First Bank Of Nigeria Now Has A New Majority shareholder, And His Name is Oba Otudeko.
With disgraced CBN governor Godwin Emiefele out of the way, Chairman of Honeywell Group Oba Otudeko has taken over control of Nigeria’s oldest bank, First Bank, from Femi Otedola, who was before now the largest shareholder of the bank.
Back story, as I digress:
On April 21, 2021, the Central Bank of Nigeria (CBN) under Godwin Emifele removed Ibukun Awosika, Oba Otudeko, and other directors of First Bank of Nigeria Limited over what it termed the directors refusal to submit to regulatory authority.
The CBN also accused the directors of corporate governance breaches, accusing them of taking actions that compromised the health of the bank.
Emifele was actually right to remove Oba Oteduko’s board.
Oteduko turned First Bank into his piggy bank, his personal ATM, using his influence as board chairman to collect loans for his business at a giveaway interest rate.
Inside borrowing, which was what Oba Otudeko was doing at the time, is not bad, but it becomes bad when it is abused.
While insider borrowing is legal, it is subject to several regulations. One such regulation is that insiders do not get any special treatment, incentive rates, or other benefits not offered to regular bank customers.
But the CBN alleged that First Bank gave special treatment to Honeywell Flour Mills in restructuring its loan facility.
Oba Otudeko, through his company, owed First Bank 75 billion naira, but surprisingly, First Bank did not perfect its lien on the shares of Mr. Oba Otudeko in FBN Holdco, which collateralized the restructured credit facilities for Honeywell Flour Mills contrary to the conditions precedent for the restructuring of the company’s credit facility.”
In simple terms, First Bank does not have a binding document filed with the CBN that will allow it to legally claim the collateral if there’s a default on the loan.
But the big elephant in the room that pushed Emiefele to sack Oba Otudeko from First Bank was the controversial Airtel shares, which Oba Otudeko used as collateral to collect loans from two banks.
In 2013, a N5.5 billion loan facility given to Oba Otudeko’s Honeywell Flour Mills by Ecobank became the subject of litigation, which was finally settled and laid to rest by the Supreme Court.
According to news reports, Otudeko’s Airtel shares were used as collateral for Honeywell’s Ecobank loan.
Yet, in an interesting turn of events, those same Airtel shares, as well as some Honeywell assets, were also used as collateral for the credit facility from First Bank.
So In simple terms, Oba Otudeko used Airtel shares to collect loans from two banks.
Incredible!
So these corporate infractions are enough to push Emiefele to sack Oba Otudeko and his board from First Bank.
The CBN at that time had to bail First Bank out several times because the loan Oba Oteduko owed was crippling the bank’s day-to-day activities.
Tired of bailing them out, CBN demanded that First Bank instruct Oba Otudeko to pay back the money owed before 48 hours, which he did, and this is how he paid back the loan.
Oba Otudeko sold a 71.69% stake in his business, Honey Well, to his competitor, Flour Mill of Nigeria, in a deal worth 80 billion. naira
This is why Honeywell is now known as Honeywell Flour Mill because Oba Oteduko no longer controls the company he founded.
It was because of his sacking by Emiefele that Femi Oredola took over, becoming the highest majority shareholder in First Bank.
Having licked his wound, and since his enemy Emiefele is out of the way, Oba Otudeko is making a big, audacious comeback.
Yesterday, the news came in that the shares of First Bank had jumped to 19 naira from 10 naira.
Apparently, a big whale was moving things around by mopping up First Bank shares, and the whale spent 85 billion to mop up those shares.
The whale later turned out to be Oba Otudeko. And this is what happened:
Oba Otudeko had shares in Firsr Bank using different proxies not connected to him.
He used proxies to own those shares.
However, he made the decision to combine his shares by selling them to the investment firm he controls, Barbican Capital Limited.
With the acquisition of these proxy shares by Barbican Capital Limited, Oba Otudeko is now the largest owner of shares in First Bank, with 13% ownership of the bank, therefore displacing Otedola, who was the largest shareholder before with just a 5.6% stake in the bank.
What I don’t understand till now is the motivation of Otudeko to merge the shares he owned through his proxies under one umbrella.
Some analysts are of the view that because of a pending judgment, the Supreme Court authorized Eko Bank to liquidate Honey Well because of another loan that Oba Otudeko took From the bank and refused to pay it back.
Rather than paying the loan, Oba Otudeko sued them in court.
The case went all the way to the Supreme Court, which finally gave its judgment on June 30, affirming that Honeywell owed Eko Bank and thereby empowering Eko Bank to liquidate Honeywell and collect their money back.
Remember, Otudeko no longer owns Honeywell; it now belongs to Flour Mill.
Even Eco Bank warned Flour mills to stay away from acquiring Honey Well, but they did not listen.
So who knows? Consolidating the shares controlled by proxies might be a way of making it easy for Eko Babk to liquidate Barbican Capital Limited and then get their money back instead of going after Honeywell, which was already sold to Flour Mill.
Or, perhaps, he wants to take total control of a bank that he should have been the major shareholder of had he not scattered his shares under proxy arrangements.
Or maybe Otudeko wants to sell some shares of First Bank under one umbrella, which he will use to offset the loan he owes Eko Bank.
The money Honeywell owed Eco Bank was just 5.5 billion, which makes the whole thing very confusing.
However, I believe that with time, we will know why Oba Oteduko consolidated his shares, which gave him the controlling right and made him the largest shareholder in First Bank.
Time has a way of revealing everything.
With this news, Femi Otedola has been displaced and is no longer the largest shareholder of First Bank as of today.
Who knows how Femi would react to this news? He is still leaking his wounds from the humiliation he suffered from Tony Elumelu.
We wait with bated breath.
