Fresh battle for control of First Bank as Otudeko stages comeback

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The recent massive acquisition of FBN Holdings Plc shares by Oba Otudeko, its former chairman, has sparked a tussle with other shareholders over who controls Nigeria’s oldest bank.

The shareholders are said to have held a meeting on Sunday to deliberate how to respond to Otudeko’s emergence as the bank’s single largest individual shareholder.

The worry for them is that Otudeko, who was unceremoniously sacked as chairman of the board by Godwin Emefiele, the now-suspended governor of the Central Bank of Nigeria in 2021, will have scores to settle with the CEO of the bank, Adesola Adeduntan and the current board members.

Otudeko’s running battle with the shareholders began when as chairman of the board, he and then members of the board dismissed Adeduntan, only for Emefiele to reverse the move and reinstate the CEO.

Adeduntan’s reinstatement was after the Otudeko-led board was itself sacked by Emefiele in what many believed was linked to dealings between FBNH and Heritage Bank and the stout resolve of the erstwhile directors not to follow suggestions by the apex bank.

Emefiele had said at the time that the “sacking of the board was done in order to preserve the stability of the bank, and protect minority shareholders and depositors”.

Otudeko is however now on the verge of staging a comeback with his 13.3 percent stake in FBNH after snapping up 4.7 billion shares last Thursday in an N87.8 billion deal.

Honeywell Group, owned by Otudeko, and FBNH have since notified the public of the 79-year-old’s acquisition of the record shares through Barbican Capital, an affiliate of Honeywell Group.

Otudeko’s shareholding is now more than the combined shares held by the second and third largest individual shareholders of the bank, Femi Otedola and Tunde Hassan-Odukale, whose total shareholdings were 5.57 percent and 4.42 percent respectively as of March 2023.

Both men, Otedola and Hassan-Odukale, had locked horns for control of the bank after Otudeko’s exit in 2021 opened up a leadership gap at the bank.

Otudeko’s return at the bank means the CEO’s position as well as those of members of the current board are no longer tenable and explains the resistance to allow his return.

FBNH’s share price has nearly doubled in the past one year, closing at N20.30 on Friday, according to data from the Nigerian Exchange Limited.

It marks a remarkable turnaround for FBNH after a turbulent 2016 saw its non-performing loans spike and its share price fall to as low as N3 per share.

FBNH had recorded a total loan impairment of over N 565 billion between 2016 and 2020, with N376.4 billion, accounting for more than half the total loans impaired, provided for in 2016 and 2017 alone.

Insider-related loans in First Bank were problematic and were responsible for the spike in bad loans, the CBN said at the time.

The bank’s bad loan ratio has however since improved to within single digits under the leadership of Adeduntan, after hitting a record 45 percent in 2015. The bad loan ratio collapsed to 5.6 percent in 2022, according to the bank’s financial statement.

The company’s profit before tax jumped more than 10 times to N147.3 billion in 2022 from N10.2 billion in 2015.

The value of shareholders’ investments has jumped 154.50 percent since Otudeko’s exit, raising the company’s valuation to N728.67 billion as of July 7, from N258.80 billion.

FBNH’s majority shareholders, all of whom have a combined stake of over 27 percent, are considering regulatory rules to stop Otudeko’s takeover and keep Adeduntan in office, according to some sources.

The CBN and the Securities Exchange Commission are yet to make a statement on the matter.

FBNH raked in N111.85 billion in net interest income in the first quarter of 2023, up from N72.79 billion in the same period last year. Profit after tax jumped 54.5 percent to N50.09 billion from N32.44 billion in the comparable period of 2022.

“Otudeko is flush with cash from the sale of Honeywell,” a source familiar with the matter said. “He will believe this is the time to make a return to the board with Emefiele out of the picture,” the source said.

Flour Mills of Nigeria Plc, the country’s biggest miller by market value, snapped up Otudeko’s Honeywell Flour Mills Plc last year in a deal worth N82 billion.