By Akintola Omigbodun

The previous week, we started with the mention of the Annual General Meetings, AGMs, of companies during this year. The reports from the meetings indicate that shareholder comments were favourable with respect to the performance of the companies. For the banks, the shareholders were complaining about payments that the banks made to the Assets Management Corporation of Nigeria, AMCON, the Central Bank of Nigeria, CBN, and the Nigerian Deposit Insurance Corporation, NDIC.

One interesting idea from one of the meetings was that the bank’s directors should be made personally liable for certain fines levied by the CBN. For example, a bank is required to obtain the permission of the CBN if the bank wishes to engage as a shareholder in a non-banking enterprise. The fine for failure to obtain CBN permission, I believe, is N2million. This is the sort of fine that the shareholder would want the liability to be placed on the bank directors.

By and large, I believe that the shareholders’ comments were simply indulgent of the performance of their banks’ management. AMCON came into being after the CBN’s intervention in some banks in 2009. A visit to the Federal High Courts would confirm the large number of suits between AMCON and the bank loan defaulters.

The impression one gets is that the banks raised substantial sums through share offers in 2007 and thereabouts and subsequently these sums and more were thrown at high risk loans. More recently, the significant bank loan defaulters are petroleum products traders. Various traders obtained loans from banks after the traders were granted licences by the authorities for the importation of premium motor spirit.

When the products arrived, some of the traders sold the products and failed to remit sales proceeds to the banks which provided the credits for the importation. The traders also made subsidy claims which were the payments they made to their creditor banks. The recent announcement by the CBN that the names of bank loan defaulters would be published should, on publication, give sufficient insight into the nature of these loans that are conveniently described as oil and gas credits.

The Federal High Courts also have a number of suits arising from these post-2009 oil and gas credits. One of the banks that understood the risk has indicated that it would not grant any loans to premium motor spirit traders because the bank was convinced that any business that required a subsidy to be claimed from government before it could make a profit was not a good business for the bank.

First Bank Nigeria Limited, the major business unit of FBN Holdings Plc, recently announced that its current Chief Executive would retire at the end of 2015 after serving on the Board of Directors for about seven years, first as an Executive Director and then for two terms as Chief Executive.

When the current Chief Executive was appointed, a number of the bank’s executive directors had to retire apparently because these executive directors had been appointed to the Board of Directors before the current Chief Executive. Some of these retired directors continued their banking careers as Chief Executives in other banks with significant improvements in the performances of these other banks.

First Bank’s corporate culture may have been built on the principle of enthroning a Chief Executive who would carry out the bidding of the kingmakers. However, the bank’s performance has not matched that of the two other major banks, Guaranty Trust Bank and Zenith Bank. One would expect that in appointing a new Chief Executive, First Bank would put in place a team of a Chief Executive plus executive directors that would bring about substantial improvements in the bank’s performance.

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