Shareholders of First Bank of Nigeria (FBN) Holdings, Nigeria’s oldest financial institution, are growing increasingly anxious as recent crises and scandals have caused the company’s share price to plummet by over 50% in five months, POLITICS NIGERIA reports.
FBN Holdings, which traded at ₦43.95 per share on March 19, has seen its share price fall to ₦20.35 as of Wednesday, according to data from the Nigerian Securities Exchange (NGX).
This dramatic decline is largely attributed to a series of controversies that have embroiled the company’s management and operations in recent months.
Asides the controversies surrounding the ownership of its controlling stake, a litany of court cases pending determination and a fraud case that led to the dismissal of over a hundred staff have raised concerns for investors holding the bank’s shares, sources confided in this newspaper.
Recapitalisation Stalled
These developments have cast a cloud of uncertainty on the bank’s recapitalisation plans as many of its competitors have completed a fresh capital raise in line with the standard set by the Central Bank of Nigeria (CBN).
Recall that the Apex bank, under a new threshold released in March, stated that commercial banks with international authorization must have at least 500 billion naira, leaving banks with two years to meet the new standard.
FBN Holdings, although announced plans to raise some N300 billion through issuance of shares via a public offering in April, the Annual General Meeting (AGM) which is meant to approve it, is yet to take place.
A Lagos Federal High Court halted an AGM initially scheduled for August 22. The meeting is now postponed till September 3, according to a notice published on the NGX.
Investors are worried that these ongoing issues could lead to a further decline in the bank’s fortunes.
“These are the kind of issues that led to the fall of Skye Bank. If care is not taken, many local and foreign investors will pull out,” said an investor who has held shares in the company since 1995. He added, “The troubles are piling up day by day and it seems there is no end in sight. It is even difficult to hold an ordinary Annual General Meeting, not to mention raising capital.”
Ownership Dispute
The ongoing dispute over the ownership of FBN Holdings’ controlling stake has been a major cause of concern for investors. In December 2021, billionaire Femi Otedola became the company’s single largest shareholder.
However, he was soon displaced by Barbican Capital Limited, a company owned by Oba Otudeko, which now claims to hold a 15.01% stake in the company.
Barbican Capital has filed a lawsuit against FBN Holdings, challenging the reduction of its shareholding from 13.61% in December 2023 to 8.67%. The company submitted evidence from the Central Securities Clearing System (CSCS) to support its claim, showing that it actually owns 5.39 billion shares, representing 15.01% of the lender’s total shares.
This ownership dispute, along with the legal battles surrounding it, has further destabilised investor confidence.
‘Illegal’ 2023 AGM
Despite a court order prohibiting FBN Holdings in 2023, the bank proceeded with the meeting and this has resulted in multiple lawsuits filed by aggrieved shareholders.
One of the plaintiffs, Kujenya Olayiwola Yusuf, prayed the court to nullify all decisions made during the August 223 AGM, including the registration of the new share capital.
In another case related to the controversial AGM, a minority shareholder Yetunde Olowoyeye, argued that all the resolutions passed during the AGM are null and void, having been forged in the fires of judicial contempt.
The outcome of these cases, some shareholders say, will impact on the future of the company as a reversal of the decisions made at the AGM could set the bank on a path of collapse.
40 billion Fraud
While there is so much going on in the FBN Holding board room, the banking hall is also not spared of scandals. The bank sacked at least 120 employees after discovering a ₦40bn fraud, Tech Cabal reported in August.
Tijani Muiz Adeyinka, a manager on the operations team who reportedly diverted ₦40 billion over two years, has been on the run for weeks after his heist was discovered in May. The employees dismissed were accused of laxity in carrying out their duties and were told they should have spotted the fraud earlier.
The Tech Cabal report added; “Several employees were questioned by the Nigerian Police Force (NPF) and detained at the Lion’s Building for at least six hours, one person with direct knowledge of the incident said. Those employees needed to post bail before they were released. Restrictions have been placed on all their personal accounts except their First Bank accounts. “
Meanwhile, Lagos-based banking and finance consultant, Hakeem Morakinyo, told POLITICS NIGERIA that FBN Holdings is in a precarious position as these crises continue to unfold.
“The coming weeks will be critical in determining whether the bank can resolve its internal conflicts and restore investor confidence or if it will follow the same path as other failed institutions,” he said.
Credit: POLITICS NIGERIA