Gone With The Wind

Gone With The Wind… Giant with Feet of Clay As ripples created by the sack of five bank chief executives and their executive directors by the Central Bank of Nigeria continues to reverberate, the inclusion of Union Bank, the bank with the advertising strap line: “Big, Strong, Reliable”, was the one that sent shockwaves throughout the banking industry yesterday. Indeed the decision to remove its executives was one of the trickiest that had to be taken, but it had to be done because Union Bank was considered too important and large to fail. This was obviously by virtue of its age, history, size, capital and branch network. The genesis Union Bank’s debacles are in three folds: first, the bank granted several loans to its subsidiaries to buy its own shares to the tune of N35 billion and supported same. Eventually, when the value of its shares collapsed on the stock exchange, the bank took the hit. Second, about N46 billion was also said to have been loaned to Transcorp Plc for the acquisition of the moribund NITEL. Also, there were several loans running into billions of naira that went bad on its books like that of the MTS Wireless Limited and its legacy debts (debts assumed from some of the banks) it acquired in 2005 during the last regulator-induced consolidation exercise in the banking industry. Union Bank currently has a paid up share capital of 13.509 billion shares. The staff union controls five per cent of the shares amounting to about 675 million shares – which automatically means its managing director controls these units in determining major decisions in the bank. As at its last financial year ended March 31, 2008, the bank had deposits of N682 billion, shareholders’ funds of N119 billion, total assets and contingents of N1.216 trillion and total deposit of N682.309 billion. Branch network currently stands at about 400. Bartholomew Ebong became the MD/CEO of Union Bank in April 2006 on a day he was to retire having clocked 60 years. Although some shareholders kicked against his appointment considering his age, he got the support of the other shareholders and his appointment was ratified.

However, there have been calls for the rejuvenation of the bank through the injection of young managers and fresh capital – just like its peers like United Bank for Africa Plc and First Bank of Nigeria Plc that have retained their top positions in the league of Nigerian banks. Union Bank attempted to raise about N300 billion from the capital market last year but the offer was shelved due to the stock market meltdown. The immediate past Managing Director of Ecobank Nigeria Plc, Mrs. Funke Osibodu, has been appointed to steer the affairs of Union Bank in an interim capacity. From Housewife to Banking Amazon 62-year old Cecilia Ibru was until the Central Bank of Nigeria’s decision to remove her as MD/CEO of Oceanic International Bank Plc, affectionately regarded by many as Nigeria’s First Lady of Banking. Others considered her one of the most powerful women in Nigeria, if not in all of Africa. Ibru’s claim to fame derived largely from her remarkable success in saving the family owned Oceanic Bank founded in 1990, from the brink of collapse. Her aggression and drive transformed the bank into one of the fastest and most profitable banks in Nigeria following her appointment as Managing Director/CEO in 1997. She surprised all sceptics, especially those who assumed that her lack of experience in banking would be a hindrance to the effective performance of her tasks as CEO. Cecilia Ibru’s achievements read like a page in the Guiness Book of Records. She was the first female leader to raise her bank’s equity to N25 billion, the first female to head the fifth largest bank and the ninth largest company quoted on the Nigerian Stock Exchange, the first female CEO of a Western Union Agency in West Africa to meet the performance and turnover targets of Western Union, and in 2000, the first female CEO to post over N1 billion in profits. The amiable lady who brought grace and panache to Nigerian banking received a BSC (Honours) in Sociology from London University in 1971, a Master of Philosophy from North East London University and a Certificate of Eligibility from the Council of Legal Education in London. She cut her teeth in the business world by

