Fresh Waves of Litigation Threatens First Bank Capitalisation

Posted on April 2, 2024

The recent directive of the Central Bank of Nigeria (CBN) to all banks in the country to further capitalise might be an impossible task for the First Bank of Nigeria Plc if the raging internal crisis of the bank proves impossible to resolve. 

This is because the bank has recently been bedevilled with lots of court cases challenging its internal governance and shareholding structure since 2022 with different shareholders taking the battle to the courtroom.

While battling all this since 2022/23 when the last two Annual General Meetings were held and have been subject of challenges in court, including the imposition of the Board of Directors by the CBN, a new twist has been introduced into the whole litigation saga as the Plaintiff in the case of Olusegun Samuel Onagoruwa v. FBN Holdings Plc. (Suit No. FHC/L/CP/1271/2022), has, by a motion on notice filed on 27th March, 2022, challenged the capacity of the Board of Directors of FBN to appoint new persons to fill the vacant slots.

It will be recalled that the erstwhile composition of the Board of Directors of FBN, nominated and appointed by the CBN has been a veritable source of rancour in FBN leading to several cases being filed against the bank by some of its shareholders.

However, according to an activist union leader within FBN, who spoke on the condition of anonymity, “as the tenure of the imposed directors is expiring, the same illegitimate Management of FBN, whose legitimacy is being challenged, has gone further, during the pendency of the cases challenging their competence to lead the bank, to arbitrarily appoint further five independent directors. Where they derived the power from remains a mystery.”

In the motion on notice filed by Mr. Olusegun Samuel Onagoruwa in Suit No. FHC/L/CP/1271/2022 and sighted by our correspondent, the Plaintiff seeks “an order setting aside, nullifying, annulling and/or quashing the appointments and approvals of” Mr. Olusola Adeeyo, Mr. Viswanathan Shankar, Mrs. Remilekun Adetola, Mr. Anil Dua and Mrs. Fatima Ibrahim “as Non-Executive Directors of First Bank of Nigeria Limited made on the 20th day of March, 2024, by FBN Holdings Plc during the pendency of this action and in defiance of the subsisting order of this Honourable Court made on the 15th day of July, 2022.”

The motion also seeks an order restraining the above-named non-executive directors from acting or taking any steps as non-executive directors of the bank.

In addition to this particular case are four other cases pending at the Federal High Court, Lagos and Abuja challenging the internal governance of FBN Limited. It has also been reported that several court injunctions are existing against the bank from holding the last two Annual General Meetings which the bank went ahead to hold.

According to the union activist in FBN, who craved further anonymity, “Mismanagement and manipulation of shares are also being alleged in some of the cases pending against the bank while the legality of the AGMs and the imposed board of directors remain a challenge.”

The activist feared this spate of litigation and internal show of strength might bring a quick collapse of the more-than-a-century old bank as the migration of the bank to the new CBN threshold is likely to be stalled and even the true value of the recently ballooning value of the bank’s shares might be unveiled.”

Efforts made to reach Mr. Ebunoluwa Adegboruwa, SAN,, the lawyer representing the Plaintiff in the case, to seek further clarifications proved abortive as he neither picked calls nor responded to messages.

Equally, efforts made to reach out to the bank’s spokesperson was not successful as his telephone lines were unreachable as at press time.

As the fates of shareholders and other stakeholders of the bank hang in the balance constructed by the internal crisis and the stormy waters of litigation sweeping the bank away, it is imperative for the management of the bank to resolve the issues urgently.

According to Mr. Olalekan Babalola, who claimed to be one of the shareholders of the bank, “it is imperative for the authorities to find a solution to this lingering crisis as Nigeria cannot afford another major bank’s collapse in this period of economic recession.”

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