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Hello everyone, welcome to the October episode of #Corporatestories by @Nairametrics

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On this month's episode, we will be telling a story of one of the biggest deals in Nigeria's corporate history.
It's a story of sheer guts, desire, deception, fraud, crony capitalism, rise and fall, tact, brilliance and most of all the heart of a lion.
1. It was late into the night on March 4th ,2004 as directors of United Bank of Africa
2. deliberated on one of the toughest decisions they had ever faced. Just 2 years earlier, the bank had been forced into a similar position
3. Only that then it was not as punitive as this one.The instruction was to split the CEO&Chairman, under the directive of the Central Bank.
4. This time around, the instruction was like a knife stuck in the heart. The business whiz kid and majority shareholder of the bank
5. Hakeem Bello Osagie, had been asked by the CBN to resign from the bank within 24 hours. Thus, a decision had to be taken that night
6. As the board deliberated late into the night to decide on how to address this latest debacle, it became clear that there was no way out.
7. The reign of Hakeem Bello Osagie (HBO) as one of Nigeria's most enigmatic Banking Chief's, had come to an abrupt end.
8. For the Nigerian banking sector which had watched in amazement how this young man
9. had risen to become a symbol of a new era for the banking sector, the news of the fall from grace,
10. of HBO is still ranks as one of the shocking moments of the Nigerian banking sector, which at the time was entering an uncertain future.
11. But as the saying goes, when one door closes, another opens in the never end chapters of history.
12. Flash back:
13. It was the early 90s & the govt of IBB, a former dictator& Military President of Nigeria had decided to liberalize the banking sector.
14. As part of the SAP induced economic reforms, he ushered in an era of banking licenses that ensured
15. the economic landscape of Nigeria was awash with the so called “new generation banks”.
16. The banks were new and had style. They promised depositors heaven and echoed the never ending slogan that Nigeria was open for business
17. Their promise of a new Nigeria was aptly depicted in the flurry of captivating advertorials that flooded local tv channels in the 90’s.
18. In one of such adverts was one with a synopsis that displayed Nigeria in all its glory.
19. . It opens with a water fall and quickly moves on to a young man playing a flute and then to a cock's crow.
20. It quickly moves to a group of young men beating drums elegantly and then to women pounding away ahead of their dinner
21. A young man harvesting cocoa will follow quickly shifting to another drinking fura de nunu.
22. As the viewer watched in awe, the display of the cultural diversity of Nigeria
23. and its rich agricultural heritage, a voice slides in welcoming its viewers to Nigeria. The voice was remarkably in a foreign accent
24. and goes on to tell whoever was watching that Nigeria was open for Business. As your curiosity increases at the spectacle on TV
25. the voice announces succinctly.

"when you are thinking of foreign investment, the natural place to come is Nigeria"
26. "and the bank to reach is Crystal Bank, where we make banking a real pleasure."
27. As the ad comes to an end, you are reminded quite confidently

“Crystal Bank, where to bank in Nigeria”
28. Crystal Bank was one of the hundreds of banks that operated in the early nineties under the government of IBB.
29. The founder of the bank, Chief Zebulon Abule was rumoured to have setup the bank to remain relevant in the politics of the early 1990s.
30. In the 90’s politicians desperate for power had to get busy as former military leader, Ibrahim Babangida kept dribbling them
31. by postponing the date of handover of power to a democratically elected President.
32. According to rumours at the time, Crystal Bank funded his Cement importation business and
33. gave out loans to its founder on terms that were not favourable. This was not a unique case.
34. The banking sector was laden with poor corporate governance. After the deregulation of the banking sector by IBB,
35. the number of commercial and merchant banks went from 40 in 1985 to 115 in 1995.
36. The banking industry also diversified into an era of specialized banking services with the advent of primary mortgage institutions;
37. which as at 1995 were 280 in numbers; community banks numbering 1355 in 1995.
38. The enormity of financial institutions made it difficult for regulators to keep up with the new generation banks as they were called.
39. By 1994, 48 out of the 120 commercial banks were distressed while 7 were on the fringe of distress.
40. 12 was reported to be out rightly illiquid or technically insolvent.
41. Only 72 banks representing 60% of the total were liquid and adequately capitalized.

