,
123 tweets,
11 min read
Read on Twitter
This is the second Episode of the UBA/STB merger. Kindly follow this link if you missed Part 1 of this episode.
Remember to retweet the first tweet of this thread, so that everyone interested in this remarkably story never misses out a tweet.
This is likely going to be another long thread so please be patient as we tell you another corporate story.
1. The announcement of the takeover of the defunct Crystal Bank (now Standard Trust Bank) took everyone by storm.
2. Understandably, critics and admirers of TOE wondered how he pulled this feat considering his relatively humble background.
3. Just as his rise brought him stardom, critics went on a prowl. In Nigeria, it is unusual for a "nobody" to own a bank without
4. Rumors persisted about how he went from a Branch Manager in All States Trust Bank to become owner of commercial bank.
5. The rumoured ruse between him and Banigo spread among critics and supporters alike, until the Chief Banigo laid the matter to rest
6. A Harvard Undergraduate of Economics, Chief Banigo came into Nigerian banking with a wealth of Experience.
7. Before returning to Nigeria, Chief Banigo had worked in Citibank, New York; Citicorp International Bank and Chase Manhattan Bank.
8. Upon return to Nigeria he was made Managing Director of International Merchant Bank of Nigeria, one of the most iconic banks of the 80's
9. In IMB, he supervised a legion of banking executives that would proceed to dominate the banking sector in Nigeria for decades.
10. Despite his failings, Chief Banigo, is today viewed by many as the “Godfather” of modern day banking in Nigeria.
11. TOE learnt from him early on that the nascent financial services sector, just like politics,
12. was all about permanent interest and keeping relationships cordial.
13. Thus, being in good stead with a personality like Banigo was critical to achieving his goal to acquire a commercial bank.
14. Chief Banigo will in 1995 personally pen TOE a letter of appreciation and commendation, wishing him well on his next venture.
15. Associates of TOE maintain till today, that he carries this letter in his briefcase wherever he goes.
Loyalty was sacrosanct for TOE
Loyalty was sacrosanct for TOE
16. Unlike today, the banking sector, TOE came to be a part of, was a much different place in the nineties.
17. This was a period when banks where still reeling from a crisis and deployed
18. risk management techniques that favoured a measured approach to mobilizing customer deposits.
19. Nigeria banking space was divided into two main categories. The old generation and newer generation banks.
20. Whilst the former relied on their proven service delivery, reliability and trust to attract deposits, the new generation banks relied
21. aggressive marketing schemes that often bothered on perception, coercion and relationships to drive deposits.
22. Seeing that trust was a major factor in attracting deposits from scourged depositors who had lost confidence in the banking sector,
23. the word “Trust” became a nomenclature for deriving names of newer generation commercial banks.
24. But TOE also had a different approach to banking that heralded his unorthodox ways.
25. Just as banks were consolidating market share in key commercial nerve centers in the country such as Lagos, PH, Aba, Onitsha, Kano
26. TOE followed a more precarious route.
27. He decided his bank was going to open branches in every state capital in the country and other locations that had business opportunities
28. In fact, by October 1997, just a few months after he took over Crystal Bank, STB had opened a branch in Abuja
29. The move, unorthodox at the time, was chided by critics who wondered how a new bank with a modest balance sheet could operate
30. branches in locations that lacked commercial benefits. For TOE, this was all part of a grand plan.
31. The era of STB also ushered in bold and aggressive marketing in commercial banking.
32. According to some sources, he favoured an aggressive approach towards deposit drive and often led the way himself
33. In one account, TOE would gather stack of complimentary cards he received from numerous people he met at airports as he waited to
34. board flights, hotels waiting to be checked in, lobby of government offices awaiting public servants and politicians.
35. Each card had a written message to the branch manager of nearest branch to the office address of the contact.
36. Branch managers who received this card knew immediately that they had a target to acquire this contact as an account.
37. TOE will often call the branch head asking if the customer had successfully opened account.
38. A negative response often attracted severe consequences.
39. Another account reveals, TOE will often lay siege in the banking halls in the evenings
40. as he awaits marketers who were returning from the deposit drives.
41. As you enter the banking hall you were asked “how many accounts did you open”. Remarks like....
42. “look at this guy, he came back empty handed” [SIC] was not uncommon and was difficult to stomach by some of the marketers.
