Home » Honeywell Group releases statement on recent First Bank loan controversy

Honeywell Group releases statement on recent First Bank loan controversy

by Editorial Team

The Central Bank of Nigeria (CBN) recently dissolved the defunct board of First Bank Holding (FBH) and First Bank of Nigeria (FBN), expelling Honeywell Group founder Obafoluke Otudeko and Ibukun Awosika as chairpersons. 

The CBN faulted the boards for insider abuse and the breakdown of corporate governance. It also accused Honeywell Group, whose founder is also the majority shareholder of FBN, of not servicing its loan with the bank.

The apex bank voices its concerns regarding FBN’s refusal to comply with regulatory directives to divest the bank’s interests in Honeywell Flour Mills despite several reminders. Therefore, the apex bank instructed Honeywell Flour Mills to repay its loan to FBN within 48 hours, which elapsed on April 28.

In response to the CBN, Honeywell Group voiced claims of servicing loan facilities obtained from FBN and other financial institutions across the country on May 2. In a statement obtained by Premium Times, the group stated that it utilizes its equity and borrows from banks and other financial institutions to execute its operations. 

Honeywell claimed to have serviced all its credit facilities in line with the terms agreed with FBN, and none of the facilities were non-performing. The group has been in business with FBN since 1972.

Honeywell stated that in 2015, under a directive from the CBN, FBN drew its attention to a 2004 circular (BSD/9/2004). The circular required that insider-related facilities must not exceed 10 percent of paid-up share capital. As a result, the group entered into negotiations with the bank to agree to an appropriate repayment structure. 

Honeywell claimed that the final negotiated position was duly approved by the CBN. It also stated that its facilities with First FBN are adequately secured with collateral in place at over 170 percent of forced sales value and 230 percent of open market value.

Last days of April

In late April, a series of activities within the FBH and FBN defunct boards of directors led to the early removal of FBN Managing Director and CEO Adesola Adeduntan from office and triggered the CBN’s intervention in the running of the tier-1 capital bank. 

The CBN placed Adeduntan in the bank as a check against attempts by FBN’s board to secure insider loans.

Nevertheless, the CBN reinstated Adeduntan on April  29. It also directed the bank to divest equity investments in all non-permissible entities such as Honeywell Flour Mills and Bharti Airtel Nigeria Ltd. within 90 days. 

Otudeko owns a significant stake in Bharti Airtel Nigeria Ltd.

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