The Central Bank of Nigeria has turned down First Bank of Nigeria’s loan restructuring for Honeywell Flour Mills, and subsequently directed the bank to recover the loan granted the company immediately.
Although, the total amount of the loan could not be ascertained as at the time of filing this report but the Flour Mill is the brainchild of Oba Otudeko who was sacked from the board of FBN Holdco on Thursday.
Dr. Adesola Adeduntan, who was removed on Wednesday by the board of the bank without the consent of the CBN, was back reinstated, following the intervention of the apex bank.
Findings revealed that the share price of FBN Holdings Plc dropped to N6.90 on Friday at the Nigerian Exchange Limited, following the dissolution of the company’s board. It is the highest drop since December 10.
Our correspondent gathered that Honeywell Flour Mills “is required to fully repay its obligations to the bank within 48 hours failing which the CBN will take appropriate regulatory measures against the insider borrower and the bank.”
The apex bank is said to be shocked that “after four years, the bank is yet to perfect its lien on the shares of Mr. Oba Otudeko in FBN Holdco which collaterised the restructured credit facilities for Honeywell Flour Mills contrary to the conditions precedent for the restructuring of the company’s credit facility.”
Otudeko had apparently used his shares in FBN Holdco as collateral for the loan facility extended to Honeywell by First Bank.
He stands the risk of losing his shareholding in FBN Holdco if he fails to offset the loan within the 48 hour deadline given by the CBN.
The apex bank is said to be upset with the First Bank for alleged non-compliance “with regulatory directives to divest its interest in Honeywell Flour Mill despite several reminders.”
Similarly, the CBN also dismissed First Bank’s excuse for the delay “in resolving the long outstanding divestment from Bharti Airtel Nigeria Ltd in line with extant regulations of the CBN.”