aluko had presided over the petitioner’s interlocutory injunction motion, alongside FBN Holdings’ counter-petition and preliminary objections.
However, at the resumed hearing, the petitioner’s counsel, Professor Osipitan, stated that both parties were ready to proceed.
FBN Holdings’ counsel, Babajide Koku (SAN), argued that his client was still within the permissible timeframe to file responses and requested an adjournment, noting that the urgency had diminished since the AGM had been postponed to September 3, 2024.
Despite opposing the adjournment, Professor Osipitan requested that if granted, FBN Holdings should formally undertake not to hold the AGM until the court resolves the pending motions.
In his ruling, Justice Aluko reaffirmed that the interim order issued on August 13, 2024, remains in effect until all applications are heard and resolved. The case has been adjourned to August 29, 2024, for further hearing.
With the warring parties still holding on to their guns, it is anybody’s guess how soon this matter will be resolved.
