Business
First Bank: Bride for all times, straddles innovation and tradition
– To scale recapitalization hurdle with ease
Despite facing stiff competitions from fellow traditional and new generation banks, Nigeria’s oldest financial institution, FirstBank of Nigeria (FBN) Plc, has held on to remain the bride for all times.
Travel to any Nigerian city, town and village across the 36 states of the federation and the Federal Capital Territory (FCT) and you are likely to find a branch of First Bank, which was established in 1894 by a British aristocrat, Sir Alfred Lewis Jones, to provide exclusive banking services to British shipping companies and trading firms operating in Nigeria.
Initially known as the Bank of British West Africa at inception in 1894, the bank concentrated on financing foreign trade for foreign owned businesses operating in Nigeria, and did little lending to indigenous Nigerians, who had little to offer as collateral for loans.
However, through consistent reinvention since its establishment more than 130 years ago, FBN has grown to become a force in the nation’s banking industry, offering retail banking, Small and Medium-sized Enterprise (SME) banking, corporate banking, treasury, trade and financial advisory services to its over 42 million customers.
ICONIC BRAND
One major factor that has helped FBN in its torturous journey to the top of Nigeria’s banking industry is the successful moulding of its iconic Elephant brand synonymous with strength, wisdom, endurance, vision and reliability.
For instance, FBN has withstood fierce competition from fellow traditional banks, as well as technology savvy new generation banks despite all odds with the help of its huge assets base, extensive branch network and higher number of highly trained employees.
A public relations expert, Teniola Dally, said that FBN Plc does not require much publicity owing to it possessing these strong attributes.
“Because it has been around for decades, many people, old and young, tend to have more confidence in it. In fact, not many Nigerians alive can mention a contemporary bank that is still alive, or as viable as FBN today if you asked them.
“What also helped the bank are its extensive branch network and large number of employees, who made the brand to be more visible, making it not to require much advertisements like other banks. So, one positive effect of these characteristics (endurance, visibility and trust) is more deposits”, Dally noted.
THE CENTURY PROJECTS
Without any doubt, what catapulted FBN Plc to its present enviable position is the resolve of the successive management to always re-invent the bank in the face of changing dynamics in the nation’s financial industry.
In 1996, the management of First Bank of Nigeria Plc launched the largely successful “Century Project”, a deliberate initiative to incubate and birth a transformation blueprint to usher the bank’s personnel, processes and operations into the 21st century.
This forward-thinking project, which recorded a huge success, was re-launched in 2001 as “The Century II Project: The New Frontiers”, after a re-appraisal.
The whole project, which lasted for fifteen years recorded a huge success. One of such successes is the development of new curricula for its training institute, FirstAcademy, to help invigorate manpower development with its rebranding trajectory as an institution of choice.
Also, FBN became the first organisation in the country to be granted notable international standardization certifications in the year 2010, followed by Most innovative Bank in Africa award by the African Banker in 2011.
In 2013, FBN emerged as the first banking institution in Nigeria to achieve the new international certification on Business Continuity Management, ISO22301 (Societal Security: Business Continuity Management System).
Also, the bank in 2014 emerged as “Nigeria’s number one banking brand” of “Top 500 Banking Brands Ranking” by The Banker Magazine, Financial Times Group and Brand Finance in the United Kingdom, making it the third time in a row.
Business Hallmark findings showed that the ambitious Century project has strengthened the First Bank brand to leverage customers’ experience, and project the bank as innovative, creative and dynamic.
Not only has the bank etched itself into the socio-economic fabric of the country and created a niche as one of Nigeria’s preferred banker, it has also pushed itself into the frontier of financial technology evolution, making an inroad into the consciousness of tech-savvy Nigerian youths and the upwardly mobile banking public.
Today, FBN is positively compared with foreign legacy brands like the Lloyds Banking Group, BNP Paribas, JP Morgan Chase, Citigroup, HSBC, Wells Fargo, Barclays, Goldman Sachs, Bank of America and Morgan Stanley, among others.
CUSTOMER BASE/CASH FLOW
First Bank of Nigeria Plc is the financial institution in the country with the highest number of customers of over 42 million.