working with the Ibru Organisation, founded and headed by her husband, Olorogun Michael Ibru. Cecilia’s undoing was the Oceanic Bank’s exposure to margin loans (loans given to people to buy shares). By the time new CBN governor, Sanusi Lamido Sanusi insisted on banks providing for their non-performing loans, Oceanic bank was forced to provide for N42 billion, the highest in the industry. The lady known for her schrewed business decisions had apparently under-estimated the market risk involved in margin lending. The possibility was always there that the value of the share certificates which used as cover for the loans could crash. When the stockmarket meltdown occured, the respected amazon was caught napping. As one observer put it, Mrs. Ibru saved Oceanic Bank but stayed almost too long. “She should have become chairperson of the bank while relinquishing the post as MD/CEO to a younger professional,” an industry source volunteered last night. The Handwriting was Clear Despite its recent 20th anniversary celebrations, not too many observers were surprised that Intercontinental Bank Plc’s executives were swept away with the gale that blew across the banking sector yesterday. For months, the bank had been the target of rabid de-marketing which picked up in the wake of the global financial crisis. This was not helped by some of the bizarre antics adopted by the bank which at some point tried to put a lid on customers’ withdrawal of their deposits, or closure of their bank accounts through the imposition of charges. In those dark days, the bank took considerable hits from the wild rumours in the banking industry to the extent that former CBN Governor Charles Soludo was forced to rise to its defence, assuring the public that it was a safe bank. But barely three months after it was given a clean bill of health by the former governor, the rumours crystallised into facts. The 20-year stay at the helm of the bank by Mr. Erastus Akingbola ended yesterday. Intercontinental Bank was one of the banks whose managing directors and executive directors were removed with effect from August 14, 2009.

It was a big blow to one of the foremost bankers of Nigerian banking, not by virtue of his position as president of the Chartered Institute of Bankers, but as one of the oldest hands in the industry. Born at Okeigbo on October 26, 1950, Akingbola worked in banking all his adult life. Soon after he finished from Christ School, Ado Ekiti, he secured an appointment with Union Bank of Nigeria Ltd. As a Bank clerk, he registered for a professional course in banking and earned the Associate Diploma of the Institute of Bankers (AIB) London in 1975. He proceeded to read for and passed for the Associateship Diploma of the Chartered Institute of Secretaries and Administrators (ACIS) in 1981. By 1986, he bagged a Master of Business Administrations (MBA) degree in General Management from the University of Lagos For a bank which counted the stability of its board as an advantage over the competition, it came as a shock that his executive directors were sacked alongside Akingbola. Sources said the bank was over exposed to margin loans and other facilities in the downstream petroleum sector. Akingbola confirmed the latter in an advertised open letter to President Yar’ Adua in which lawyers acting on behalf of the bank exposed three of the bank’s debtors, and how their indebtedness had made it difficult to get a pass mark on solvency from the CBN. To some banking and government sources, this act of desperation may have hastened the tide that swept Akingbola and his executive directors away. AP Connection For those who have been following the affairs of the banking industry, it is no longer news that of all the so called first generation banks, it was only Afribank that had challenges raising capital to stay competitive. This was simply because of the controversial 33.94 per cent of the bank's shares that were held by the former core investors (BIAO which has since been in liquidation) . It was not until these shares were disposed off in 2004 during the consolidation programme under the management of Alhaji Kashim Njidda, that Afribank was able to shake off the BIAO bug that had

stunted its growth. The consolidation led to the emergence of Patrick Olayele Akinkuotu as the new Managing Director in early 2005 from whom the ousted Managing Director, Sebastian Adigwe took over a few months later after the former was asked to leave. Although Afribank was said to have been in a bad state when Adigwe assumed duty, he made spirited efforts to bring the bank to its pride of place in the industry as evidenced by its financials. But he got his fingers burnt through the bank’s exposure to the capital market and investments in African Petroleum Plc, where the bank through its investment banking subsidiary – Afribank Capital, is one of the core investors. Apart from holding a substantial stake in AP, which the bank defended as “strategic,” a substantial portion of AP’s shares divested by its chairman, Femi Otedola very recently running into several billions of naira, was also acquired by the bank through Spring Capital. AP was said to have acquired the new shares from Union Bank, where Otedola had taken loans for the purchase of the shares when he acquired NNPC’s stake in the company sold by the federal government in 2007. His failure to service his debt forced Union Bank to sell his shares which were held by the bank as security for the loan. Similarly, when the value of AP’s stocks hit N262 per share late last year and crashed a few months later, AP also took the hit. Analysts believe that were it not for the AP investments, Afribank may have had a healthier balance sheet.. Culled from Thisday