Setback for FBN Holdings majority shareholders, as CBN releases new bank investor policy

The Central Bank of Nigeria (CBN) has released a new bank investor policy that could cause a setback for the majority shareholders of FBN Holdings in their fight against Oba Otudeko.

In the new investor policy, which is part of a new ‘corporate governance guidelines’ released on Saturday, but dated July 13, 2023, investors in financial holding companies (FHCs) are not allowed to enter into an agreement which results in the change of the holding company’s control.

Also, shareholders of a holding company are prohibited from entering an agreement that increases the stake of another investor to 5 per cent and above or transfer five per cent stake to another shareholder.

CBN said the investors with such intention must seek approval from the financial regulator before proceeding. The directive would take effect from August 1, 2023.

How CBN’s new investor policy affects FBN Holding

This policy comes at a period the majority shareholders in FBN Holdings are reportedly considering joining forces by merging their shares into one for Femi Otedola, in a bid to displace Oba Otudeko, a former investor in the firm that shocked FBN Holdings’ board by acquiring significant stake of 13.3 per cent about a week ago.

With 13.3 per cent, Otudeko became the largest shareholder of FBN Holdings, a move that isn’t embraced by other majority shareholders, as his investment in the lender will result to the ouster of key directors in the company.

The majority shareholders, which includes Femi Otedola, Oye Hassan Odukale, Mike Adenuga, and the family of Late Azeez Arisekola Alao, have been reported to be weighing the option of combining their shares, which would amount to 27 per cent stake in favour of Otedola to ensure Otudeko doesn’t take control of the firm.

However, with the new CBN investor policy, the majority shareholders would have to seek CBN’s approval before taking such action, thereby, delaying the process of ther merger against Otudeko.

 

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The circular said: “Except with the prior written approval of the CBN, no FHC or any of its director, shareholder or agent shall enter into an agreement which results in:

“i. a change in the control of the FHC, the transfer of shareholding of five per cent (5%) and above in the FHC; and/or an increase in shareholding to five per cent (5%) or more in the FHC.

“Provided that CBN’s prior approval and No Objection shall be sought and obtained, before any acquisition of shares of an FHC by an investor (including through the capital market), that would result in equity holding of five per cent (5%) and above.

“ii. the sale, disposal or transfer of the whole or any part of the business of the FHC;
“iii. the acquisition or merger of the FHC;
“iv. the reconstruction of the FHC; or
“v. the employment of a management agent, management by or transfer of its business to any such agent.”

CBN said it will communicate its no objection or disapproval to FHC in question and within 48 hours of the notice, the investor must be notified by the holding company.

Meanwhile, no investor is allowed to own a controlling stake in more than one bank without approval from the CBN, the circular reads.

Also, subsidiaries of holding companies are prohibited from acquiring shares in their parent company and other subsidiaries within the holding companies.

 

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