Owing to its strong customer base, the bank has an impressive cash flow of N5 trillion to ensure sufficient liquidity and avoid runs.
ASSETS SIZE
FBN is the fourth bank in the country with the largest assets base of N16.90 trillion, only behind Zenith Bank with N24.28 trillion assets base; United Bank for Africa with N25.37 trillion and Access Bank in first position with N32.57 trillion asset size.
BRANCH NETWORK
As with asset size, FBN has an impressive record of being the bank with the most branches in Nigeria, where it provides comprehensive range of retail and wholesale financial services.
According to available data, First Bank has 595 branches and 144 Quick Service Points (QSPs) across the country, as well as 86 branches across its international subsidiaries, closely followed by Access Bank in second position with 583 branches and UBA in third with 460 branches.
LEADERSHIP
Unlike many of its peers, one major factor that has helped FBN to achieve relative stability is its succession plan. All its Group managing directors, with the exception of Joseph Oladele Sanusi, who was chief executive officer from 1992 to 1998, have all been tapped from the inside.
According to BH findings, since the exit of Joseph Sanusi as CEO in 1998, succeeding chief executive officers have all been staffers of FBN. For instance, Mr. Jacob Moyo Ajekigbe succeeded Joseph Sanusi in 1998. After Ajekigbe completed his tenure in December 2008, he was replaced by Mr. Sanusi Lamido Sanusi, the Emir of Kano, who superintend over the bank for only five months before he was appointed the governor of the Central Bank of Nigeria (CBN) and was replaced by Mr. Bisi Onasanya.
Onasanya was on the saddle from June 2009 to December 2015 and was replaced by Adesola Adeduntan on January 1, 2016. After completing his tenure on April 2024, Adeduntan handed over to the incumbent helmsman, Olusegun Alebiosu, in April 2024, who had since piloted the affairs of the bank.
The smooth successions, banking stakeholders agreed, has helped First Bank to avoid leadership crisis, allowing successive management teams to focus on their primary assignments of building the bank.
These relatively younger and energetic CEOs have been most efficient in developing unique products, and delivering efficient services that gave FBN a foothold in the fiercely competitive banking industry that is largely dominated by tech-savvy new generation banks.
OWNERSHIP STRUCTURE
FBN’s greatest strength, findings revealed, lies in its ownership structure. The institution is largely owned by Nigeria’s most wealthy individuals and institutions, who protect their investments in the bank with great intensity.
At the last count, not less than ten Nigerian wealthiest families or institutions own equity in the bank. For instance, the nation’s 4th richest billionaire, Femi Otedola, with a net worth of $1.4billion, according to Forbes, is the largest shareholder of the bank with 9.41% stake valued at N18. 9 billion.
He displaced the Sir O. Hassan-Odukale’s dynasty 5.57 percent combined equity to take the lead position in the bank, according to the unaudited report of the lender for the first half of 2023.
Other wealthy Nigerians with substantial stake in FBNH include Chief Oba Otudeko with 4.7 billion units; Leadway Assurance, founded by Sir O. Hassan Odukale 4.40% equity; Chief Mike Adenuga (undisclosed); scion of the Hassan-Odukale dynasty, Tunde Hassan-Odukale 1 percent equity and Estate of Late Chief Arisekola Alao, among others.
The bank, stakeholders argued, has been integrated into the nation’s political system, with it becoming almost untouchable by forces both inside and outside the banking industry, who often mess with weaker DMBs like orphans with no one to protect their interests.
FINANCIAL PERFORMANCE
Shareholders of FBN Holdings Plc have earned value return on investments as the bank continued to record impressive back to back performances.
In June, the bank declared N238.53 billion profit before tax (PBT) in its unaudited first quarter (Q1) ended March 31, 2024 results, which was about 325.2% growth recorded in Q1 of 2023.
The Q1 2024 results reflected the impressive 2023 performance, as the oldest banks in Nigeria sustained its fundamentals amid domestic and foreign challenges.
