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Thursday, November 30, 2023

On the return of Oba Otudeko to First Bank

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By Tony Ademiluyi

In the beginning

Until 2019, popular businessman, Oba Otudeko of the Honeywell Group fame was the Chairman of First Bank. At the time he stepped down as Chairman and was succeeded by Ibukun Awosika – the first female Chairperson of Nigeria’s oldest bank founded in 1894, he was the largest individual shareholder of the long-lasting financial institution.

In 2021, he was removed as a non-executive director alongside his successor by the Central Bank of Nigeria for refusing to submit to regulatory authority, corporate governance breach as the health of the bank was allegedly compromised, the apex bank was alleged to have been interfering in the bank to avoid it from collapsing because of the gargantuan exposure to non-performing loans and also the CBN under the leadership of the now embattled Godwin Emefiele questioned the suspicious removal of Dr. Adesola Adeduntan as the Managing Director saying that it was done without the approval of the regulator and he was reinstated after the ouster of the directors.

No criminal charges were filed against the directors after they were shown the door by the CBN.

Beneficiaries of the Otudeko Vacuum

Otudeko served on the board of First Bank for a total of twelve years and has fought many board battles. His exit from First Bank led to a bitter power tussle between Chairman of Geregu Power, Femi Otedola, and Hassan Odukale.

According to a report by an online publication Arbiterz, Otedola prevailed as he became the largest individual shareholder in 2021.

Otudeko’s Dramatic Return

Oba Otudeko reportedly returned as the largest shareholder in FBN Holdings. In a significant cross deal valued at N87.8 billion, Otudeko increased his ownership stake in the company to 4.7 billion shares, representing a 14% interest.

The shares, acquired at a rate of N19 per unit, represent the highest volume of First Bank shares traded within a single day since 2012, marking the beginning of data published by the stock exchange. However, the transaction has escalated concerns regarding the legitimacy of the trades, as no shareholder had previously been officially recorded as owning such a substantial number of shares.

While an official press release clarifying the details of the trade is still pending from the Nigerian Stock Exchange, a shareholding disclosure submitted to the Company Secretary of FBN Holdings Plc on July 7, 2023, by Honeywell Group Limited disclosed that Barbican Capital Limited, owned by Otudeko’s children, has procured a total of 4,770,269,843 shares in FBNH.

“We write on behalf of Barbican Capital Limited, an affiliate of Honeywell Group Limited and refer to the provisions of Sections 119 and 120 of the Companies and Allied Matters Act 2020 (as amended).

“In addition to the previously disclosed interests by Honeywell Group Limited’s affiliates, kindly take this as notification that, as of 7th July 2023, Barbican Capital Limited has acquired an aggregate of 4,770,269,843 shares in FBN Holdings Plc. Kindly accept the assurances of our highest regards.” Honeywell Group said in a “disclosure of shareholding”

In a letter signed by the acting company secretary, Adewale Arogundade, FBN Holdings Plc has also officially acknowledged the acquisitions made by Honeywell Group Limited.

“This is to inform the public and our stakeholders that the Company received a notification dated July 7, 2023, from Honeywell Group Limited that its affiliate, Barbican Capital Limited, has acquired an aggregate of 4,770,269,843 units of shares from the Company’s issued share capital of 35,895,292,791, as at the above-referenced date. Based on the foregoing, the equity stake of Barbican Capital Limited in the Company is 13.3%,” the letter read.

Based on reports, the cross-deal supposedly included 26 proxy shareholders who are purportedly connected to Oba Otudeko. These shareholders consist of entities such as Bethlehem Properties Limited, Musa Haruna Foods, Yazidu Zakari Ventures Limited, Thornbull Securities Limited, and Moore House Limited. Additionally, other entities involved are Impressario Limited, Mahmoud Alheri Limited, Timothy Banfield Limited, and The WhitBread Limited.

Reactions from Stakeholders

A stockbroker, David Adonri, CEO of Highcap Securities Limited while admitting that the CBN took regulatory actions against him in 2021 due to his breach of trust as the FBHN Chairman, he went further to say that the details of the sanctions against him were unknown. He said: “We don’t know if it includes the prohibition to hold a board position in any bank. Assuming he was prohibited, his company which bought the shares and is now majority shareholder will have to nominate another person to serve on the board. I’m not aware of any SEC sanction against him arising from his dismissal from FBNH Board.”

On the highly contentious issue of the alleged debt owed Ecobank by Otudeko which saw the former write to First Bank to disregard his share acquisition, Mr. Adonri continued: “The alleged debt owed Ecobank by Oba Otudeko is hotly contested. If Ecobank has writ of Fi-fa, then they can attach fixed and floating assets of Oba Otudeko to foreclose the debt. This is a matter for the Court to decide”.

