The events of last week involving First Bank Nigeria Plc (FBN) escalated quickly to expose underlying issues that resulted in the sack of the bank’s MD/CEO, Dr. Adesola Adeduntan.

Behind the glittering look of the bank, the battle of supremacy was unfolding to uncover insider loan and other malpractices. A report by Nairametrics revealed that the plot to oust Adeduntan was led by factions in First Bank Holdings (FBNH) led by Dr. Oba Otudeko and the former Chairman of the First Bank Ibukun Awosika.

According to the report, it started when the bank received a letter of reprimand from the Central Bank of Nigeria (CBN), over its failure to divest its interest in Honeywell Flour Mills “despite several regulatory reminders” by the Apex bank.

The CBN thus mandated First Bank to ensure within 48 hours that Honeywell repays its obligation. The loans are traceable to Otudeko, and the apex bank had threatened to “take appropriate regulatory measures against the insider borrower and the bank” if the regulatory directives are not met.

“For years, the CBN has used Adeduntan as a check against attempts by directors of First Bank to secure insider loans, a major source of conflict between the CBN and Oba Otudeko,” the report said.

Thus, the premature removal of Adeduntan as the MD/CEO is seen as an attempt by Otudeko and Awosika and their faction to ensure the CBN’s regulatory letter is not implemented, as Adeduntan is seen as the Apex bank’s watchdog in First Bank.

In the press briefing where he discussed the sack of Awosika and Otudeko, CBN governor Godwin Emefiele said the Apex bank had granted “regulatory forbearances to enable First bank to work out its non-performing loans through provision for write off of at least N150b from its earning for four consecutive years.”

Otudeko is said to be one of the beneficiaries of these insider loans who needs to be tamed before First Bank goes under administration.

“Oba Otudeko who was the major target of this fiasco is believed to have obtained billions of unpaid loans in First Bank and had to be controlled by the CBN through Adeduntan,” the report said.

Emefiele also pointed out that in his media briefing that the inside loanees failed to comply with restructuring terms of their credit facilities, putting First Bank in a bad financial state.

“The insiders who took loans in the bank, with controlling influence on the board of directors, failed to adhere to the terms for the restructuring of their credit facilities which contributed to the poor financial state of the bank. The CBN’s recent target examination as at December 31, 2020 revealed that insider loans were materially non-compliant with restructure terms (e.g. non perfection of lien on shares/collateral arrangements) for over 3 years despite several regulatory reminders. The bank has not also divested its non-permissible holdings in non-financial entities in line with regulatory directives,” Emefiele said.

The Honeywell’s side of the story.

In light of the unfolding events, Honeywell has issued a statement to clarify its position in the saga. In a statement entitled: “Relationship Between Honeywell Group and First Bank of Nigeria,” the company said it has serviced all credit facilities in line with agreed terms with First Bank, and no point have any of these facilities been non-performing.

“Like most companies, Honeywell Group utilizes its own equity and borrows from banks and other financial institutions to carry out its operations. Partnering with local and and international financiers, we have a strong track record of mutually beneficial successes with our partners, based on honoring obligations and delivering returns to all stakeholders.

“Since 1972, Honeywell Group and First Bank of Nigeria (First Bank or the Bank) have had a professional business relationship which preceded the Group’s investment in First Bank over a decade later. Honeywell Group’s relationship with First Bank has always been professional, at arm’s length and in accordance with all regulatory and industry practices and norms. The credit facilities which we have accessed from First Bank and indeed other banks, were granted after due negotiations, with necessary documentation and line with regulatory policies and industry standards.

“We have serviced all our credit facilities in line with the terms agreed with First Bank and at no point have any of these facilities been non-performing.

“In 2015, First Bank under the directive of the Central Bank of Nigeria, drew our attention to a 2004 circular (BSD/9/2004), which requires that insider related facilities must not exceed 10% of paid-up share capital. Based on this directive we subsequently entered negotiations with the Bank to agree on appropriate repayment structure and the final negotiated position was duly approved by the CBN. It is important to note that from the inception of the facilities and to-date, the facilities have been performing.

“In accordance with agreed terms, our facilities are adequately secured with First Bank, with collaterals in place at over 170% of Forced Sales Value and 230% at Open Market Value.