According to FBN Holdings audited financial statements for the year ended December 2023, the group recorded a profit after tax of N310.4 billion, a significant increase from the N136.3 billion reported for the same period in 2022.
This marks the highest profit ever declared by the financial services giant in its more than 130-year history.
Further breakdown of the report showed that the bank’s Net Interest Income rose to N548.9 billion, marking a 51% increase from N363.2 billion in the previous year, while Fees and Commissions increased by 64% to N193.1 billion, up from N117.6 billion.
Also, Profit After Tax saw an impressive increase of 128%, rising to N310.4 billion from N136.1 billion, with Earnings Per Share increasing by 129% to N8.59 from N3.75.
Deposits, meanwhile, grew by 53%, reaching N12.4 trillion compared to N8.1 trillion in the previous year. Likewise, Total Assets saw a substantial increase of 61%, climbing to N16.9 trillion from N10.5 trillion.
WEAKNESSES
Like all giants, who have their Achilles heels, FBN also has its issues. Its major strength, ownership structure, has also proved to be its main weakness.
Owing to the fluid ownership structure of the bank, there have been reported cases of battle for the control of the bank, which often necessitate the interventions of the courts and regulatory bodies.
In April 2021, the CBN removed all directors of the bank and those of its parent company, FBN Holdings Plc to stave off a boardroom crisis that led to the short-lived retirement of its immediate past Managing Director/Chief Executive Officer, Dr. Adesola Adeduntan.
While the CBN reinstated Adeduntan, who was earlier sacked by the Oba Otudeko led board, Otudeko was relieved of his chairmanship position, and was replaced with a former Minister of State for Finance, Mr. Remi Babalola.
Also, Justice Akintayo Aluko of the Federal High Court, Lagos, in a ruling on August 20, restrained FBN Holdings Plc from holding, conducting or hosting its 12th Annual General Meeting (AGM) scheduled for August 22, 2024, whether virtually or otherwise, pending the determination of a motion for interlocutory injunction filed by a shareholder, Tohir Folorunsho Ismaila.
In April, while the Corporate Affairs Commission (CAC) placed the record of First Bank of Nigeria (FBN) Holdings on caveat pending the resolution of the crisis rocking the board of the bank as a result of multiple court cases filed by aggrieved directors.
Though BH could not independently verify this claim, sources alleged that Ismaila and other shareholders that stalled the AGM of the firm are proxies working for major owners of FBN.
However, despite their differences, the owners have not allowed the crisis to affect the bank.
“We have been very creative in tackling our challenges. This dark cloud will also blow over like others and First Bank will come back stronger”, an insider assured.
RECAPITALISATION DRIVE
The CBN, it would be recalled, had on Thursday, March 28, 2024, announced the commencement of the much awaited recapitalization exercise for DMBs, which mandates substantial increases in their minimum capital base according to the scope of their operations.
While commercial banks that want to get international licences will need to upgrade their capital base to N500 billion, national banks must capitalized to the tune of N200 billion, regional banks N50 billion, non-interest banks seeking national licence N20 billion and non-interest banks seeking regional approval N10 billion.
While setting a deadline of March 31, 2026, the apex bank emphasized that the new capital requirement will consist solely of paid-up capital and share premium and that banks’ Shareholders’ Fund will not be considered.
Capital Boost
FBN is one of the banks expected to easily meet the new recapitalisation target of N500billion for it to operate an international licence.
Before the announcement of the new recapitalisation requirements, First Bank of Nigeria Holdings Plc was capitalized to the tune of N251.34 billion, needing another N248.66 billion to retain its licence.
Already, the bank is in the market to raise N300billion additional capital. FBNH in a notice of its Extraordinary General Meeting filed with the Nigerian Exchange Limited in April, disclosed that it would be seeking to raise the funds via a public offering, private placement, or rights issue in the Nigerian or international capital markets. With it’s wealthy individual and institutional shareholders meeting the target may pose serious challenge.
BH projects that while the fate of many banks hangs in the balance, First Bank is expected to scale the recapitalization hurdle without breaking much sweat due to its strong ownership structure.
Capital market operators, who spoke on the matter also agreed that the offer will do well and likely overshoot its target.
