Majority ownership tussle: Otedola gains as PenCom rejects FBN Holding’s claim on shares controversy

The National Pension Commission (PenCom) has said funds invested by Leadway Pensure Limited in the shares of FBN Holdings Plc belong to Retirement Savings Account holders, and not a third party as FBN Holdings recently claimed.

PenCom dismissed the claim, basing its position on the fact that the equity investments in the parent company of First Bank had been made from a pool of contributors’ funds under management.

The pension office made the assertion in a statement issued on Friday, which followed a claim by FBN Holdings in a letter to the Nigerian Exchange Limited, dated October 26 and signed by Company Secretary, Seye Kosoko, that 1.05 per cent Leadway Pensure PFA’s holdings in the holdco had been ascribed to Tunde Hassan-Odukale, chairman FirstBank of Nigeria Limited “due to his influence and having significant control.”

Mr Hassan-Odukale had come to lay claim to a 5.36 per cent interest in the group in what the FBN Holdings hierarchy called “cumulative equity stake” through direct and indirect shareholding days after billionaire Femi Otedola openly declared his holding of 5.07 per cent. The move was queried by the Nigerian Stock Exchange.

Mr Otedola had quietly been amassing shares in the bank, and his move to be declared the biggest individual shareholder in First Bank Holding Company has met with opposition from the bank’s top hierarchy.

“The equity investments in FBN Holdings made by Leadway Pensure Ltd on behalf of the pension funds under its management are in the name of the pension fund and belong to the RSA holders,” the regulator said in a statement Friday. “Therefore, the equity investments in FBN Holdings Plc as stated in (1) above, cannot be appropriated or classified as shareholdings of any related party to the PFA.”

The position of the pension regulator means that Mr Hassan-Odukale would be having less than 5 per cent stake in the nation’s oldest lender, possibly clearing the way for Mr Otedola as the biggest individual shareholder in the bank.

Here is the full statement from PenCom:

CLARIFICATION ON ALLEGED BREACH OF THE REGULATIONS ON INVESTMENT OF PENSION FUND

ASSETS IN THE EQUITIES OF FBN HOLDING PLC BY LEADWAY PENSURE LTD

The Commission’s attention has been drawn to several publications in the media alleging breach of its Regulation on investment of pension fund assets by Leadway Pensure Ltd, a licensed Pension Fund Administrator (PFA), in the equities of FBN Holdings Plc. The Commission categorically states that the allegations are NOT correct and must have been made based on the lack of understanding of the Investment Regulation issued by the Commission.

For the avoidance of doubt, the Commission wishes to clarify as follows:

1. The equity investments in FBN Holdings made by Leadway Pensure Ltd on behalf of the pension funds under its management are in the name of the pension fund and belong to the RSA holders.

2. Therefore, the equity investments in FBN Holdings Plc as stated in (1) above, cannot be appropriated or classified as shareholdings of any related party to the PFA.

3. Leadway Pensure Ltd is not in breach of the Investment Regulation by investing pension funds in the equities of FBN Holding Plc.

4. Records which can be confirmed from the Securities and Exchange Commission show that the equity investments in FBN Holdings Plc are in the name of the Pension Fund on behalf of the RSA holders.

5. For further clarification please note that:

a. Pension fund assets are managed by licensed PFAs and held in custody by Pension Fund Custodians (PFCs) on behalf of Retirement Savings Account holders and other beneficiaries of the Contributory Pension scheme (CPS), in line with the provisions of the Pension Reform Act 2014 (PRA 2014).

b. Section 69 (b) of PRA 2014 stipulates that the PFA and PFC shall take reasonable care that the management or custody of the pension funds is carried out in the best interest of the retirement savings account holders. Therefore, all investments made by licensed PFAs in eligible securities and corporate entities are “ring-fenced” and belong to the RSA holders and other pension beneficiaries. Accordingly, these pension assets cannot be appropriated directly or indirectly to any individual or related party of the PFA.

c. The provisions of Section 6.1(iii) of the Investment Regulation dealing with conflict of interest, stipulate that:

“The PFA or any of its agents are prohibited from investing Pension Fund Assets in the shares or any other securities, issued through public or private placement arrangements, by related party/person of any shareholder of the PFA”. Related persons/party as defined in Section 1.10 of the Investment Regulation “includes natural persons related by blood, adoption or marriage; legal entities one of which has control or significant influence over the other, or both of which are controlled by some other person or entity; a corporate entity where any of the aforementioned holds 5% or more beneficial interest; and any other relationship that can be reasonably construed as related persons or parties”.

6. In view of the foregoing, the Commission reiterates that there was no breach of its Investment Regulation whatsoever and invites the general public to be guided accordingly.

7. The Commission restates its commitment to fulfilling its regulatory and supervisory functions as well as ensuring the safety of pension assets and the soundness of the Pension Industry.

SIGNED: MANAGEMENT