“In addition to the above, First Bank, on the directive of CBN, requested additional security in the form of FBN Holdings Plc shares held by the Chairman of Honeywell Group, Dr. Oba Otudeko citing a 2001 circular. This was duly provided through an authorization to place a lien on the shares.

“Honeywell Group has continued to meet all its obligations on its facilities with the Bank according to agreed terms and has reduced its exposure by nearly 30% in 2.5 years. The facilities were charged at market rates and the Bank continues to earn significant interest therefrom.”

With this statement, it is believed that Otudeko has questions to answer as it appears he is using FBNH shares to collateralize loan from FBN. Data from Nairalytics said FBNH had recorded a total loan impairment of over N565 billion between 2016 and 2020.

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As industries grapple with a global shortage of chips, the European Union is seeing it as a chance to tie up loose ends of the bloc’s chip production. The EU is on a mission to form new alliances with big names in the semiconductor industry to meet its 2030 goals.

COVID-19 pandemic-induced strains threw the world of technology into chip shortage, which has seen the auto, smartphone and internet-based technologies cutting down production. To the European Union, it is an ample opportunity to close the existing wide gap between the bloc and other regions in semiconductor manufacturing.

The bloc is considering creating a semiconductor alliance including STMicroelectronics, NXP, Infineon and ASML to cut dependence on foreign chipmakers amid a global supply chain crunch, Reuters reported, citing four EU officials familiar with the matter.

The plan, which is at a very preliminary stage, may include a pan-European scheme known as an Important Project of Common European Interest (IPCEI), which allows EU governments to pump in funding under easier state aid rules, and companies to work together on the entire project, the sources said.

The report said It would complement or come as an alternative to a possible foreign-funded factory, with the aim to double the EU’s market share in semiconductors to 20% by 2030, a target set out by European internal market chief Thierry Breton.

In March, the EU unveiled a plan named Digital Compass, designed to set the 27 country bloc on the path of making its first quantum computer in five years.

“It is our proposed level of ambition that by 2030 the production of cutting-edge and sustainable semiconductors in Europe including processors is at least 20% of world production in value,” a document from the bloc said in March.

These moves beckon hope of Europe, less dependent on other regions for chips. Compared to other regions, Europe is the least market in the semiconductor industry. The United States, although has recorded a drop to 12% since 1992, still leads the industry, followed by China who recorded over $13 billion in market value last year.

The EU Commissioner had a meeting with Intel CEO Pat Gelsinger on Friday, in an attempt to persuade the leading chipmaker to site a major fabrication plant in the bloc.

Gelsinger said EU leaders needed to invest to ensure a vibrant semiconductor industry to enable competitiveness that will drive a semiconductor industry that will take on Asian rivals, a point Breton admitted after his meetings with semiconductor business heads on Friday.

“To meet current & future semiconductor industry demand, Europe will drastically increase production capacity – both on its own and through selected partnerships to ensure security of supply,” said Breton.

Gelsinger is also prospecting for a location for a plant in Europe that he says would back Breton’s goal of doubling the region’s share of global chip output to 20% over the next decade.

But on the contrary, Taiwan Semiconductor Manufacturing Co (TSMC) is not interested in building a plant in the EU, diplomats and Taiwanese officials said.

Breton held talks earlier on Friday with TSMC, the world’s No.1 chip maker, as part of the EU’s Commission partnership efforts.

But industry and diplomatic sources say that, of the Big Three chipmakers, Intel is the only one so far to express concrete interest in Breton’s goal of producing the most advanced chips in Europe.

The Commission said Breton would hold further talks on May 4 with the CEOs of two Dutch semiconductor players: ASML, the leading maker of semiconductor lithography tools, and with chipmaker NXP.

On his stop in Germany during his European tour, German Economy Minister Peter Altmaier and Bavarian governor Markus Soeder assured Breton of their support, saying Germany would be a suitable location for a potential European foundry.

“We think of Germany as a good candidate – not the only, but a good candidate – for where we might build our fabrication capabilities,” he said.

Breton and other European leaders believe it’s time for the bloc to exert leadership position in semiconductor manufacturing, a move that will boost the region’s production capacity.

“To be leaders not followers, EU industry requires urgent, ambitious action on digital technologies such as semiconductors, cloud, quantum, space connectivity & batteries,” Breton tweeted on Thursday following his meeting with Altmaier.