CBN Intervenes In First Bank Tussle, Retains Interest Rate

By Fola James

The Central Bank of Nigeria, CBN has disclosed that it will intervene, when necessary, in the ownership tussle in First Bank Plc, as the first generation bank is too strategic to the nation’s economy and cannot be allowed to fail.

Godwin Emefiele, the CBN Governor stated this, on Tuesday, in Abuja, while speaking to journalists at the end of the monthly Monetary Policy Committee, MPC meeting.

At the end of the 2-day meeting, the Committee voted unanimously to retain the Monetary Policy Rate, MPR also known as interest rate at 11. 5 percent, while other economic policy parameters such as the Cash Reserve Ratio, CRR and Liquidity Ratio were retained at 27. 5 and 30 per cent, respectively.

Speaking on the ownership tussle between business magnate Femi Otedola and Hassan Odukale, over who is the single largest shareholder of the commercial bank, the CBN Governor said the commercial bank is too big to be owned by a single individual.

He said the apex bank has made serious interventions in First Bank in the last six years which have paid off, adding that it will not allow the bank to fail in the interest of shareholders and customers.

According to him, “First Bank was established in 1894 and is the oldest bank in Nigeria. It is a powerful domestically significant bank in Nigeria. If anything happens to First Bank, it means that something has gone wrong with the Nigerian banking system. And it is for this reason that we are taking advice on how to keep the bank afloat very seriously.

CBN interventions have put the bank on the right path, Emefiele said, adding that the struggle to control the bank is a healthy one.

He said “six years ago, as a result of the accumulation of non-performing loans on the books of First Bank, the fair value of the share price was approximately N2 per share, and we took it on while everyone else was fleeing.

“Because we have cleaned up the balance sheet, non-performing loans have dropped dramatically. People are seeing that First Bank is returning to profitability and are now competing for a stake in the company,” he said.

“Why should I argue that people are competing for the shares of First Bank, which was N2 six years ago and they fled from it? Now, the last time I looked at First Bank’s share price, it was N11.55kobo over the weekend.

“I am pleased to see that they are competing for First Bank shares. Of course, we all know that First Bank is so large that no single person can own it. In running the banks, they should see themselves as representing others.

On why the MPC decided to retain the economic policy parameters one year after, the CBN Governor said the decision has placed the country on the path of growth and recovery.

Emefiele said “this meeting MPC was gratified that its policy actions in the past had started to yield positive result through remarkable improvement in Gross Domestic Product, which stood at 4.03 per cent during the third quarter of 2021.

“There was also the sixth consecutive month moderation in inflation to 15.99 percent in October.

“Given the level of its conviction about the efficacy of its actions on macroeconomic variables, MPC felt that tightening could increase cost of funds and constrain growth, while loosening could compound distortion in the money market.

“The MPC believes that the existing monetary policy stance has supported economic growth and recovery and should be allowed to continue for a little longer for consolidation,” he said.

He said the CBN is keeping watch on the trend in global economic activity and will respond appropriately when it needs to.

“The committee also feels that the old stance will enable it to carefully access the implication of unfolding global developments around policy deepening and normalisation by the advanced economies,” the CBN governor said.