Who Will Save First Bank From The Warring Factions?

+ How Crisis Exposed The Rot In The Old Generation Bank

Truth is a casualty in the business parlances of Nigerian banks. However, if truly a bank is a place where they lend you an umbrella in fair weather and ask for it back when it begins to rain, then First Bank might be getting drenched in torrential doses of the proverbial bank’s poison. As you read, the sweet simplicity of the steep per cents has deserted the bank like a spent era of prosperity and pliant luck.

Interestingly, about 10 years after he retired as chairman of First Bank of Nigeria Ltd, echoes of Oba Otudeko’s reign still reverberate rancorously. While the premier banking institution still wears a facade of glee and grace and sturdiness, sources say it is heaving and caving under a heavy yoke of colossal insider debts. Otudeko, a billionaire philanthropist and chairman of multi-faceted Honeywell Group, is reportedly indebted to the bank . Alas, the loan is non-performing.

Neither are there indices that the loan would perform anytime soon in view of the current economic headwinds. This has thrown many customers privy to the unwholesome transactions into a vortex of turmoil. Like a midwife with a rich history of stillbirths, Otudeko is a serial entrepreneur with understandable exposure to bank loans. The contention by many customers of First Bank now is that Otudeko’s subsisting relationship with the bank is doing it more harm than good. But what can the poor mortals do?

And you couldn’t have forgotten so soon the tenure of billionaire banker, Bisi Onasanya. Forget his cars, Onasanya owns impressive stakes in the coastal city’s real estate sector. This includes posh apartments in the most exclusive and highbrow areas of Lagos called The Address. Hence even though he is retired, Onasanya is making a hell of money from real estate.

There is no gainsaying Onasanya made a lot of money while he served as head honcho of First Bank. He also helped a lot of Nigerian magnates to make a lot of money. For instance, it was during his tenure as MD of First Bank that the bank lent out money to the highest number of people. It was also during his tenure that the bank suffered the highest number of non-performing loans. Thus many businessmen made their fortune via Onasanya’s very accommodating loan schemes.

The Central Bank of Nigeria has directed the Oba Otudeko owned Honeywell Flour Mills to repay a loan to First Bank within 48 hours.

“Consequently, the company (Honeywell Flour Mills) is required to fully repay its obligations to the bank within 48 hours, failing which the CBN will take appropriate regulatory measures against the insider borrower and the bank.”

Insider lending is when a bank makes a loan to one or more of its own officers or directors.

Oba Otudeko serves as the chairman of FBN Holdings PLC, the holding company which owns First Bank. Otudeko also served as Chairman of First Bank until 2010 and is also the Chairman of the Honeywell Group.

While insider borrowing is legal, it is subject to several regulations. One such regulation is that insiders do not get any special treatment, incentive rates, or other benefits not offered to regular bank customers.

But the CBN is alleging that First Bank gave special treatment to Honeywell Flour Mills in restructuring its loan facility.


In the same memo seen by TechCabal, the CBN said that it has previously written to First Bank about its interests in the Honeywell Group. One big regulatory concern was Honeywell Flour Mill’s collateral for the loan facility.

According to the memo, “We further noted that in 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 Honeywell Flour Mills contrary to the conditions precedent for the restructuring of the company’s credit facility.”

In simple terms, First Bank does not have a binding document filed with the CBN that will allow it legally claim the collateral if there’s a default on the loan.

The apex bank has also asked First Bank to divest its interests in Honeywell Flour Mills Group and Bharti Airtel Nigeria Ltd. This order to divest from the apex bank has its roots in yet another bank loan involving Ecobank, Oba Otudeko and some Airtel shares used as a collateral.


In 2013, a N5.5 billion loan facility given to Oba Otudeko’s Honeywell Flour Mills by Ecobank became the subject of litigation and is in fact still ongoing at the Supreme Court.

According to news reports, Otudeko’s Airtel shares were used as collateral for Honeywell’s Ecobank loan. Yet, in an interesting turn of events, those same Airtel shares as well as some Honeywell assets were also used as collateral for the credit facility from First Bank.

According to one banking insider, “In a round about way, First Bank now owns the assets pledged to Ecobank.”

“So the same asset (Honeywell and Airtel) is allegedly pledged to Ecobank and none of the banks can move in on these assets. First Bank has an equity position while Ecobank has a debt position.”

But Otudeko and Honeywell’s loan are not the only issues at First Bank this week. In a separate memo, the CBN has also taken issues with First Bank over its recent announcement of a new MD/CEO.


On Wednesday, the Board of Directors of First Bank of Nigeria Limited said that it had appointed Gbenga Shobo as its Managing Director/Chief Executive Officer (CEO). Shobo’s appointment followed the news that the former MD/CEO, Dr Adesola Adeduntan, had retired.

But the CBN has now flagged that transition process and said it has no justification because Dr Adeduntan’s tenure has not yet run out, and there was no notification from First Bank to the CBN over the transition.

In a memo seen by TechCabal dated April 28, 2021, the CBN stated, “The attention of the Central Bank of Nigeria (CBN) has been drawn to media reports that the Board of Directors has approved the removal of the current Managing Director of the bank, Dr Sola Adeduntan, and appointed a successor to replace him. The CBN notes with concern that the action was taken without due consultation with the regulatory authorities, especially given the systemic importance of First Bank Ltd.”

However, Nairametrics quoted a source within First Bank who said that the bank “followed its corporate governance framework in its leadership change and appointed new executive directors. No Managing Director in the 127 years history of FirstBank has ever attempted a tenure extension. Why now?”

Given the pace at which the CBN reacted to these developments and demanded action on a 4-year case, one has to wonder how many more systemic infractions the regulator has overlooked and managed all this while.”

Leave a Reply

Your email address will not be published. Required fields are marked *