First Bank of Nigeria Holdings Plc’s stock price declined on Monday by 5.63% on the Nigerian Exchange Limited, as investors exercised caution in trading shares of the country’s oldest financial institution.

The stock, which started trading at N30.20 per share, dropped by N1.70 or 5.63%, ending the day at N28.50 per share.

Market analysts attributed the decline to investors’ negative response to the dispute between First Bank, a major part of FBH Holdings Plc, and General Hydrocarbons Limited over a $225 million loan.

Stock traders say investors are being cautious with FBN Holdings shares, awaiting the final outcome of the dispute, and they suggest this could signal the start of a continued decline in the stock’s value.

In response to claims of an alleged debt to FBN Plc, GHL management, citing several agreements with FBN, clarified that a moratorium remains in place pending the commencement of commercial oil production.

GHL also stated that a Federal High Court ruling was in its favor, further criticizing FBN’s claims of indebtedness, particularly in the media, as “misleading and malicious.”

Referring to media reports from January 10-11, which suggested that a Lagos Federal High Court had frozen GHL’s accounts across all financial institutions in Nigeria due to an alleged outstanding debt of $225,802,379.79 to First Bank, GHL’s Director of Strategy and Operations, Abdelmuizz Bello, emphasized that these claims were false and misleading.

The reports also mentioned the involvement of Mr. Nduka Obaigbena, Chairman of THISDAY/ARISE Media Group.

According to Bello, the oil firm entered into a legally binding, enforceable Subrogation Agreement with First Bank on May 29, 2021.

Under the terms of the agreement, FBN was to finance GHL’s exploration, production, and development of OML 120. In return, the two parties agreed to share the profits from oil proceeds from the OML in a 50:50 ratio, after accounting for statutory payments and taxes, over a period of 8 years.

Bello explained that FBN’s 50% share of the profits would be used to pay down its non-performing loans, which totaled approximately $718 million. This amount was subsequently discounted to $600 million in order to address and resolve FBN’s solvency issues.

““In its quest to stay afloat, the FBN loan was  sold at $600million as an Eligible Banking Asset (EBA), with comfort from GHL. The FBN then collected the cash from Assets Management Company of Nigeria (AMCON) with which they rebuilt the bank without meeting GHL’s needs.

“The FBN non-performing loan arose from FBN’s unsecured and reckless lending to Atlantic Energy under separate Strategic Alliance arrangements, in which GHL had no nexus to or connection with.

“The agreements made it clear that the Non-Performing Loan had nothing to do with GHL beyond the fact that 50% of profits from OML 120 due to FBN under the Subrogation Agreement will be used by FBN  to settle the hole created in its books by the Non-Performing Loan (NPL).

“For clarity, Atlantic Energy operated OMLs 26, 30, 34 and 42 – very different from GHL’s OML 120,” he said.