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PENCOM faults First Bank, as PFA rules strip Hassan-Odukale, make Otedola majority shareholder



FBN Holdings to sell off insurance subsidiary

The Nigerian Pension Commission (PENCOM) has addressed the blow out from the leadership tussle between Tunde Hassan-Odukale and Femi Otedola in First Bank Nigeria (FBN) Holdings.

Ripples Nigeria had reported that in its attempt to clarify the majority shareholder of FBN Holdings, the lender revealed that the Leadway Pensure PFA shares in the company made Hassan-Odukale the chairman of the firm.

In findings by this publication, PENCOM regulations had stated that a PFA shouldn’t invest in securities of a firm where it has a “related party/person of any shareholder of the PFA”.

In this case, Hassan-Odukale is the Managing Director of Leadway Assurance Company Limited [where he holds 69 percent stake], parent company of Leadway Pensure, and substantial shareholder of First Bank – which hinted that the PFA breached the investment regulation of PENCOM.

PENCOM defends Leadway, faults First Bank

In response to a Ripples Nigeria exclusive publication, PENCOM stated that there’s a clause in securities investment, which allows a PFA to invest in a company with related party or shareholder of PFA that doesn’t hold five percent or more controlling shares.

Analysis of Hassan-Odukale’s shares shows that exclusion of Leadway Pensure’s 1.05 percent stake from his shares in First Bank, leaves him with 4.31 percent – this rules out the MD of Leadway Assurance from the level of related party/shareholder PENCOM identifies.

Read also: PenCom to register, verify, enroll retirees online

In its statement, PENCOM said, “The provisions of Section 6.1(iii) of the Investment Regulation dealing with conflict of interest, stipulate that “The PFA or any of its agents are prohibited from investing Pension Fund Assets in the shares or any other securities, issued through public or private placement arrangements, by related party/person of any shareholder of the PFA.

“Related persons/party as defined in Section 1.10 of the Investment Regulation “includes natural persons related by blood, adoption or marriage; legal entities one of which has control or significant influence over the other, or both of which are controlled by some other person or entity; a corporate entity where any of the aforementioned holds 5% or more beneficial interest; and any other relationship that can be reasonably construed as related persons or parties”.

Adding that, “In view of the foregoing, the Commission reiterates that there was no breach of its Investment Regulation whatsoever and invites the general public to be guided accordingly.”

PENCOM statement makes Femi Otedola FBN Holdings chairman – not Hassan-Odukale

PENCOM statement punctured First Bank clarification of leadership tussle, and stripped Hassan-Odukale of his chairmanship status in the financial institution, making Otedola the majority shareholder.

FBN had listed various indirect shares that earned Hassan-Odukale the chairmanship position in the firm, which included; Leadway Assurance Company’s 2.11 percent stake and ZPC/Leadway Assurance Prem & Inv Coll Acct 1.36 percent.

Also listed are Haskal Holdings Limited 0.04 percent, Leadway Capital & Trust Ltd 0.00 percent (one million shares), LAC Investments Ltd 0.00 percent (112,552 shares), Leadway Property & Investment Ltd 0.00 percent (112,237 shares), Leadway Holdings 0.59 percent, OHO Investment 0.15 percent, and Leadway Pensure Ltd 1.05 percent.

Calculation of these indirect shares, including Hassan-Odukale’s 0.07 direct stake, takes his total shareholdings to 5.36 percent, according to First Bank, which ascribed Leadway Pensure Ltd stake to Hassan-Odukale.

However, according to PENCOM, funds under Leadway Pensure belongs to Retirement Savings Account holders, and cannot be appropriated or classified as shareholdings of any related party to the PFA.

“Section 69 (b) of PRA 2014 stipulates that the PFA and PFC shall take reasonable care that the management or custody of the pension funds is carried out in the best interest of the retirement savings account holders.

“Therefore, all investments made by licensed PFAs in eligible securities and corporate entities are “ring-fenced” and belong to the RSA holders and other pension beneficiaries. Accordingly, these pension assets cannot be appropriated directly or indirectly to any individual or related party of the PFA.”

The exclusion of Leadway Pensure’s 1.05 percent from Hassan-Odukale’s 5.36 percent controlling stake hands him 4.31 percent, placing him as the second largest shareholder in FBN Holdings below Otedola who owns 5.07 percent stake.

Otedola’s shareholdings in First Bank is divided into 0.03 percent direct stake and 5.04 percent held by his investment vehicle, Calvados Global Services Limited.

This again changes the management status of First Bank, and puts a brake on Hassan-Odukale’s presence as head of the lender’s board of directors.

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