In a statement, which was made
available to Tectono
Business Review, the global rating firm stated that its ratings on
FBN and other Nigerian banks remain constrained by shortcomings in corporate
governance and transparency, among other factors. The CBN recently replaced the
entire boards of FBN Holdings Plc and First Bank of Nigeria Limited and
reinstated the former executive directors and CEO, Dr. Adesola Adeduntan. The CBN had also requested First Bank to
unwind certain exposures and divest from its participation in a non-permissible
company, also pointing to potential corporate governance lapses at the bank.
“However, Dr.
Adeduntan’s reinstatement and the re-appointment of the other executive
directors underscores the CBN’s confidence in the existing management team to
continue the turnaround of the third-largest banking group in Nigeria, which
has total assets of Nigerian N7.7 trillion. We are of the view that the CBN’s
historical approach has been more reactive than proactive, as illustrated by
the Skye Bank episode. That said, recent actions, while disruptive in the
near-term, may signal a more direct and possibly decisive supervisory approach
to alleged failings in the management and governance of regulated
institutions,” it stated.
It, noted that First Bank’s
overall credit profile has gradually stabilised since 2016, with a capital
adequacy ratio of 17 percent in 2020, as against a 15 percent minimum
requirement. Similarly, the bank’s asset quality indicators improved
significantly, with Non-Performing Loans (NPLs) reducing to 7.7 percent in
2020, from 20-25 percent since 2016.
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