In the storied corridors of First Bank Holdings, Nigeria’s oldest bank, a battle of titanic proportions is brewing over the single largest shareholder of the bank.
First Bank Holdings in its audited accounts for 2023 puts Femi Otedola, the bank’s chairman, as the single largest shareholder with a 9.41 percent stake in the financial institution.
However, data from the Central Securities Clearing System (CSCS), the widely accepted source for confirming share ownership, puts Barbican Capital, which is affiliated with the Oba Otudeko-owned Honeywell Group, as the largest single shareholder with a 15.01 percent stake.
There are also records kept by the bank’s registrars, Meristem Registrars & Probate Services Ltd, confirming Barbican Capital as the single largest shareholder with 5,386,397,202 shares (5.38 billion) shares as of May 23, 2024.
Barbican Capital has sued First Bank Holdings for wrongly stating its shareholding 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 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.”
BusinessDay can authoritatively report on the timeline of events leading to the shareholder dispute at First Bank, following multiple interviews with sources familiar with the matter.
How it all started
The story began in 2015, when the global oil industry, long the backbone of Nigeria’s economy, stumbled. The reverberations of this collapse were felt keenly within the financial sector, where First Bank of Nigeria (FBN) found itself exposed to a crumbling oil market. Non-performing loans (NPLs) surged, threatening the stability of the bank’s portfolio. In a bid to stave off disaster, a forbearance plan was meticulously crafted in conjunction with the Central Bank of Nigeria (CBN). This plan allowed the bank to manage its deteriorating assets while focusing on loan recoveries and profit capitalisation—a lifeline that would later be yanked away with brutal swiftness.
A Sudden Turn of Events
Fast forward to April 2021, a month that would see the first shots fired in what would become a drawn-out war of ownership and control.
The Board of First Bank, citing internal matters, decided to relieve Adesola Adeduntan, its managing director, of his duties, signalling an intention to make way for a new era of leadership under the deputy managing director. It was a move that, under normal circumstances, would have been routine. But this was no ordinary board, and these were no ordinary times.
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 Controversy
The loans in question had long been a point of contention. The Honeywell Group, one of Nigeria’s industrial powerhouses, had secured these loans under terms that were, at the time, fully compliant and performing according to agreed schedules.
The loans were not due to be repaid until 2026, yet the CBN’s sudden insistence on immediate repayment seemed less a matter of financial prudence and more a strategic move in a larger game.
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 it also raised eyebrows: Was this a case of a company capitulating to undue pressure, or was it an astute maneuver to avoid further entanglement in what was fast becoming a quagmire?
Biases in the Intervention: A Tale of Two Banks
As the dust settled on the initial skirmish, a pattern began to emerge—one that hinted at deeper biases within the CBN’s intervention.
Notably, Godwin Emefiele, the governor, 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.
Further complicating matters was the reconstitution of FBN’s board after the initial dissolution. The new board members were, by and large, associates of the former CBN governor—an arrangement that did little to inspire confidence in the bank’s independence. As new shareholders were introduced, some acquisitions were facilitated under circumstances that, while legally sound, carried the unmistakable scent of cronyism.
A Fleeting Hope for Resolution
November 23, 2023, marked another pivotal moment in this ongoing saga. 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. The goal: To return the bank to shareholder control while ensuring fair representation for all major stakeholders.
On paper, the agreements reached at this meeting were promising. Shareholding verification, proportionate board representation, and the resolution of outstanding litigation were all laid out as steps toward restoring order. However, as the subsequent months would reveal, the devil was very much in the details.
Shareholding Verification: A Contested Process
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.
Board Representation: A Breach of Agreement
Adding to Honeywell’s grievances was the issue of board representation. The CBN had initially agreed that major shareholders would be given seats on the boards of both the bank and its holding company, proportionate to their shareholdings. Yet, when the time came to implement this, Honeywell found itself allotted just one seat on each board—far fewer than what other shareholders with smaller stakes had been granted. To add insult to injury, this allocation was contingent on Honeywell withdrawing from unrelated litigation, a condition that was as unjust as it was impractical.
Litigation and Mistrust: The Final Frontier
Frustrated by what it saw as an unjust and potentially unlawful diminution of its rights, 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.
The Road Ahead: A Bank in Flux
As the battle rages on, First Bank Holdings finds itself at a crossroads. The questions that loom over its future are as much about governance and fairness as they are about financial stability. Will the bank emerge from this conflict stronger, its governance structures reinforced and its independence intact? Or will it succumb to the pressures of external influences, its legacy as Nigeria’s oldest bank overshadowed by the machinations of those who seek to control it?
In the end, the resolution of this ownership battle will not just determine the future of First Bank but will also set a precedent for corporate governance in Nigeria. For now, the nation watches, as the story of First Bank’s struggle for autonomy unfolds—a drama that, like all great tales, is far from over.
Ololade Akinmurele a seasoned journalist and Deputy Editor at BusinessDay, holds a crucial position shaping the publication’s editorial direction. With extensive experience in business reporting and editing, he ensures high-quality journalism. A University of Lagos and King’s College alumnus, Akinmurele is a Bloomberg-award winner, backed by professional certifications from prominent firms like CitiBank, PriceWaterhouseCoopers, and the International Monetary Fund.
(BusinessDay)
