S&P: FBNH, FirstBank Boards’ Changes Ensured Stability

<p><em>S&amp&semi;P global rating<&sol;em><br &sol;>&NewLine;<a href&equals;"https&colon;&sol;&sol;openlife&period;ng&sol;">S&amp&semi;P Global Ratings<&sol;a> said changes to the boards of FirstBank of Nigeria Limited and FBN Holdings &lpar;FBNH&rpar; Plc&comma; recently directed by Central Bank of Nigeria &lpar;CBN&rpar;&comma; addressed the banking group’s corporate governance challenges and ensures the Nigerian banking sector’s financial stability&period;<br &sol;>&NewLine;In a statement&comma; it stated that its ratings on FBN and other Nigerian banks remain constrained by shortcomings in corporate governance and transparency&comma; among other factors&period;<br &sol;>&NewLine;The CBN recently replaced the entire boards of FBN and FBNH&comma; and reinstated the former executive directors and CEO&comma; Dr&period; Adesola Adeduntan&period;<br &sol;>&NewLine;The CBN had also requested FBN unwind certain exposures and divest from its participation in a non-permissible company&comma;also pointing to potential corporate governance lapses at the bank&period;<br &sol;>&NewLine;&OpenCurlyDoubleQuote;However&comma; Dr&period; 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&comma; which has total assets of Nigerian N7&period;7 trillion&period;<br &sol;>&NewLine;&OpenCurlyDoubleQuote;We are of the view that the CBN’s historical approach has been more reactive than proactive&comma; as illustrated by the Skye Bank episode&period;<br &sol;>&NewLine;&OpenCurlyDoubleQuote;That said&comma; recent actions&comma; while disruptive in the near-term&comma; may signal a more direct and possibly decisive supervisory approach to alleged failings in the management and governance of regulated institutions&comma;” it stated&period;<br &sol;>&NewLine;It&comma; noted that FBN’s overall credit profile has gradually stabilised since 2016&comma; with a capital adequacy ratio of 17 percent in 2020&comma; as against a 15 percent minimum requirement&period;<br &sol;>&NewLine;Similarly&comma; the bank’s asset quality indicators improved significantly&comma; with <a href&equals;"https&colon;&sol;&sol;www&period;thesun&period;co&period;uk&sol;sport&sol;football&sol;">Non-Performing Loans<&sol;a> &lpar;NPLs&rpar; reducing to 7&period;7 percent in 2020&comma; from 20-25 percent since 2016&period;<&sol;p>&NewLine;<p>&nbsp&semi;<&sol;p>&NewLine;