As Fidelity Bank Moves to Calm the Storm…

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Obinna Chima writes on the anti-graft agency’s probe into an alleged $115 cash transfer and steps taken by the bank to calm the storm

Fidelity Bank Plc has been the cynosure of all eyes in recent times following a $115 million cash transfer, which led to the arrest of its Managing Director and Chief Executive Officer, Mr. Nnamdi Okonkwo, by the Economic and Financial Crimes Commission (EFCC). The EFCC had arrested Okonkwo for allegedly receiving the sum from the former Minister of Petroleum Resources, Mrs. Diezani Alison-Madueke, and disbursed same to politicians and electoral officials in the build-up to the 2015 presidential election that was lost by former President Goodluck Jonathan.

The bank was said to have done this in collaboration with four oil firms and their directors whom the EFCC have also been questioning following a presidential directive. The four oil firms were said to have made the lodgements, which EFCC, according to THISDAY checks, is bent on recovering from the companies.

The transaction which is still under investigation was alleged to have violated the Money Laundering (Prohibition) Act. Under the Bank and Other Financial Institutions Act (BOFIA) and Money Laundering Act, banks are mandated to report unusual transactions to the EFCC. The bank is however insisting that the transaction was duly reported to appropriate unit. Okonkwo has been released by the commission while investigation continues.

The commission’s investigators, THISDAY gathered, were seeking useful information from Okonkwo and the bank’s Head of Operations, Mr. Martins Izuogbe, who was also arrested by the EFCC in connection with the disbursement of the funds.

The $115 million was said to have been given to Alison-Madueke by the companies, while she was alleged to have contributed another $25.77 million.

A senior operative in anti-graft agency had said that in the run up to the presidential election, Alison-Madueke gave a list to the bank boss and instructed him to change the $115million into naira and disburse the money to INEC officials in the 36 states, some individuals and non-governmental organisations (NGOs).

The Bank Reacts

The bank has since stated that the transactions were reported to the relevant agencies and that its officials were cooperating with the EFCC as the investigation progresses.

“Our attention has been drawn to reports in the media on investigations into transactions undertaken by the bank in the normal course of business in 2015. The transactions are now the subject matter of investigations by the Economic and Financial Crimes Commission (EFCC). The bank is cooperating fully with the authorities on the investigation. We assure our numerous stakeholders, including our customers that we are working assiduously towards a quick resolution of the issues,” Fidelity Bank had explained.

THISDAY also learnt that Fidelity Bank has since refunded N40 million, being the interest on the funds deposited in the bank.

Officials of the Central Bank of Nigeria (CBN) last week stormed the Kofo Abayomi Street, Victoria Island head office of the bank as part of investigations into the cash lodgements.

A central bank official, who confirmed this to THISDAY said the visit was to compare transaction documents and to find out if the cash lodgement was duly reported in line with the Money Laundering (Prohibition) Act as claimed by the bank.

…Enter Balarabe

In order to calm the storm and reassure stakeholders, the bank last week announced the appointment of its Executive Director North, Alhaji Mohammed Lawal Balarabe, as its acting MD/CEO. The appointment was announced after a board meeting last week. This is to ensure seamless operation at the financial institution and to prevent a run on the bank.

A two-paragraph statement at the end of the meeting said Balarabe’s appointment, which took effect immediately, would be subject to regulatory approval even as the bank assured its stakeholders of continued seamless services.

“In the absence of the Managing Director/Chief Executive Officer, Mr. Nnamdi Okonkwo, the Board of Directors has appointed Alhaji Mohammed Lawal Balarabe, Executive Director North, as Acting Managing Director/Chief Executive of Fidelity Bank Plc with immediate effect subject to regulatory approval,” it said, adding: “The bank reassures all its stakeholders including over 400,000 shareholders and 3.4 million customers of its continued seamless services.”

Balarabe holds a Bachelor’s degree in Accountancy and Finance from Nottingham Trent University, UK, as well as an MSc in Finance from the University of Lagos.

A dealing member of the Nigerian Stock Exchange (NSE) since 1992, he was an Executive Director with the former Oceanic Bank Plc. He was also a General Manager in United Bank for Africa (UBA) and had been the General Manager and Chief Executive of Newdevco Finance Services Company Limited. He has over 24 years banking experience across business portfolios in banking. He was appointed to the Board of Fidelity Bank Plc in April, 2012.

Certainly, Balarabe will need the support of other board members of the bank to succeed in this new task of steering the bank out of its present situation. Some of them are the Executive Director, Shared Services, Mrs. Chijioke Ugochukwu, who has been in the board since 2012. Ugochukwu was General Manager, Legal Services and Company Secretary of the bank. At various points, Mrs. Ugochukwu had been in Operations, Treasury Management and Corporate Services functions.

Also, Mr. Adeyeye Adepegba, who has also been in the board since 2015, would also be providing his wealth of experience to support the acting MD/CEO. Adepegba holds a Masters of Business Administration (MBA) degree from Lancaster University Management School, Lancaster University, United Kingdom (Merit) a Master’s degree in Industrial & Labour Relations (MILR) as well as a Bachelor’s degree in History from the University of Ibadan, Nigeria.

Other board members include Chief Christopher Ezeh; Mrs. Aku Odinkemelu; Nneka Onyeali – Ikpe, Alhaji Bashari M. Gumel, among others.

Bank’s 2015 Results

According to the audited results of the bank, gross earnings grew from N136.9 billion in 2014 to N146.9 billion in 2015. Profit before tax (PBT) declined by 9.6 per cent to N14.0 billion from N15.5 billion in 2014, while PAT settled at N13.9 billion compared with N13.8 billion the previous year. Hence, the directors recommended a dividend of N4.6 billion, thus maintaining a tradition of consistent dividend pay-out for the past six years.

Total equity increased by 6.0 per cent to N183.5 billion from N173.1 billion in 2014 full year, net operating income stood at N83.9 billion, a moderate 12.5 per cent rise from N74.6 billion in 2014 full year, growing the major income lines across the quarters.

A further analysis of the bank’s performance showed its fourth quarter was impressive particularly in terms of income generation, which accounted for 27.4 per cent of the gross earnings for the full year. The bank’s gross earnings grew to N146 billion on the back of 16.2 per cent stronger performance recorded in interest income for the year. Interest income grew from N104.3 billion to N121 billion.

Fidelity Bank recorded significant jump in interest income in the last quarter of 2015 due to its aggressiveness in growing loans and advances, which rose from N610 billion to N658 billion in 2014. Interest expense grew at a slower pace to interest income by 8.7 per cent due to 6.7 per cent moderation in total deposits, that fell from N820 billion to N769 billion. Consequently, interest margin improved from 5.4 per cent to 6.1 per cent.

It performance was attributed to the disciplined execution of its medium term strategy and the resilience of evolving business models despite the extremely challenging business environment in 2015.

The board of directors of the bank offered shareholders 16 kobo per share dividend for the period ended December 31, 2015.