*Capital Raising May Experience Delay
Nigeria’s oldest lenders, First and Union Banks, embroiled in legal battles, ownership and corporate governance issues, among others, may experience far-reaching consequences on capital raising efforts, with possible negative impact on financial inclusion, analysts say.
Industry watchers are warning of possible domino effect as the two big lenders, whose sneeze used to make economy catch cold, and in the category of ‘too big to fail’, battles of survival rage on.
Metrobusinessnews.com (MBN) investigations show that, in the past four decades, and up to the Sanusi Lamido Sanusi era, most appointments as either governor or deputies of CBN were made from the two giant institutions, an indication of their relevance and importance to the economy.
However, the CBN’s alleged silence on the matter is sparking fears that the issues may be more deep-seated than initially thought, and that the regulator may not be taking sufficient action to address them.
Specifically, while the unending legal battles with some shareholders of First bank is threatening for the second consecutive year to stifle an annual meeting of shareholders of First Bank Holdings, the parent company, the discredit of the acquisition of Union bank by relatively younger Titan Trust Bank and recommendation of take over by government by the Jim Obaze’s special investigation Committee have become matters of great concerns to the investing public.
First Bank Unending Issues
A Lagos Federal High Court halted FBN Holdings’ 12th AGM, initially scheduled for August 22, at the request of shareholder Tohir Folorunsho Ismaila, the latest of a growing list of shareholders standing in the way of the bank’s crucial annual meeting.
The virtual meeting now postponed till September 3 according to a notice by the bank on the NGX, was supposed to be the place to get shareholders approval for a N350 billion capital raise in the form of a public offering, rights issue or private placement.
“Dear Shareholder, FBN Holdings holds its 12th AGM on 03/09/2024 at 10am Virtually on Attend by Meristem: https://rb.gy/y7q3qd
Reports: https://rb.gy/yfyy3c”, according to a message from the bank’s Registrars to the shareholders on Wednesday.
First Bank had in April announced plans to raise some N300 billion through issuance of shares via a public offering, private placement or rights issue in the Nigerian or international capital markets.
While some banks have concluded their capital raising exercises,others are approaching the finish lines.
Securing approval for First Bank’s capital raise now faces another delay with the postponement of its AGM.
The postponement of the AGM is due to the recent high court ruling blocking the meeting.
The bank’s annual general meeting last year also looked on shaky ground after a similar court ruling by Justice I. N. Oweibo in the case brought against the bank by three shareholders – Olojede Adewole Solomon, Adebayo Oluwafemi Abayomi and Ogundiran Emmanuel Adejare, blocked the meeting from happening.
The virtual meeting did go on, with First Bank insisting that it had not been served any court order stopping it from holding its 11th Annual General Meeting.
The Bank finds itself ensnared in a web of legal battles with shareholders questioning the legitimacy of a board appointed by the CBN rather than shareholders.
The AGM delayed till September 3 is also supposed to approve a fixed amount of N50 million each as directors’ fees for the financial year ending 31 December 2024 and N63.7 million as the fee for the board chairman.
Billionaire investor, Femi Otedola, was appointed chairman at a controversial AGM last year.
Analysts are worried that the bank on which the economic fortunes of the country used to be tied to, could be enmeshed in serious issues leading to disenchantment by some of its shareholders who are bent on exercising and enforcing their alleged infringed rights.
Analysts are waiting with bated breadth how the meeting ends to pave way for a united house to give approval for capital raising and others approvals.
CBN, FG Keep Mum Over UBN, Months After Report, Take-Over
For the embattled Union bank, CBN, on January 10, dissolved the board of directors of the bank, alongside those of Polaris and Keystone Banks in one fell swoop and also appointed managing directors and executive directors to run the institutions.
The apex bank according to its Acting Director of Corporate Communications, Hakama Sidi-Ali, wielded the big stick having been found guilty of various infractions considered inimical to financial system stability. The action, Sidi-Ali, in a statement said became necessary, following failure on the part of the affected banks and their respective boards to abide by the stipulated rules.
“The banks’ infractions vary from regulatory non-compliance, corporate governance failure, disregarding the conditions under which their licenses were granted, and involvement in activities that pose a threat to financial stability, among others,” she said.
Since the dissolution in January that swept off 26 bank directors from the industry, the apex bank has kept mum on the three banks, and efforts to know the next line of action so as to enable them commence capital raising exercises have been futile as officials of CBN maintained sealed lips.
Also, Obaze, the special federal government investigator, in the report said Emefiele used proxies to acquire Union Bank for Titan Trust Bank Limited, as well as Keystone Bank without any evidence of payment.
As a result, it recommends that the Federal Government should reverse the sale of the banks and also take them over.
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“We have completed our investigation on this acquisition and have also held meetings with the relevant parties except for Mr. Cornelis Vink, who is currently hospitalised in Switzerland’, said Obazee’s report.
“Otherwise, we are on the verge of recovering these two banks for the federal government,” Obazee reportedly said in December 2023.
In January 2024 however, the banks were recovered for the federal government following the inability of the previous owners to present proof of ownership of the funds with which the banks were acquired.
For instance, the chairman of Titan Bank, and also, former Deputy Governor of CBN, Tunde Lemo, and other investors in both Titan and Union Bank, Cornelius Vink and Rahul Savara refused to attend the December 28 meeting called by Obaze where they were expected to provide proof of ownership of the funds with which Titan Bank was set up and the proof of the funds for its acquisition of the Union Bank.
“Nigerians are waiting for a definitive statement of action from CBN, and this to me will douse the current anxiety hovering around the institutions,” says an analyst, who pleaded for anonymity.
