Why Moody’s seeks to downgrade First Bank
Ratings agency Moody’s Investors Services said it has placed First Bank of Nigeria on review for downgrade after the central bank sacked the board of the lender and its parent and appointed new directors.
“The review will focus primarily on an assessment of evolving governance considerations at First Bank, specifically corporate governance developments,” Moody’s said in a statement.
Last week, the Central Bank of Nigeria (CBN) sacked the entire members of the board of First Bank Nigeria Ltd and FBN Holdings Plc and also recalled the chief executive officer, Adesola Adeduntan who was earlier removed by the board.
The bank is currently operating under an interim board of directors appointed by the regulatory bank.
However, the revelation that the bank had been under regulatory forbearance since 2016 further eroded investors’ confidence in the nation’s first lender.
The CBN had accused the dissolved board on not consulting it on the removal of its chief executive and not aware of any report from the board indicting the Managing Director of any wrong-doing or misconduct
According to the regulatory bank, “there appears to be no apparent justification for the precipitate removal of Adeduntan.
The CBN said the removal of a sitting MD/CEO of a systemically important bank, “that has been under regulatory forbearance for five to six years without prior consultation and justifiable basis,” has dire implications for the bank and also portends significant risks to the stability of the financial system.