Oba Otudeko’s Honeywell Group has reportedly bought the largest shares of First Bank of Nigeria Holdings Plc in a cross deal worth N87.8 billion.
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Some of the major shareholders are said to have held a
crucial meeting Sunday to plot how to respond to the apparent emergence of
Otudeko as the bank’s single largest equity holder.
Their worry appear to revolve around concerns that Otudeko
and some other shareholders would now seek firstly to enthrone a board
representative of interests of the shareholders and not that of the suspended
governor of the central bank Godwin Emefiele who brought the bank under a
controversial regulatory control last year. This may also mean trouble for some
in the management of the bank seen by the Otudeko group as puppets of Emefiele.
The running battle began when the former board refused to
extend the tenure of CEO Adesola Adeduntan for an unusual third term, and only
for Emefiele to use his regulatory powers to reverse the board’s position on
the CEO.
According to a former director of the bank, “the current
board of First Bank is an anomaly. The board was created by the suspended
central bank governor. Regulators do not own or run companies. Companies are
owned and run by shareholders. This is the time to reverse this anomaly.”
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, confirming a story
first reported by BusinessDay following an unusual trading activity in FBNH
shares
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.
An email to First Bank to ascertain the outcome of the
shareholders’ meeting was not immediately responded to.
FBNH’s share price has nearly doubled in the past one year,
closing at N20.30 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 N565
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.
Over the last seven years, bad loan ratio collapsed, falling
to 5.6 percent in 2022, according to the bank’s financial statement.
The company’s profit before tax jumped more than ten times
to N147.3 billion in 2022 from N10.2 billion in 2015.
The value of shareholders’ investment has jumped 154.50
percent since lately, raising the company’s valuation to N728.67 billion as of
July 7, from N258.80 billion.
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.