It was a disaster of unimaginable proportions
42. Depositors lost billions of naira in deposits and the prisons were littered with ex bank chiefs
43. who stood accused of fraud and financial misappropriation under the government of an unforgiving military junta, Gen Mohammed Abacha.
44. The Nigerian Deposit Insurance Corporation, NDIC which had been setup about 7 years earlier (1988)
45. under the recommendation of former CBN Governor, Ola Vincent, was faced with its worst nightmare.
46. In one example of bank failures, 2 high profile banks Alpha Merchant bank and the United Commercial Bank were declared distressed.
47. Over N1.8 billion were lost by depositors to Alpha Merchant Bank including government agencies which lost about N1.2billion.
48. United Commercial Bank was owing CBN over N903million in loans and advances at the time it collapsed.
49. Included in the list of banks that the CBN could salvage from distress was African Continental Bank (ACB) and Crystal Bank.
50. As the wave of banking sector crisis swept through the country, a door was left seemingly open
51. for a new crop of banking whiz kids that would change the face of banking in Nigeria forever.
52. It was February1995 and a young 32-year-old man named Anthony Onyemaechi Elumelu (TOE) had had enough.
53. He was the Executive Director at Linkage Assurance Company Ltd, and informed his Chairman,
54. Ebitimi Banigo that it was time to pursue a solo career.
55. TOE as he will later be called by friend's and associates had served Chief Banigo for over 6 years
56. in capacities such as Branch Manager and Regional Manager in Port Harcourt.
57. According to some rumours, he had his first fall out with Chief Banigo, after stories emanated that he made millions in a forex deal.
58. TOE was soon whisked out of All States Trust Bank and sent to Linkage Assurance as Executive Director.
59. Linkage Assurance was the insurance arm of the renowned Conglomerate, chaired by the erstwhile banking mogul, Ebitimi Banigo.
60. Undeterred, TOE continued to serve his boss, bidding his time as he watched events in the banking sector, which was reeling of losses.
61. TOE in tune with his middle name, “onyemaechi” already knew that Nigeria was on the cusp of a banking revolution.
62. He called his Friend, Albert Okumagba and Chuka Onwuchekwa informing them that he wanted to setup a new company.
63. Albert and TOE had struck a unique relationship back in 1987 when they were studying for their masters degree in the University of Lagos
64. Their relationship blossomed and Albert will go on to be TOEs best man at his wedding in 1994. TOE will return the favour a year later
65. TOE informed Albert and Chuka that their new company will be named named Banc Garanti Limited (BGL).
66. The plan was to use BGL as the vehicle to achieve their goals of conquering the financial sector.
67. To setup BGL he raised seed capital by pooling funds from family and friends. According to close associates, TOE called these friends
68. “intellectual friends” suggesting that he pitched those who he thought had knowledge of the sector & will easily part with their money.
69. Leveraging on their experience and tenacity, BGL also started making money by helping
70. banks that were technically insolvent facilitate mergers and acquisitions.
71. TOE soon led the team to acquire a distressed Merchant Bank of Commerce (MBCOM), which they will later rename Continental Trust Bank.
72. MBCOM as it was called upon acquisition, had Ike Nwabuoku as Managing Director, with TOE as an executive director.
73. As ED of MBCOM, TOE leveraged on his experience and unique insights into the insolvency of most banks,
74. deciding it was time to acquire a distressed commercial bank.
75. They would have on their list of targets, African Continental Bank (ACB), Pinnacle Bank, Commercial Bank of Africa and Crystal Bank.
76. According to an official account, TOE articulated and wrote a memo to the CBN, applying to takeover Crystal Bank
77. As the CBN dithered for weeks on TOE’s proposal, he wondered what other levers he could pull to push through this request.
78. Most people who knew TOE opine he had a knack for following through with projects that are directly under his purview.
79. Failure was hardly an option even if it meant using unorthodox means.
80. As it became clear that the back & forth between the CBN and the Ministry of Finance could jeopardize his vision, he moved on to plan b.
81. TOE approached one of his non-executive directors at MNCOM, a certain Brigadier General Abba Kyari to help use his connections
82. in the Ministry and the CBN to secure the approval of his proposal.

