EDITORIAL: Inside First Bank Crisis; What Went Wrong?

First Bank

By_ Afolabi Hakim & Ronny Ikpoto

This past week, Nigeria’s first indigenous commercial bank, First Bank Nigeria PLC has been in the eye of the storm following a leadership crisis which has exposed the bank’s steep financial improprieties.

EKO HOT BLOG reported how the commercial bank drew the wrath of the apex bank after it appointed Gbenga Shobo as its managing director/chief executive officer on April 27, 2021.

Mr Shobo, who was the lender’s deputy managing director, was billed to take over leadership from Adesola Adeduntan, whom the bank said would be retiring in accordance with the bank’s term limits for chief executives, having headed it since 2016.

In the wake of this development, the regulator sacked the board of the bank and its holding company on Thursday, in a dramatic move that came a day after the bank named a new managing director.

First Bank, Nigeria’s premier bank, has for years been plagued by “bad credit decisions, significant and non-performing insider loans and poor corporate governance practices”, the CBN said Thursday.

In a speech to journalists, CBN governor, Godwin Emefiele, said First Bank maintained healthy operations up until 2016 financial year when the CBN’s examination revealed that the bank was in grave financial condition with its capital adequacy ratio and non-performing loans ratio substantially breaching acceptable standards.

First Bank has over 31 million customers with deposit base of N4.2 trillion, shareholders’ funds of N618 billion and NIBSS instant payment (NIP) processing capacity of 22 per cent of the industry.

In his speech, Mr Emefiele announced the reinstatement of Sola Adeduntan as the managing director and chief executive officer of the bank, a day after he was removed by the board.

READ ALSO: “I’ve Always Acted In Honour” – Ousted First Bank Chairman, Awosika, Breaks Silence

But where exactly did it all go wrong? As detailed by the CBN on some of the insider lendings of First Bank, especially as it relates to the Chairman of its holding company – Otunba Oba Otudeko, a former Chairman of First Bank Nigeria, One of them is for circa N75 billion, which should be beyond the single-obligor limit, especially for a director of the bank or its holding company.

Further investigations reveal that the same Otudeko also owes Ecobank some N5.5 billion, a loan which is the subject of litigation at the Supreme Court presently. The CBN has asked for an immediate paydown of the First Bank loan within 48 hours. What is more confounding about the situation is that both loans – from First Bank and Ecobank – have been allegedly secured with Otudeko’s shares in Airtel, which the CBN claims have not been put in perfectable state and hence cannot really serve as a fall back for either of the banks. A study of the First Bank’s books reveal that the bank may have provisioned over N1 trillion in the last six years for bad loans! With these kinds of numbers, no director of the bank has any moral ground to pontificate.

With regard to the power tuzzle within the bank’s hierarchy, an insider revealed that Adedutan was Arisekola’s candidate on the board. Adenuga had inherited Arisekola’s shares.

The ex-Chairman of the Board, Awosika, was Oba Otudeko’s candidate in the board.

Oba Otudeko’s company, being indebted to the bank had been pushing the bank to perfect the collateral which happens to be the Arisekola’s shares.

When the situation became more dicey, Adeduntan, being Adenuga’s (Arisekola’s) stooge was willing to dance to the tune of CBN calling for perfection of Arisekola’s shares. Hence, Oba Otudeko quickly moved to avert that by removing Adeduntan, a move which was deemed by the central bank as a contravention of laid down procedures.

The imbroglio that engulfs first bank is a microcosm of what goes on in the Nigeria socio-economic and political milieu where we have people of means and influence leverage their position to advance their selfish interests, they capitalise on precarious situation to aggrandize themselves at the detriment of the struggling and hapless masses. Evidence of such mind-numbing and appalling disposition is abound on all fronts: politics, economy, security.

The aforementioned situation underscores crony capitalism that stagnates the Nigeria economy. Nigerian billionaires thrive on cronyism and government patronage. Dangote enjoys state backed monopoly in certain sectors and even gets tax waiver on some goods, and those who could not get shameless government officials to do their bidding in perpetrating their unscrupulous acts turn to financial institutions for respite.

Nigerian billionaires are notorious debtors to corrupt financial institutions who rip the poor masses and protect the influential and rich: This fact is known to every Nigerian who’s shown casual interest in how the Nigerian banking industry operates. However, the magnitude of financial impropriety and the power play that went into covering up such malfeasance is what Nigerians have never witnessed.

Even more worrisome is that, while the Central Bank of Nigeria (CBN) was pulling every string to reposition and restructure the bank and place it on sound financial footing, the bank’s board of directors was sabotaging the effort of the apex bank and continued with the financial rascality that got it into the dire strait it now finds itself.

As noted by Tope Fasua in his piece, Why Elephants don’t do break dance, First Bank Plc has always been respected and remains so. In the reckoning of Nigeria’s banking regulator, the Central Bank of Nigeria (CBN), First Bank is regarded as a ‘systemically important bank’ (SIB). This is a principal bank that nothing must shake. The regulator therefore has a keen eye for developments in such a bank because it is connected to too many entities in Nigeria and beyond. Besides, the profile and history of First Bank, in particular, means that it is heavily relied upon by older and more conservative folks, who have always seen its longevity and pioneer status as a sign of solidness. The elephant logo, though thought to be slow, heavy and initially walking backwards but now rebranded to look younger and to walk forward, epitomises size and reliability. The elephant is also said to have a long memory.


In the light of recent events, particularly the move by the CBN to sanction erring parties, there is a great sense of expectation that the bank will regain stability in the near future. But then, this imbroglio should serve as an example to not just the institution but to all commercial banks in Nigeria that such underhanded practices as witnessed within First Bank is a glowing recipe for disaster, such disaster which has witnessed the disappearance of some of Nigeria’s most boisterous banking entities in the 21st century.

Furthermore, it may be expedient at this time to wield the big stick of the law against the major players involved in this circus act, primarily as a cautionary tale to jolt shoddy executives that it will no longer be business as usual, and that errant individuals must be made to face the music of their actions to avoid plunging Nigeria’s critically important institutions into the doldrums.

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Ronny Ikpoto
Edidiong-Ronny Ikpoto holds a First Class degree in Media Studies from the University of Calabar. He shares a healthy enthusiasm for journalism, social & literary criticism, and creative writing.