Nigerian banks and their African burden

He is easily one of Nigeria’s ‘hard hat’ bankers. Even when he started out as a stripling bank officer at Ecobank Plc his colleagues saw an early glimpse of the man he was to become. Gritty, zealous and ‘hard’, Anthony (‘Tony’) Elumelu, was the next phase of Nigeria’s banking odyssey. His style as chief executive officer of Standard Trust Bank (STB) was a cross between the subtle conservatism of a Warren Buffett and the rule-bending irreverence of Richard Branson. To Tony being ‘nice’ was good but getting the job done was a whole lot better.

Interestingly and importantly, Elumelu, 52, had never, at any point, been in doubt as to  what he wanted. His endgame was very clear; he wanted his own bank, run on his own terms.

It was therefore not a surprise that through a mixture of hard ball negotiating, a modicum of wiliness and some pretty deft financial engineering, he and a team of whippet smart colleagues took over the then comatose Crystal Bank and rebranded it into what later became one of the nation’s most iconic new- generation banks in the country, Standard Trust Bank (STB).

STB made a decisive marketing statement. Its ladies were drop dead gorgeous while its men were like models stepping out of a men’s health magazine. Rivals made snide remarks that the bank had turned the ‘noble’ profession of banking into a ‘glamour parlour’. Elumelu couldn’t be bothered, his gambit was simple, customers needed to perceive the crisp freshness of the bank’s staff to be enticed to enjoy the technology- driven , hell- for- leather approach of a financial institution motivated by personal targets , group performance and divisional bottom lines.

For Elumelu, the rule book was only as good as the results it generated. The fact that the bank survived two disruptive rounds of Central Bank of Nigeria (CBN) imposed banking sector recapitalisation exercises was proof that corporate survival was more than a game of civility; it was one of existential strategy. The gutsy approach of STB to banking rapidly built a loyal retail customer base and broke down the mental barriers of government agencies to younger banking institutions. STB at a point was the principal banker to the National Assembly (NASS) and other major public sector institutions. This was both a blessing and curse. It was a blessing to the extent that it created a massive government sector deposit base, but was also a curse as the bank was intermittently adversely affected by changes in the CBN’s cash reserve requirements (CRR) for public sector deposits.

The liquidity challenges this brought about resulted in the bank changing tack by building up its retail deposit base. With Elumelu and his team realizing that going forward banks that had weak retail deposit bases were likely to suffer severe punishment by the changing moods of CBN’s monetary policy, the charge for a new business paradigm was set and the gambit for an improbable takeover was cemented.

The STB – UBA merger in 2005, a product of Elumelu’s evolving territorial and strategic repositioning was a timely and classic piece of competitive gamesmanship. At the time of the merger UBA had a chunky five million customers on its books while STB had barely 50 per cent of that number at two million customers. While UBA had a major presence in New York, STB had gradually eased into a sub-regional expansionist strategy with a branch in Accra, Ghana.  The merger was an unusually successful construct that saw the smaller institution STB taking over active leadership of the larger new entity called UBA, in concession to larger bank’s stronger brand equity. According to Segun Atere, a former chief stock analyst with Apel Assets and Trust, ‘It was a merger you just had to admire, the smaller entity brought great intellectual fire power and swiftness to the table while the older institution supplied corporate  strength and brand recognition. It was a marriage made in the Olympian skies’.

Going forward the Elumelu/ Oduoza  tag team has taken UBA to a completely new phase of banking transition; the battle for continental relevance, a charge consistent with the agenda of former CBN governor Charles Chukwuma Soludo, who pushed for the consolidation of banks in Nigeria in 2005 reducing them from a rabble of 89 struggling money houses to a more manageable and stronger gang of 25 institutions which accounted for 93.5 per cent of total bank deposit liabilities in the country and $1billion of fresh investments.

UBA’s African onslaught has knitted tightly into Elumelu’s new frontier of economic contribution which is the promotion of the philosophy of Africapitalism, a verdant programme designed to build fresh entrepreneurial capacity across the African continent.  The battle for the African pocket as slim as it is at the moment will ultimately depend on growing African businesses and the people that run them. This is the new global economic reality that Elumelu professes and the new and bold direction that UBA is traipsing.

The power suits of STB’s muscular men and the skirt suits of its shapely women may have excited the banking system a generation ago but in the new world of aggressively competitive continental markets, Elumelu and UBA are playing by new rules and grander visions.