Nigeria’s foremost banking institution, First Bank of Nigria Holdings Plc, has lately been emeshed in controversy bothering on lack of trust of its stakeholders, particularly its shareholders, following its failure as a publicly quoted entity, to disclose how it has handled the issue of of its bad debts.
The banking institution, was particularly berated for its failure to disclose how much it has recovered from its whooping bad debts otherwise known as non-performing loans since 2011, seven years after it made an estimated ₦700 billion provisioning for the debts in its books.
The development had led to an ugly scenerio at the company’s annual general meeting (AGM), held recently at the prestigeous Eko Hotel, as shareholders held up the meeting for almost one hour.
This followed the refusal of the board Chairman, Mr Oba Otudeko, who apparently didn’t want the matter to be discussed, to recognise an outspoken shareholder, Mr. Nonah Awo, who wanted to ask the board of the banking institution why it has failed to tell how much is the bank’s debts portfolio and the level of recovery sofar achieved.
The distruption of the meeting on Awoh’s insistence to speak backed by the voiceforous Shareholders protest, forced the the board, led by Otudeko to backdown and allow him to eventually take his turn to speak.
Reeling out what he described as the sins of the bank against its shareholders, on the issue of the bank’s NPL, Awoh chided the board and management of the banking institution, over its failure to as a matter of importance to disclose how much it has recovered from the festering non-performing loans, to which a huge ₦700 billion provisioning was made seven years ago.
He stressed that the board of the bank owe shareholders the obligation to know the result of the effort of the company at recovering the huge debts, which have impacted negatively on the activities of the bank, as well as drastically reduced return on investment to shareholders, who were being paid insignificant dividends as a result of the poor financial situation of the foremost financial institution in the last five years.
He said, ‘The board of the company must respect shareholders. I know the bank can be stronger, the recovery of the loans will make the bank a better institution”.
He warned that unless the board wakes up to his responsibility to recover the bad debts, which he said is the only way the bank can return to its enviable position, shareholders may be doomed forever, as they will remain the worst for the situation, in terms of low return on their investments, as seen in last couple of years, where dividend payments had insignificant compared to what was known of the banking group’s return to its shareholders.
The only response the banking group could muster against the indictment was the assurance by the Group Managing Director, Mr. Urum Kalu Eke that the board of FBN Holding was determine to recover all the bad loans, which gave rise to the huge provisioning for the bank.
Eke who said the holding company had set up a special committee set up to address the issue, saying an asset management units has been created for the purpose, admitting that the banking group effort presently through its recovery team has witnessed the traditional low recovery .
According to him “even though we have not recorded a full resolution of our Non-Performing loans (NPL), we have made significant progress in dealing with a number of these names and more fundamentally, ensured a strong asset quality from recent credits.
Investors turned blind eyes to the shares of the company, on the day the annual account was released on the floor of the NSE, as the share price of FBN Holding went down by 5.22, contrary to expectations of upbeat transactions whenever such a company’s results were released.