… As CBN intervenes and more lenders go continental
The delicacy served stakeholders by the CBN’s intervention at FBN has been spiced up with tidings of Access Bank and Guaranty Trust Bank unveiling ambitious plans for the African continent. Kenneth Eze writes.
In what might typify different strokes for different folks, the Nigerian banking sector has been getting public attention lately for various reasons.
While the boardroom melee at First Bank of Nigeria, required the timely intervention of the Central Bank of Nigeria, Access Bank Plc, hoisted the green white green on the South African soil with the acquisition of controlling shares in Grobank Limited.
Stakeholders also received the news of reorganisation at Guaranty Trust Bank Plc that would see the lender transform to HoldCo structure, to strengthen its operations across Africa.
From Local to Continental, Aiming Global
With the completion of all mandatary regulatory procedures, former Grobank Limited would now be trading as Access Bank South Africa Limited. The deal, publicly celebrated recently, in Sandton, officials say, has positioned the local lender to deliver a banking operation that connects key African markets, where the parent bank already had presence.
During the formal consummation of the relationship, Chief Executive Officer, Grobank, Bennie van Rooy said, “This is an extremely exciting day for the South African banking industry. Our corporate customers will now have increased access to trade finance, treasury, international payments and loans through the wider distribution network offered by Access Bank’s presence in the key trade corridors that connect Africa to the rest of the world.”
In his reaction to the developments, a Lagos based seasoned Chartered Accountant, Abel Agholor, said, “it is good to have the Nigerian banking sector, in positive light like this. While the CBN deserves commendations for the timely intervention at First Bank of Nigeria, what each Nigerian should be delighted about is the foray of Access Bank into the South African market.”
The increasing footprint of Nigerian banks across the world, particularly Africa is something remarkable. Before now, it was foreign banks, including lenders of South African origin, who were making ‘skeletal investments’ in Nigeria, often selecting cities to operate in or locate their branches.
Recall that Stanbic Bank, a division of Standard Bank, South Africa took advantage of the banking consolidation supervised by erstwhile Governor of the Central Bank of Nigeria, Prof Chukwuma Soludo to acquire controlling shares in the former IBTC, which operated as an investment bank.
The lender now trades in Nigeria as a subsidiary of Stanbic Bank South Africa, under the name, Stanbic IBTC Bank.
With this acquisition by Access Bank, the tide seems to be turning. And van Rooy in an attempt at bringing the perspective from South Africa into the public space, envisaged more opportunities for the bank’s stakeholders even in the domestic economy, following the procurement.
“Banking with Access Bank South Africa means greater security as well as access to more products and services through a best-in-class digital platform, and a full retail banking suite will soon be on offer,” he said.
However, at Access Bank, they are merely implementing a strategy. This acquisition is part of the bank’s vision of earning global recognition as “the World’s Most Respected African Bank,” Group Managing Director, Access Bank Plc, Herbert Wigwe, said.
While celebrating the acquisition, Wigwe said, “Today’s ceremony in South Africa seals our commitment to delivering our strategic aspirations of becoming Africa’s Gateway to the World, in line with our vision to be the World’s Most Respected African Bank.”
On the future outlook of financial services and how the entry of Access Bank into the South African market would impact, Wigwe’s position correlated with van Rooy’s. “We look forward to the many opportunities our collective experience and deep understanding of the African market brings to our valued clients, and the journey ahead being one of great promise for our institution and the continent,” he said.
Analysts are of the opinion that this move will spur other lenders of Nigerian origin to explore the South African market. They are optimistic that this should have a good impact at diplomatic circles in both countries.
Also, while presenting the bank’s financial results for the 2020 financial year to shareholders in Lagos, the business expansion strategy came up and Wigwe said, “The strategic actions that the bank has taken over the past 12 months evidence a strong focus on retail banking and financial inclusion, an African expansion strategy and a drive for scale for sustainable value creation.
“In 2020, Access Bank proudly opened its doors for business in Kenya and Mozambique, further increasing our footprints across the African continent. Access Bank Zambia also concluded the acquisition of Cavmont Bank Limited in January 2021 and the Group recently announced the approval by relevant regulatory authorities for the acquisition of Grobank Limited, creating an inroad into the South African market in the realisation of the group’s strategic ambitions.”
In pursuit of this strategy, the lender has obtained regulatory approvals, in Nigeria, to transit into HoldCo structure as part of efforts to explore more opportunities in the market, locally and globally, The Point investigations revealed.
