The raging legal battle between prominent shareholders of FBN Holdings Plc has delayed plans by the company to raise fresh capital of N350 billion to meet the new Central Bank of Nigeria’s N500 billion minimum capital requirement for Tier 1 banks
The holding company’s 12th annual general meeting slated for September 3, 2024 during which shareholders were expected to approve the recapitalisation exercise, dividend payments and directors fees was cancelled last Monday following an order of the Federal High Court sitting in Lagos at the request of a shareholder, Tohir Folorunsho Ismaila.
This is the second year running that the parent company of Nigeria’s oldest bank has been enmeshed in legal disputes with some shareholders that has disrupted its Annual General Meetings schedule.
At this year’s AGM, shareholders are also supposed to approve a fixed amount of N50 million each as directors’ fees for the financial year ending December 21, 2024, and N63.7 million as the fee for the board Chairman, Femi Otedola, which approval was granted during last year’s AGM.
The legal tussle stems from a dispute between the bank and its former Chairman, Oba Otudeko, over the true state of his shareholding.
Otudeko had sued FBN Holdings over its failure to recognise his investment vehicle, Barbican Capital, as the largest shareholder in the bank, which he claims owns a 15.01 percent stake amounting to 5.38 billion units.
The bank insists that Otedola, who holds a 9.41 percent share, is the largest shareholder.
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First Bank argued that Barbican cannot provide evidence of purchase of some of the shares it claims to own.
According to court papers, First Bank further argued that Barbican is concealing the fact of an ongoing verification exercise by the Central Bank of Nigeria of its alleged significant shareholdings.
It noted that only 3.11 billion shares (representing 8.67 percent) of Barbican Capital’s total shares could be verified by the CBN, while its alleged 2.34 billion shares (representing 6.52 percent) could not be verified.
FBN Holdings and the CBN, both respondents to the lawsuit, have asked a Federal High Court sitting in Lagos to dismiss a suit filed by Barbican Capital over “the alleged alteration of its alleged 5,386,397,202 units of shares in the bank”.
FBN Holdings contends that Barbican Capital has not challenged the outcome of the verification exercise carried out by the CBN as the supervisory and regulatory body regarding share ownership.
But Barbican claims it has attached a statement by the Central Securities Clearing System Plc, which is a computerised depository, clearing, settlement, and delivery system for transactions in securities.
Barbican claims CSCS’s statement showed that as at May 23, 2024, its shareholding stood at 5.386 billion shares.
Barbican further argues in its court filings that First Bank paid dividends for all of its 5.386 billion shares between November and December 2023 for the full year 2022, which validates its ownership of the shares.
While the matter has been fixed for hearing on October 2, 2024, shareholders are worried that the legal tussle could affect the fortunes of the bank as the industry becomes even more competitive and the recapitalisation clock continues to tick.
Some stakeholders blame the boardroom-turned-legal battle on an ongoing power tussle between the bank’s largest shareholders.
The Chairman, Trusted Shareholders Association of Nigeria, Alhaji Mukhtar Mukhtar, which represents minority shareholders, urged regulators to protect the company from aggressive moves by some individuals to undermine FBN Holdings in view of its status as a systemically important institution.
Mukhtar said: “I think this is very improper.
“It is not right that some people who have benefited from the political economy of this country are the ones holding this institution to ransom.
“They are trying to prevent the bank from holding AGM and considering some resolutions, which is to raise more capital for the banking business.
“You can agree with me that banking business is about capital.
“If there is no capital, business will collapse.
“And for the banking industry, capital is very, very important.”
The National Coordinator, Independent Shareholders Association of Nigeria, Moses Igbrude, had said resorting to court to stop the statutory AGM was bad because there were no operational issues or infringements within the company to warrant such a move.
Igbrude appealed to major shareholders to sheathe their swords and work for the unity of the bank by putting their resources and expertise in the service of the bank.
The Chairman, Pragmatic Shareholders Association of Nigeria, Bisi Bakare, said the bank was more important than any individual’s interest, berating the attempt to use court to stop the AGM as a bad move.
Bakare noted that as a major financial group, anything that happens to FBNH will affect the whole economy, creating massive distress and huge unemployment.
FBN Holdings had last month declared a pre-tax profit of N177.79 billion, representing an 18.9 percent year-on-year growth according to its 2024 second-quarter results.
The impressive growth in pre-tax profits boosted half-year profitability to a record N411.9 billion for the group, marking its best-ever half-year performance on record.
FBN Holdings’ half-year profit of N411.9 billion is more than double the N205 billion pre-tax profit reported for the same period in 2023 in continuation of improved performance and ratings recorded over the past 10 years.
The result is a continuation of the performance legacy instituted by recent chief executives of the bank: Bisi Onasanya and Dr. Adesola Adeduntan, which is being built on by the present management led by Olusegun Alebiosu, who took office in April.
For six consecutive years: 2011 to 2016, FirstBank was named “Most Valuable Bank Brand in Nigeria” by the globally renowned The Banker Magazine of the Financial Times Group and “Best Retail Bank in Nigeria” eight times in a row, 2011 to 2018, by the Asian Banker International Excellence in Retail Financial Services Awards.
In 2022, the Top 100 African Bank rankings released by The Banker Magazine ranked FirstBank as number one in Nigeria in terms of Overall Performance, Profitability, Efficiency and Return on Risk.
Also in 2022, the Bank received the “Most Innovative Retail Banking Product in Nigeria (FastTrack ATM)” and “Best Retail Bank in Nigeria” awards from International Finance Magazine.
FirstBank was also awarded “Best Corporate Banking Western Africa, 2022” and “Best CSR Bank Western Africa, 2022’’ by Global Banking and Finance Magazine.
In 2023, FirstBank received notable awards including “Best Private Bank for Sustainable Investing in Africa 2023” by Global Finance Awards; “Best Sustainable Bank in Nigeria 2023” by International Investors Awards; “Best Bespoke Banking Services in Nigeria 2023” by International Investors Awards; “Best Financial Inclusion Service Provider in Nigeria 2023” by Digital Banker Africa; “African Bank of the Year” by African Leadership Magazine; “Best Corporate Bank in Nigeria 2023” by Euromoney Awards; and “Most Innovative Banking Brand – Nigeria 2023” by Global Brands Award.
