Monday, 25 October 2021 04:52

CBN, SEC, NGX scrutinise Otedola over First Bank acquisition

Nigeria’s financial services regulators are launching intensive regulatory assessment to review acquisition of a major stake in Nigeria’s oldest banking group, FBN Holdings by business magnate and investor, Mr Femi Otedola. The review is also expected to include recent transactions by directors of the of the company.

FBN Holdings (FBNH) Plc had on Saturday confirmed receipt of a notification that Otedola has acquired material shareholding in the holding company. Company Secretary, FBN Holdings Plc, Mr Seye Kosoko in a regulatory filing stated that the holding group received notification of Otedola’s acquisitions on Saturday morning, after The Nation had reported that Otedola had acquired more than five per cent equity stake in the holding group for First Bank of Nigeria (FBN) and its former subsidiaries.

Regulatory filing at the Nigerian Exchange (NGX) showed that Otedola had acquired about 1.819 billion ordinary shares of 50 kobo each, representing 5.07 per cent of the group’s issued share capital.

Sources in the know said the full review of the transactions, a formal process for approval or otherwise of the transactions, will be conducted by the Central Bank of Nigeria (CBN) this week after a formal notification by the holding group. Both the Securities and Exchange Commission (SEC) and NGX Regulation are also expected to review the transactions to ensure they comply with extant disclosure requirements.

Nigerian capital market rules set a threshold of five per cent for “material” or significant shareholding, which must be disclosed to the regulatory authorities and the board of the affected company. The “material” nature or significance of such holding also subjects it to additional regulatory reviews and approvals.

 
 
 

Rule 4.1 of the Guidelines for Licensing and Regulation of Financial Holding Companies in Nigeria stipulates that where shares amounting to five per cent of a holding company are acquired through the secondary market, such holding company shall apply for approval from the CBN within seven days of the acquisition. FBNH is also expected to notify the CAC of changes in its shareholding.

Rule 397, subsection 2 of the Consolidated Rules and Regulations of SEC also requires the Registrar of a company to file formal notification of any material acquisition of five per cent and above.

 

FBNH stated that it received formal notification of Otedola’s holding on Saturday, a non-working day.

Another document obtained by The Nation however showed that a long-standing director and chairman of First Bank of Nigeria (FBN) Limited, Mr. Tunde Hassan-Odukale, had increased his shareholding above the five per cent threshold for significant or material shareholding.

 

 

Regulatory document filed at the Corporate Affairs Commission (CAC) by FBN Holdings showed that Hassan-Odukale through direct and indirect acquisitions had acquired a total of 1.92 billion ordinary shares of 50 kobo each in FBNH, representing 5.36 per cent of the group’s issued share capital of 35.895 billion ordinary shares of 50 kobo each.

According to regulatory documents, Hassan-Odukale’s shareholdings included direct personal acquisitions  and indirect acquisitions through related firms including Leadway Assurance Company Limited, Haskal Holdings Limited, LAC Investments Limited, Leadway Holdings, Leadway Pensure PFA, OHO/Oye Hassan-Odukale, Leadway Properties & Investment Limited and ZPC/Leadway Assurance Prem & Inv Coll Acct.

About 95 per cent of Hassan-Odukale’s shareholdings were held in four major vehicles- Leadway Assurance Company Limited, Leadway Holdings, Leadway Pensure PFA and ZPC/Leadway Assurance Prem & Inv Coll Acct.

Otedola’s acquisitions were mainly through personal holdings and indirect holdings through his nominee, Calvados Global Services Limited.

A document filed by a Marina, Lagos-based firm, APT Securities and Funds Limited, which acts as professional advisers to Otedola, at the weekend showed that the business magnate holds 10 million ordinary shares directly and 1.809 billion ordinary shares through Calvados.

The increase in Hassan-Odukale’s shareholdings amid Otedola’s acquisitions underscored the market interplay that saw FBNH’s share price and transactions atop activities at the stock market in recent weeks.

Market pundits were unanimous that the acquisitions by Otedola would not lead to any material changes in the board and management of the banking group. They noted that Otedola’s holding falls short of majority shareholding as the traditional alliance, which includes Hassan-Odukale, that runs the banking group still has controlling equity stakes.

With no outstanding majority shareholder, FBNH has been ran by a longstanding, time-tested traditional alliance of several shareholders with major shareholdings, who traditionally pool their holdings through proxies to sway major decisions including board and management appointments. That alliance was tested recently during a boardroom squabble and it fended off what was described as “undue” influence.

The emergence of Hassan-Odukale and Otedola’s material shareholdings has however altered the shareholding structure of the holding company, which had for several years ran without any known individual with more than five per cent equity stake.

Market pundits said the acquisitions by Otedola would possibly lead to no changes in the FBNH citing corporate governance structure at the banking group, diverse shareholding and Central Bank of Nigeria (CBN)’s regulations. As against other non-financial institutions, CBN reserves the primary approval right for any appointment unto the board and management of a regulated financial institution.

“This is not like the case of Forte Oil, he was practically the owner of Forte Oil but he is not holding the majority shares in FBNH, and I don’t think he has the financial muscle to attain a clear single controlling equity stake,” a source, a dealer and chief executive at the stock market, said.

 

 NATION

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