S&P
Global Ratings said changes to the boards of First Bank of Nigeria Limited and
FBN Holdings (FBNH) Plc, recently directed by Central Bank of Nigeria (CBN),
addressed the banking group’s corporate governance challenges and ensures the
Nigerian banking sector’s financial stability.
In a
statement, it 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 and FBNH, and reinstated the former
executive directors and CEO, Dr. Adesola Adeduntan.
The CBN had
also requested FBN 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 FBN’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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