Shareholders fume as First Bank opts for virtual AGM


Shareholders in First Bank Holdings are uncomfortable with the decision of the board to conduct its next annual general meeting virtually.

Uba Group

The annual general meeting is scheduled for Tuesday, August 15, 2023.

After a press statement indicating that the annual general meeting of the bank’s holding company would be held this month, it has emerged that several major shareholders have kicked, raising questions about the main purpose of the meeting which is to approve plans for a capital raise by a rights issue.

Groups of shareholders of the bank are asking why the board is avoiding a physical gathering which would permit the owners to have an unfettered ambience to consult among themselves and ensure only the best options are voted for.

One of the issues on the agenda includes deliberation of plans by the board to initiate a fresh capital raise.

Also on the agenda for the meeting is the proposal by the directors for shareholders to elect Femi Otedola to the board, although two existing directors are known to be his representatives.

The angry shareholders believe that a key reason why the directors have resorted to a virtual meeting is to keep in check angry owners who have been irked by the suggestion of a virtual meeting.

Shareholders are also raising questions over the appropriateness of leaving such a crucial matter like raising fresh capital in the hands of a board that is unrepresentative of the bank’s ownership.

According to one major shareholder, “there is no shareholder fight in this bank. The crisis you see today was instigated by Godwin Emefiele, the suspended Governor of the Central Bank of Nigeria, and those doing his bidding in the bank.”

Since Emefiele dissolved the board of the oldest financial institution on April 29, 2021 and insisted on allowing the Chief Executive Officer, Sola Adeduntan, a rare third term, First Bank has remained in the news.

First, it was the shock move by Otedola in buying and then suddenly off-loading significant shareholding in the bank.

That was then followed by the massive acquisition of shares by the hitherto unknown Barbican Holdings which displaced Otedola as the largest single equity holder in the bank in what has been described as the comeback of the bank’s former chairman, Oba Otudeko.

Shareholders including Barbican Holding have written formally to query the process for the meeting while some other shareholders have cried foul over the role of the Emefiele-appointed board in seeking to raise capital for the bank and prescribing how that capital raise should be conducted.

“How did the board come to the conclusion that there was a good reason for raising fresh capital and how did the same board determine that this was a good time to raise fresh capital,” one shareholder of the bank queried.

He added, “It appears to me that there is something in this that should worry especially the more than one million small shareholders of the bank.”

In the notice for the annual general meeting, the board is proposing to FBN Plc shareholders, “to consider and if thought fit, pass the following as ordinary resolutions:

(a) That the Company’s Issued Share Capital be and is hereby increased from N17,947,646,396 (Seventeen Billion, Nine Hundred and Forty-Seven Million, Six Hundred and Forty Six Thousand, Three Hundred and Ninety Six Naira) made up of 35,895,292,792 (Thirty-Five Billion, Eight Hundred and Ninety-Five Million, Two Hundred and Ninety-Two Thousand, Seven Hundred and Ninety-Two) Ordinary shares of 50 (Fifty) Kobo each to N22,434,557,995 (Twenty-Two Billion, Four Hundred and Thirty-Four Million, Five Hundred and Fifty-Seven Thousand, Nine Hundred and Ninety-Five Naira) by the creation of 8,973,823,198 (Eight Billion, Nine Hundred and Seventy-Three Million, Eight Hundred and Twenty-Three Thousand, One Hundred and Ninety-Eight) Ordinary shares of 50 (Fifty) Kobo each.”

Various shareholder groups are known to have raised objections to the manner the AGM and the capital raise are being handled.


One other shareholder said “there appears to be the intention to push this through at all costs and there is word out in the market that financial advisers are already being contacted for the capital raise well before the AGM at which approval will be given.”

According to one former director who spoke on the condition of anonymity, “there are several questions that are begging for answers. For one, what is the logic in keeping the bank in the control of directors chosen by Emefiele when the bank is not in debt? More than two years ago, First Bank’s CAR was rising and with the resolution of the matter of Atlantic Energy, analysts familiar with the finances of the bank said the capital adequacy ratio should now be in the twenties.”

There are also suggestions that some of the directors making these key decisions about raising capital do not own a single share in the bank and now they are asking for a carte blanche to raise capital.

“It is time for shareholder directors to be allowed to make such crucial decisions,” a market analyst said.

Several years ago, First Bank ran into troubled waters with large non-performing loans associated with oil firms including Atlantic Energy and which caused concern in the market.

But over the years, the bank’s books were cleaned up, but strangely, Emefiele sacked the shareholder-appointed directors who oversaw this good work and imposed a new board on the bank. This left some to suggest that the suspended governor of the CBN had ulterior motives.

It is a well-known fact in the industry that First Bank has been providing liquidity support to Heritage Bank but over the years, a huge debt has piled up in connection with this service although Heritage officials said that they are working to clean this up.

For two years, Emefiele provided a CBN guarantee for this exposure, but it is unclear when the guarantee stopped and why.

According to one shareholder, “there is need for a full disclosure in this matter especially because it has been suggested that Emefiele might have put pressure on the management in this regard.”

Another worry among shareholders is the decision of the directors to stipulate “that the Rights Issue referred to in Resolution (b) above may be underwritten on such terms as may be determined by the Directors, subject to obtaining the approvals of the relevant regulatory authorities. (d) That the shareholders, pursuant to Resolution (c) above, hereby waive their pre-emptive rights to any unsubscribed shares under the Rights Issue in the event of an under-subscription.”

Market players said that the usual practice is for the board to first come up with a proposal to raise capital and if passed the board will then be asked to come back with a detailed plan for shareholder approval at a subsequent date.

One of them said it would seem the board is working to a predetermined answer. Some years ago, the board moved the registrar service of the bank from First Registrars to another firm without explanation.