And in a manner reminiscent of the dramatic opening of the consolidation agenda by Prof Soludo, which saw the regulator formally unveil the plans, while two lenders, Zenith International Bank and Guaranty Trust Bank Plc launched their Initial Public Offerings the same day, in July 2004, the later has also moved to give impetus to transition into an Afrocentric HoldCo structure that it mooted in 2020.
Recall that during its half year 2020 Investors/Analysts call on September 7, 2020, the Managing Director and CEO, Guaranty Trust Bank Plc, Segun Agbaje, disclosed the commencement of the succession process that would involve the directors.
By March 22, 2021, when he was offering an update on this, Agbaje made it clear that the bank was in the process of obtaining and has obtained statutory and shareholders approvals, respectively, while necessary appointments were already being made.
He said that “holders of the fully paid ordinary shares,” rectified the plan at a Court-Ordered Meeting, on December 4, 2020.
“Please be informed that the members of Boards of Directors will be announced, and all other details of the ongoing corporate reorganisation provided, once all regulatory approvals have been obtained. We remain committed to providing best-in-class customer experience to all our valued customers and consistent high-quality returns to all our esteemed shareholders,” he said.
The Point investigations revealed that this would witness a major management streamlining at the lender with Miriam Olusanya set to be announced as the new managing director.
Perhaps, a major indicator that the lender has its focus on the continent is the appointment of regional managing directors for West and East Africa. Our investigations revealed that Thomas John is already designated Managing Director, GTB West Africa while Bayo Veracruz was chosen as Managing Director of GTB East Africa.
These banks join the United Bank for Africa, which has been strategically positioning itself as Africa’s Global Bank, with presence in 19 African countries, in the quest for the soul of financial services in the continent.
Watchers are of the opinion that the level of ambition being displayed by lenders of Nigerian origin and the strategic moves are likely to see Nigeria become the financial hub of the African continent in no distant time.
And CBN Intervenes at FBN
It is not all joy though, as a former banker , Kunle Abiaja (not real names) while reechoing the sentiments of Agholor, said, “the CBN’s intervention at First Bank smells nice. However, the apex bank should have been more firm and proactive.”
Abiaja did not want his real names divulged, because it would seem he was addressing specific situations, having been active in the financial services industry until lately.
The Governor of the Central Bank, Godwin Emefiele, while announcing the apex bank’s intervention at the board of the lender said, “The Bank maintained healthy operations up until 2016 financial year when the CBN’s target examination revealed that the bank was in grave financial condition with its capital adequacy ratio and non-performing loans ratio, substantially breaching acceptable prudential standards”.
Analysts are of the opinion that if the CBN observed that FBN “was in grave financial condition”, with its CAR and NPL, to the extent of “substantially breaching acceptable prudential standards” the regulator should have wielded the big stick proactively, much earlier.
Managing Partner, Otumunye Isaiah & Co (Chartered Accounts), Isaiah Otumunye was also of the opinion that the CBN should have stepped in earlier than they did at FBN.
“that the level of ambition being displayed by lenders of Nigerian origin and the strategic moves are likely to see Nigeria become the financial hub of the African continent in no distant time”
“If CBN’s intervention majorly consisted of forbearance, Nigerians have to worry about how many other lenders are in similar situations and are enjoying similar tame regulatory discipline,” Otumunye said.
Observers are wondering what would have led to the matter becoming public, as it is almost a tradition for the regulator and the financial institutions not to go public on sensitive matters.
Analysts are of the opinion that the Board of FBN Holding Plc, under the former Chairman, Oba Otudeko would have misinterpreted the forbearance of the CBN for weakness. What with the CBN going public that it made various entreaties to the bank to recapitalise without success?
Otumunye warned that time is of essence in risk management as passage of time could easily aggravate situations, particularly in financial reporting. “In the present dispensation and age, as it is globally, there is little room for compromises. There should be zero tolerance in all critical spheres of the economy,” he counselled.
Various stakeholders, who spoke to The Point, are concerned that the Board under Otudeko might have grown to consider itself above the law, to the extent of attempting to remove a CBN appointed managing director in disregard to the regulator’s entreaties and statutory provisions.
Banking and financial services business in Nigeria is governed by the Banks and Other Financial Institutions Act, 2020, which empowers the CBN to approve appointment of certain categories of officers of banks operating in Nigeria before they become effective.
The BOFIA 2020 dealt with this under “Disqualification and Exclusion of Certain Individuals from Management of Banks,” in S47, where the Act empowers the CBN Governor on appointment of management staff, directors, chief executives or other such grade officers of banks operating in Nigeria.
S47(1), provided that “Every bank shall, before appointing any director, chief executive or management staff of such grade as maybe specified from time to time by the Bank, seek and obtain the Bank’s written approval for the proposed appointment.”
