In 2015, First Bank under the directive of the Central Bank of Nigeria (CBN), 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 an 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 authorisation 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.