Oba Otudeko Affected in the sack of First Bank of Nigeria Holdings Board of Directors

The Central Bank of Nigeria recently sacked Mr. Oba Otudeko as Chairman of First Bank of Nigeria Holdings and Mrs. Ibukun Awosika Chairman of First Bank of Nigeria. The action was swiftly done to protect over 30 million customers and shareholders of the Bank. Since then, disturbing news about Mr. Oba Otudeko has filled the airwaves.

The Honeywell Group owes a loan of over 75 billion naira with its chairman, Otudeko, board member at the time of loan, as the insider lender. After the mass firing, CBN issued her statement claiming that the bank, FBN, is in dire financial condition due to, “…bad credit decisions, significant and non-performing insider loans and poor corporate governance practices”, made by her board, hence the harsh action to fire them all. 

Board members were accused of manipulating and influencing other board members to show then favoritism and not follow proper regulatory practices that ensured loans taken are serviced.

The Central Bank governor, Godwin Emefiele, made this sack known to its customers and the general public via the Central Bank of Nigeria Twitter handle. Some of their tweets read;

“FBN is one of the country’s key financial institutions, given its records, significance, large customer base, connections with other financial institutions abroad and size of its balance sheet”.

“The Central Bank of Nigeria reassures FBN customers and stakeholders of the financial institution’s stability as they will run frequent checks on FBN to make sure there are no bad eggs left in the financial institution,” Godwin Emefiele- CBN Governor, added.

CBN reinstated Adeduntan as the CEO/Managing Director of First Bank of Nigeria and has also appointed Tunde Hassan-Odukale and Remi Babalola to replace Otudeko and Awosika on the boards. 

According to CBN Governor, Godwin Emefiele, “The insiders who took loans in the bank, with controlling influence on the board of directors, failed to adhere to the terms for the restructuring of their credit facilities…”

This goes against the ethics of insider lending and defeats its purpose. For those who don’t know what it is, insider lending occurs when a bank makes a loan to one or more of its own officers or directors, i.e. when an executive or director of a bank, like Otudeko, is loaned money from the bank that they work for. It requires that bank officers don’t get any special treatment comparable to an average bank customer. Apparently the opposite is the case between Otudeke and FBN, as CBN points to the Honeywell group as the main defaulters.

CBN states that in addition to not servicing loans, FBN has failed to take the right action required to ensure that the Honeywell group lives up to her part.

 According to the statement, FBN “has not complied with regulatory directives to divest its interest in Honeywell Group despite several reminders.” CBN has, therefore given an ultimate to Otudeko and his company to repay the loan in 48 hours or face dire consequences.