TheCable

Shares of First Bank of Nigeria (FBN) Holdings Plc plunged 6.7 percent to N6.90 on Thursday as investors sell 51.5 million units in the tier-1 lender.

It was the most traded stock by volume and valued at N359.83 million.

The last time the bank’s share price suffered a decline of this magnitude was on January 5 when it suffered a 8.28 percent decline from N7.85 per share on January 4 to N7.20 per share on January 5.

This is coming a day after the Central Bank of Nigeria queried the board First Bank over the removal of Sola Adeduntan, the bank’s managing director and chief executive officer (MD/CEO), without due consultation with regulatory authorities.

On Wednesday, the First Bank had announced the appointment of Gbenga Shobo as its new MD/CEO with effect from April 28.

The bank said Adeduntan will be leaving the position in accordance with the bank’s term limit for its chief executives, after leading the bank since January 2016.

But in a letter dated April 28 and addressed to Ibukun Awosika, the chairman of First Bank, the CBN said the tenure of Adeduntan was yet to expire (MDs of banks have a maximum tenure of 10 years).

“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,” the letter signed by Haruna Mustafa, CBN’s director of banking supervision, read.

“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.

“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.

“In the meantime, you are directed to desist forthwith from making any further public/media comments on the matter. Your comprehensive response on the foregoing should reach the Director, Banking Supervision Department on or before 5pm on April 29, 2021.”

The CBN also instructed Honeywell Flour Mills to fully repay its loan obligations to the bank within 48 hours, warning that failure to do so will prompt the apex bank to take appropriate regulatory measures against the insider borrower and the bank.