Business
First Bank in trouble over insider borrowing, CBN threatens sanction, Otudeko indicted
BY KAZIE UKO
The Central Bank of Nigeria (CBN) has given First Bank of Nigeria Limited 48 hours to recover loans it granted to Honeywell Flour Mills, having failed to perfect its lien on the shares of Mr. Oba Otudeko in FBN Holdings, which was used as collateral for the Honeywell loan.
The CBN order was conveyed in a letter dated April 28, 2021, signed by its Director, Banking Supervision, Mr. Haruna Mustafa, and addressed to the bank’s Chairman, Mrs. Ibukun Awosika.
In the letter titled: “Re: Audited FIRS Accounts for the Financial Year Ended December 31, 2020,” the apex bank revealed that First Bank was yet to divest its interest in Honeywell Flour Mills, Barti Airtel and other non-permissible interest.
The Chairman of FBN Holdings, the holding company (Holdco) of First Bank of Nigeria Limited, Oba Otudeko, is also the Chairman of Honeywell Flours. He used to be the Chairman of Barti Airtel.
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According to a Thisday report of Wednesday, April 29 2021, the CBN in its letter said it was concerned that First Bank had not complied with regulatory directives to divest its interest in Honeywell Flour Mills despite several reminders.
“We further noted that after four years the bank is yet to perfect its lien on the shares of Mr. Oba Otudeko in FBN Holdco, which collateralised the restructured credit facilities for Honey Well Flour Mills contrary to the conditions precedent for the restructuring of the company’s credit facility.
“Given the bank’s failure to perfect the pledge and satisfy conditions for regulatory approval, the restructuring has thus been invalidated and the credit facilities now payable immediately,” the regulator declared.
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The CBN, consequently, directed that Honeywell, “fully repays its obligations to the bank within 48 hours failing which the CBN will take appropriate regulatory measures against the insider borrower and the bank.”
It continued: “Furthermore, the Bank (CBN) notes the untenable delay in resolving the long outstanding divestment from Bharti Airtel Nigeria Ltd in line with extant regulations of the CBN.
“Accordingly, you are required to divest the equity investments in all non-permissible entities such as Honey Well Flour Mills and Bharti Airtel Nigeria Limited within 90 days. Please you are to forward evidence of compliance in accordance with the timelines above to the Director of Banking Supervision.”