This after all, was why you had men like this in your board
83. The General was friends with Mr Tony Ani, the Minister of Finance at the time and also had connections at the CBN.
84. He soon got feedback from top executives at the CBN that TOE’s request was being viewed favorably. But that was not enough. TOE pushed
85. As the deadline day drew nearer they flew to Abuja to continue lobbying, shuttling between the CBN and
86. Ministry of Finance to secure the numerous approvals that had to be obtained.
87. In hindsight, TOE was doing the CBN, and to a large extent the depositors at the beleaguered bank. But this is govt.
88. You would have to sweat your way to achieve any goal even if it is to receive payment for work executed successfully.
89. It was now 30 minutes before deadline and they were yet to secure CBN’s approval.
90. TOE’s heartbeat raced as government bureaucracy stood between securing his future and accepting failure.
91. Through the help of the General, the Ministry requested for a N100k non- refundable bid deposit for the bank to which TOE promptly paid.
92. To fund this transaction, they secured the approval of the board at MBCOM. By the time they were done, it was too late
93. to get a written approval. And so they left Abuja with a “verbal approval” for the deal.

TOE had scored a major victory.
94. As celebrations ensued in Lagos, TOE’s attention turned towards the task ahead.

They had to raise the purchase consideration
95. According to historical accounts of the transaction, MBCOM led the acquisition of the bank by injecting over N500m into the bank
96. In the wake of the crisis, the CBN had increased the minimum share capital for commercial banks to N500 million.
97. The new owners of Crystal Bank went a step further. They increased their share capital to N750m
98. MBCOM setup an SPV named Merchant Bank Ventures which in turn owned about 85% of the new bank.
99. In tune with keeping everything in house, BGL was also appointed the lead arranger of the deal,
100. pocketing lucrative fees for the now leading investment and fund raising house in the sector.
101. An unofficial account of this transaction suggest TOE had approached some of the largest depositors at the then Crystal Bank.
102. He made them an offer they couldn’t refuse.
103. TOE it was alleged, told them that he was planning to takeover the bank and needed their support.
104. He told them he wanted to assure them that their deposits were secured but that he needed one favour.
105. They should convert their deposits into shares and become shareholders in the new bank.

It did not end there.
106. He also informed them that he needed them to match their deposits with even more investment in the new bank.
107. In return, he promised to make them even richer and solidity their stands as billionaires.
108. One of the alleged 'major depositors' was a certain Rasheed Ladoja.
109. The depositors bemused at the brazenness of this 34-year-old banker realised they had no choice.
110. This was an offer they could not refuse.
111. A few weeks later, MBCOM announced the constitution of a new board of directors of a newly created bank, Standard Trust Bank.
112. The name was crafted by no other but TOE himself.

Crystal Bank was dead and buried and Standard Trust Bank was birthed.
113. On the board of the new bank were, Senator Rasheed Ladoja, Chief Annie Okonkwo, Alhaji Yusuf Ali, Chief Ferdinand Alabrabra,
114. Ike Nwabuoku, Abba Kyari as Chairman and TOE as Managing Director.
115. Thus, the beginning of a new era that would change the face of banking in Nigeria had begun, under the leadership of Tony O Elumelu.
116. We have come to the end of Part 1 of the series.
117. I hope this has been informative and engaging.

We love feedback so please do not hesitate to share
118. Kindly ignore errors and typos as this is twitter.
119. The date for Part 2 will be announced tomorrow and as usual, it promises to be as informative and engaging as Part 1
120. Thanks everyone and do remember to rt the first tweet.

Direct all inquires on this thread to @Nairametrics

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