CBN Raises Concern Over First Bank Investment In Honeywell Flour Mills, Airtel Africa (see the letter)
The Central Bank of Nigeria (CBN) has raised concerns over First Bank of Nigeria limited investments in Honeywell Flour mills plc and Airtel Africa Plc.
Mr. Oba Otudeko is the founder Honeywell Flour Mills and holds the position of Group Chairman at FBN Holdings Plc.
The Director of Banking Supervision CBN, Haruna Mustafa in a circular to the lender stated that the apex bank instructed the management of the bank to divest its interests in both companies.
CBN’s Director of Banking Supervision noted that “Your letter dated March 30, 2021, on the above subject refers
“We are concerned that the bank has not complied with regulatory directives to divest its interest in Honey Well Flour Mills despite several reminders”.
The letter observed that “after 4 years the bank is yet to perfect its lien on the shares of Mr. Oba Otudeko in FBN Holdco which collaterized the restructured credit facilities for Honey Well Flour Mills contrary to the conditions precedent for the restructuring of the company’s credit facility”.
It went on to comment that “Given the bank’s failure to perfect the pledge and satisfy the condition for regulatory approval, the restructuring has thus been invalidated and the credit facilities now payable immediately”.
Consequently, the CBN insisted that Honeywell Flour Mills was required to fully repay its obligations to the FBN within 48 hours failing which the regulator would take appropriate regulatory measures against the insider borrower and FBN itself.
According to the circular, “Furthermore, the Bank, notes the untenable delay in resolving the long outstanding divestment from Bharti Airtel Nigeria limited in line with extant regulations of the CBN.
“Accordingly, you are required to divest the equity investments in all non-permissible entities such as Honey Well Flour Mills and Bharti Airtel Nigeria Ltd within 90 days.
“Please you are to forward evidence of compliance in accordance with the timelines above to the Director of Banking Supervision.”
