Less than 24 hours after First Bank of Nigeria announced the replacement of Adesola Adeduntan, about eight months to the expiration of his second tenure, the share price of FBN Holdings dropped 4.73 percent on Thursday afternoon, the company’s biggest daily fall since January 2021.
While it opened trading with N7.40, the share price of the financial holding company dropped to N7.05 as at 12.37 pm WAT.
This happened after the Central Bank of Nigeria (CBN) queried the Board of First Bank for removing the MD without regulatory approval.
The letter dated April 28, 2021, signed by Haruna Mustafa, the CBN’s director of banking supervision, and addressed to the Ibukun Awosika, First Bank’s chairman, questioned the Board’s decision.
CBN said in the document that the action was taken without due consultations with the regulatory authorities, especially given the systemic importance of the commercial bank.
“The CBN was not made aware of any report from the board indicting the managing director of any wrongdoing or misconduct; there appears to be no apparent justification for the precipitate removal,” the industry regulator said.
It explained that it was particularly concerned because the action is coming at a time the CBN has provided various regulatory forbearances and liquidity support to reposition the bank.
“It is also curious to observe that the sudden removal of the MD/CEO was done about eight months to the expiration of his second tenure which is due on Dec. 31, 2021,” the letter stated.
First Bank had on Wednesday announced the appointment of Gbenga Shobo as the new managing director/chief executive officer.
According to the lender, the new MD was to assume office on April 28.
Awosika had said the holding company was proud to announce Shobo as its new managing director/chief executive officer, adding that he was succeeding Adeduntan who would be leaving the bank following the bank’s term limit for its chief executive after successfully leading the bank since January 2016.
“His appointment has proven the resilience of our succession planning mechanisms and the value we place on our long-standing corporate governance practices, which underpin the institution’s enduring sustainability and 127-year legacy,” Awosika said.
Until his appointment, Shobo was the First Bank’s deputy managing director.