FirstBank of Nigeria Limited, has issued an official statement to address recent media reports surrounding its legal dispute with General Hydrocarbons Limited (GHL). The bank reassured customers and stakeholders of its commitment to transparency, good governance, and reliable banking services.
The dispute stems from a series of credit facilities extended by FirstBank to GHL for the development of Oil Mining Lease assets. FirstBank clarified that these facilities are backed by comprehensive loan agreements outlining both parties’ obligations and robust security arrangements.
Clarifying Misleading Narratives
In response to reports suggesting the bank’s alleged abuse of judicial processes, FirstBank highlighted its adherence to due process and law.
The statement noted,
“There is a subsisting commercial transaction between FirstBank as lender, and GHL as borrower, where FirstBank extended several credit facilities to GHL for the development of some Oil Mining Lease assets. These facilities are backed by very robust loan agreements executed by the parties in which the obligations of the parties are clearly defined and the security arrangement clearly spelt out.”
The bank disclosed that its concerns arose after GHL allegedly breached the loan agreements, including diverting proceeds from financed assets. FirstBank proposed appointing an independent operator, acceptable to both parties, to enhance transparency and safeguard stakeholder interests. However, GHL rejected the proposal and instead sought additional funding without meeting FirstBank’s stipulated conditions.
Legal Actions and Clarifications
GHL initiated arbitration proceedings and approached the Federal High Court for preservative orders. FirstBank emphasized that it remains the only party to file a substantive claim at the Federal High Court.
“FirstBank’s claim is in respect of subsequent credit facilities granted to GHL and the offer letters and finance documents pertaining to the subsequent transactions clearly state that the disputes arising from the subsequent facilities are to be resolved by a court of competent jurisdiction in Nigeria and not by arbitration.”
The bank explained its decision to seek legal remedies:
“The Bank had no choice as a secured lender, under these circumstances of continued breaches, non-payment of due obligations and attempts to shield the Bank away from agreed security and repayment sources, than to approach the court for legal remedies, to preserve assets, recover the diverted proceeds, prevent reoccurrences and safeguard FirstBank’s interest.”
Commitment to Stakeholders
Reaffirming its dedication to ethical banking practices, FirstBank stated:
“FirstBank remains committed to the building of a strong credit culture where borrowers pay their debts when they borrow and will always take appropriate steps, within the ambit of the law, to resist attempts by borrowers to repudiate their repayment obligations.”
The bank also extended gratitude to shareholders for the successful initial round of its parent company First Holdco Plc’s capital raise, noting the anticipation of a similarly positive outcome in the final leg.
FirstBank reassured its customers and stakeholders of its unwavering stability and commitment to providing world-class banking services. The bank remains steadfast in its pursuit of legal and transparent practices that benefit all parties involved.
