CBN: First Bank Failed To Perfect Collaterals On Insider Loans For Three Years

source: vanguardngr
50

The most alarming paragraph in the statement released by CBN regarding First Bank. "Notwithstanding the significant improvement in the bank’s financial condition with positive trajectory of financial soundness indicators, the insider related facilities remained problematic. 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" So if the insider loans close to N100 billion go bad, First Bank has no collateral to recover it. How can management be this reckless regarding insider loans. CBN stepped in right in time to save depositors funds.

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