On July 12th, the share price of First Bank fell dramatically by a whooping ten percent which some analysts posit is a result of the fallout of the crisis. Mr. Adonri went on to say: “Fall in the price of FBNH could be backlash from the dispute between Oba Otudeko and Ecobank. It could also be because the market is fatigued after several days of the rally because many other stocks fell heavily on that day. However, FBNH does not possess strong fundamentals like other big banks to sustain rising investor’s interest.”

On wanting to know why Otudeko is plotting a controversial return to the bank by way of torpedoing the big-time shareholders there to become its largest, the veteran stockbroker said: “Oba Otudeko know the secrets of the bank and may wish to leverage on insider knowledge to enrich himself. Being a trained banker, Oba Otudeko sees banking as the best outlet to channel his divestment proceeds from Honeywell Flour mill. FBNH is his destination of choice based on his close familiarity with the bank”.

A Shareholder Activist and Co-Founder and Former National Publicity Secretary of the Nigerian Shareholders Solidarity Association (NSSA), Alhaji Gbadebo Olatokunbo weighed his many decades of experience in shareholder protection and activism.

He said that to the best of his knowledge, Oba Otudeko was asked to pay his debts and he thinks he did and therefore he doubts if there was any sanction from either the CBN or SEC since they had settled on point of disagreement.

He went further to say on the claims that he allegedly owes Ecobank a whopping 13.5 billion naira: “Since this matter is in court, l can’t say much, but since the issue became public, there have been serious discussions amongst shareholders on the pros/cons and I’ve been working on internet/phone for sometimes now, but one the of findings was that he [Otudeko] and the bank [Ecobank] agreed on some amount and he honoured the agreement, only for the bank to demand more money after payment of the agreed sum, which he refused to entertain and that the amount left was so small to the demand of 13.5billion in question today”.

On the collapse of the share price of First Bank on the Nigerian Stock Market on July 12th, 2023, the veteran shareholder activist who co-founded the NSSA in 1985 said: “To be candid, there weren’t fundamentals for the prices of some stocks in the capital market as we discuss, the current prices were matters of demand and supply; while the stocks must later find their level; therefore whatever happens to first bank stock applies to many other ones without the technicalities/figures and other parameters to support their current prices”.

When asked why he thinks the Otudekos – Oba Otudeko and his children want to be major individual stakeholders in the bank, he opined: “HELL-BENT?,I cannot speak for the Otudekos, but if we should be less emotional and allow common sense to play out,l am of the view that Otudeko the ‘father’ is not same as the ‘children’ by law, because l read in the newspapers that the recent stocks bought in First Bank belong to a company owned by the children and not the father; therefore l don’t see the connection nor desperation. Though, there might be an issue of ego at play in some members of the family wanting to stage a comeback; l can’t think of any other reasons than the ones stated by the company/Otudeko in the memo written to First Bank on the acquisition of the said stocks; mind you, l don’t speculate on any issue.

Generally speaking, I don’t see any strange thing in what happened, because recently we’ve seen some issues played out at the capital market and there wasn’t any noise about them, but time will tell, if there is more to the issue at play, but for now no cause for alarm”.

Moses Igbrude, National Coordinator of the Independent Shareholders Association of Nigeria said: “The only thing I will say in respect of this issue is very simple. The company comprises different shareholders those with minority stakes and all of that but what is important is that the entity itself must survive and for the entity to survive and be prosperous they must work together. The stakeholders must work together to sustain the enviable institution. So based on that my advice for those who are coming in is that there is value so people are coming in. if there is no value nobody will risk his money to come in. If there is value there is interest in such things. So for that I will appeal to them that all of them should work together to bring their expertise, resources, and technical know-how tp work together and make First Bank an investors choice.

That is the only thing I will advise. they should work together and make sure that First Bank be one of the best banks in the country and return to the old days when they have to pay good dividends and good returns for all shareholders. It is only when they have that their returns are coming that they will also be happy. My advice to them is that all of them should work together in order to make sure that all is well in the financial institution.”

CBN Intervention

The stakeholders and pundits are watching with keen interest whether the Central Bank of Nigeria (CBN) will intervene yet again to save the bank from crisis and erosion of investor confidence in order to adequately protect shareholders’ funds.

Time will surely tell.

Tony Ademiluyi is the Editor of Buzz Times Media and can be reached at anthonyademiluyi@yahoo.com and +2348167677075.

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