By our reporter| Fitch, an international credit rating agency, says board replacement at First Bank won’t affect its profitability and asset quality and has affirmed FBN Holdings Plc (FBNH) and its primary operating subsidiary, First Bank of Nigeria Ltd (FBN), at “B-” with a negative outlook.
A ‘B’ rating indicate that “material default risk is present, but a limited margin of safety remains.”
In a statement released on Friday, Fitch said the “impact of the CBN replacement of FBNH and FBN’s boards, the identification of corporate governance failings and the imposition of corrective measures are tolerable at the rating level.”
“We have assessed the near-term financial impact of these actions on FBNH and FBN and believe this is tolerable at the rating level, even though the final outcome is uncertain. In our view, any remedial actions imposed by the CBN, including a potential reclassification of related-party exposures as impaired, will not have a material effect on the group’s asset quality, profitability, and capitalisation.
“However, this does not consider any possible additional actions by the CBN, especially if FBN fails to implement the regulator’s corrective measures or if there were any further uncovering of corporate governance irregularities.
“The Outlook remains Negative, reflecting FBNH’s pre-existing asset quality and capitalisation weaknesses as well as the group’s corporate governance weaknesses highlighted by the CBN. These could put pressure on the ratings.”
The rating comes days after the Central Bank of Nigeria (CBN) sanctioned the first generation bank over the decision to terminate the tenure of Adesola Adeduntan as the bank’s managing director.
According to the apex bank, the tenure of Adeduntan was yet to expire, adding that it was not consulted before the decision to remove Adedutan.
The CBN went ahead to reinstatement of Adeduntan as MD of First Bank and also ordered the immediate removal of all directors of FBN Limited and FBN Holdings Plc.
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