Otudeko vs. Otedola Legal Battle Destroys First Bank’s Recapitalization Chances

First Bank despite its status as a Systemic Important Bank (SIB) may eventually crumble due to a possible inability to meet the N500 billion minimum re-capitalization requirements for tier 1 banks as directed by the Central Bank of Nigeria (CBN) orchestrated by continuous cancellations of its Annual General Meetings.

Previous reports published on ENigeria Newspaper online had chronicled the unending battle of supremacy between billionaires, Femi Otedola and Oba Otudeko the former Chairman of First Bank Holdings.

In the exclusive report, ENigeria Newspaper took a down-memory lane look into the battle which dates back to 2019 since Femi Otedola in what was described as a hostile takeover, reportedly bought over the highest number of shares (9.41 percent) of FBN Holdings the parent company of First Bank Nigeria.

That singular maverick business move, positioned Otedola as the highest shareholder which in the original calculation would earn him the position of the bank.

ENigeria Newspaper reports that in a slamming clap back, Oba Otudeko returned with additional investment through his investment vehicle, Barbican Capital, acquiring a 15.01 percent stake amounting to 5.38 billion units, and then came the boardroom drama that ensued to date. READ IT HERE

Amid the melodrama, how the management of First Bank arrived at the calculation that Otedola, who holds a 9.41 percent share, is its largest shareholder while neglecting Otudeko who holds a 15.01 percent stake remains an algebraic equation that defies mathematical calculations.

As you may already know, FBN Holdings’ 12th annual general meeting slated for September 3, 2024, during which shareholders were expected to approve the recapitalization exercise, dividend payments, and directors’ fees was canceled 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 entangled in legal disputes with some shareholders that have disrupted its Annual General Meetings schedule.

Matters on the front burner up for discussion at this year’s AGM, include raising fresh capital of N350 billion to meet the new Central Bank of Nigeria’s N500 billion minimum capital requirements for Tier 1 banks.

Also, shareholders were 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 for failing to recognize 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.

First Bank argued that Barbican cannot provide evidence of the purchase of some of the shares it claims to own.
According to the 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 (CSCS) Plc, which is a computerized depository, clearing, settlement, and delivery system for transactions in securities.

Barbican claims CSCS’s statement showed that as of 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 a 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 recapitalization 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, of the Trusted Shareholders Association of Nigeria, Alhaji Mukhtar Mukhtar, representing minority shareholders, urged regulators to protect the company from aggressive moves by some individuals to undermine FBN Holdings given 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 the 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 of the 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 of, Pragmatic Shareholders Association of Nigeria, Bisi Bakare, said the bank was more important than any individual’s interest, criticizing the attempt to use the 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.

As at the time of filing this report, it is unclear what the future holds for FBH Holdings Plc and by extension its subsidiary, First Bank of Nigeria.