CBN quizzes Firstbank over MD’s sudden replacement

Zainab Iwayemi

Following the appointment of Gbenga Shobo as the new managing director and chief executive officer of First Bank of Nigeria Limited, the Central Bank of Nigeria (CBN) has queried the board of the bank in a letter over its action without due consultation with regulatory authorities.

The letter, dated April 28th was addressed to Ibukun Awosika, the chairman of First Bank and signed by the CBN Director, Banking Supervision, Haruna Mustapha.  The CBN noted that the tenure of Adesola Adeduntan, the replaced managing director was yet to expire whilst also stressing that the CBN as a regulator was not carried along the process of change.

“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.” The letter read in part.

Noting that Adedotun still has a long way to go before his due date, the apex bank shares concern on the possible implication of the bank’s action. “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 31st, 2021.

“The removal of a sitting MD/CEO of a systemically important bank that has been under regulatory forbearance for five to six 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,” It said.

Mandating the bank 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, the apex bank directed the bank to respond to the query on or before 5 noon on Thursday, April 29.

“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.” It added.