The Central Bank of Nigeria (CBN) has ordered First Bank Nigeria Limited to retrieve loans given to Honeywell Flour Mill within 48-hours, due its failure to follow the regulators orders.
In a letter dated April 26 and addressed to the now ousted Chairman of First Bank, Ibukun Awosika, the CBN stated that Honeywell should fully pay its borrowed loan to First bank within 48 hours, or else appropriate measures will be taken against the insider borrower and the bank.
The Chairman Honeywell Group, Oba Otudeko, had also served as Chairman of FBN Holdings PLC until he retired in 2010.
First Bank, according to the apex bank, has been warned previously to take necessary action and comply with the regulator’s directives to divest its interest with Honeywell.
The CBN alleged that Honeywell Flour Mill is enjoying unethical protection from First bank despite the bank’s ailing balance sheet. It said the practice ran foul of the conditions for the restructuring of the company’s credit facility and payment structure.
The letter stated that Honeywell will now have to pay its loan immediately, since First bank refused to follow the regulatory condition, the restructuring is considered invalid.
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The letter read:
We are concerned that the bank has not complied with regulatory directives to divest its interest in Honeywell Flour Mills despite several reminders.
We further noted that after four years the bank is yet to perfect its lien on the shares of Mr Oba Otudeko in FBN Holdco which collateralised the restructured credit facilities for HoneyWell Flour Mills contrary to the conditions precedent for the restructuring of the company’s credit facility.
Given the bank’s failure to perfect the pledge and satisfy conditions for regulatory approval, the restructuring has thus been invalidated and the credit facilities now payable immediately.
Consequently, the company 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.
In addition, the apex bank asked First Bank to forward evidence involving the divestment of interest in Honeywell Flour Mills groups and Bharti Airtel Nigeria Ltd within 90 days in line with CBN regulations.
Otudeko obtained N5.5 billion loans from Ecobank in 2013. The loan later became a subject of litigation and the matter is still pending before the Supreme Court.
The CBN discovered that Otudeko’s shares in Airtel were used as collateral for the loan in Ecobank while the same asset was also used to obtain a loan in First Bank.
Meanwhile, the CBN, on Thursday evening sacked the Ibukun Awosika led First Bank board. The bank also announced new set of directors for First Bank Nigeria Limited and First Bank Holdings.
