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The Central Bank of Nigeria, CBN, has questioned the Board of the First Bank of Nigeria for relieving Dr Adesola Adeduntan, the Managing Director/Chief Executive Officer, of his duties without regulatory approval.
The Apex bank queried First Bank in a letter to the bank’s Chairman, Mrs Ibukun Awosika, dated April 28, 2021, signed by the CBN Director, Banking Supervision, Mr Haruna Mustafa, and obtained by the News Agency of Nigeria.
According to Mustafa, the decision was reached without due consultations with the regulatory authorities, especially given the systemic importance of the commercial bank.
He noted that the tenure of Adeduntan has yet to expire.
He said, “The CBN was not made aware of any report from the board indicting the managing director of any wrongdoing 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.
“It is also curious to observe that the sudden removal of the MD/CEO was done about eight months to the expiration of his second tenure which is due on Dec. 31, 2021.”
Mustafa stressed that the removal of a sitting MD/CEO of a systemically important bank was risky.
“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.
“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 5p.m. on April 29, 2021,” he said.
NAN reports that First Bank on Wednesday announced the appointment of Mr Gbenga Shobo as the new Managing Director and Chief Executive Director.
According to Awosika, the appointment was subject to all regulatory approvals.
This post was written by Obiajulu Joel Nwolu.
The views expressed here belong to the author and do not necessarily reflect our views and opinions.