CBN rejects newly appointed First Bank CEO, threatens disciplinary action

The Central Bank of Nigeria (CBN) has described First Bank of Nigeria’s new board appointments which includes Gbenga Shobo as Managing Director and Chief Executive Officer (CEO) as difficult to accept and warned of disciplinary action.

Ripples Nigeria had reported on Wednesday that the Board of Directors of First Bank of Nigeria Limited approved the appointment of Mr. Gbenga Shobo as its new MD and CEO.

But in a letter to the board, seen by Ripples Nigeria, CBN noted that it took exception to a situation where a systemically important bank (SIB) such as FBN would reconstitute its board without previous consultation with the regulator.

In letter which was signed by its Director, Banking Supervision, Haruna Mustafa dated April 28, 2021, the regulator stated clearly that no appointment can be made while the term of its purported outgoing managing director, Dr. Adesola Adedutan, was yet to end.

The CBN’s letter to the FBN board of directors in part read “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”.

“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”.

The CBN, therefore, insisted that the Board of FBN in the light of unfolding developments should “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 regulator further insisted that the bank in the meantime desist “forthwith from making any further public/media comments on the matter”.

The Apex bank further directed the bank’s Board for a comprehensive response on the matters raised be placed before the Director, Banking Supervision Department on or before 5 pm on April 29, 2021.