43. For those who got positive remarks, their targets were subsequently increased.
44. It was an atmosphere of intense competition for opening accounts among employees and one that often required extreme means.
45. As the competition rose within the bank, so did it with other banks. New Generation banks alike deployed
46. even more aggressive tactics towards deposit drives
47. The new generation banks introduced several initiatives that was geared at extracting deposits from unsuspecting depositors who felt
48. safer stashing their cash in older generation banks or in their homes.
The approach was two pronged.
The approach was two pronged.
49. First was to relax some of the bureaucratic operating procedures that will make their services faster
50. and much better than the sloppy services that was pervasive with older generation banks.
51. The banks also introduced higher interest rates to customers in exchange for deposits and treated their loyal customers like Kings.
52. The second approach was to offer more flexible management styles and improvement of the working condition of their employees.
53. Staff of newer generation banks earned twice their peers in older generation banks and were barred from joining the labour unions.
54. As the rewards towered in comparison to older generation banks, it paled in comparison for job security.
55. Seeing that most of the cash was help by Men, these banks quickly deployed and perfected the use of women as marketers.
56. They adopted the strategy of recruiting female graduates as marketers and unleashed
57. them at unsuspecting men who with a little sway would open accounts.
58. STB epitomized most of the characteristics of the New Generation Banking ear and soared in deposits.
59. By deciding to open branches in every part of the country, TOE was strategically targeting public sector funds,
60. an area of opportunity that his competitors had largely ignored.
61. The strategy according to insiders was named “insurgent” banking and came at a significant cost.
62. Branches reported losses and chasing deposits were even harder.
63. While some employees excelled against all odds, others who couldn’t stand the psychological turmoil bucked under pressure.
64. But TOE was unrelenting as he so often does. He told his associates that soon, the branches will turn profits.
65. The move will pay off in 1999 as democracy was ushered in. Under Democracy, each tier of government was independent in terms of
66. governance and more importantly their finances. TOE knew the states will require funding from STB to finance projects
67. and was already strategically positioned to seize this opportunity. In return for giving states loans,
68. In return for giving states loans, STB secured Irrevocable Standing Orders secured against the FAAC allocations of the states and
69. their local governments. The 3 tiers of government also required the services of banks where they can deposit their allocations.
70. Incredibly, the CBN also included branch network as part of the requirements to be included as a settlement bank.
71. They were only 7 out of 89 banks appointed as settlement banks& ostensibly, STB was one of them.
The bet had paid off, or so it seemed
The bet had paid off, or so it seemed
72. TOE also held countless retreats with his employees, where he often dished out Kolanuts to keep his employees awake late into the night.
73. In one remarkable encounter, he will sit and listen to his executives present an overview of the Nigerian economy.
74. After beautifully presenting an overview and outlook of the economy for the ensuing year,
75. the presenter projected a targeted profit of N600m for the financial year. This was about three times the prior year profits.
76. According to sources, TOE immediately stood up and left the hall in frustration.
77. Within hours he returned with his own projections and gathered everone back into the hall
78. He told participants that the bank would target a profit of a billion from the N600m they had declared during the year.
79. By 2000, the bank declared a profit of over N1.2 billion (from N221m), the first by any bank at the time.
80. Followers of the banking sector in this era still have divergent views of how banks came to declare rapid profits
81. Just as it is today, commercial banks made profits from lending at exorbitant interest rates, excessive fees and forex transactions.
82. Nearly all banks were in on the game and soon the race for astronomical profits began.
83. As other banks jostled for branch expansion and paper profits, TOE set his eyes on an even bigger target.
84. He had in a seminar in 1998 declared that banking consolidation would ensure in 5 years.
His next goal was to become a top 5 bank
His next goal was to become a top 5 bank
85. After the retreat, the conclusion at was that to become the number one bank in Nigeria, STB would have to acquire
86. one of the older generation banks. Union Bank, First Bank and UBA were shortlisted as the likely targets
87. For some of the attendees of the retreat, the thought of acquiring a bigger bank was unimaginable and perhaps may just be a dream
88. TOE immediately set out to put his plans into motion by listing STB as a Public Quoted Company in 2003.
89. By December of that year, the bank launched its very first Initial Pubic Offering (IPO).
90. Standard Trust Bank offered about 1 billion units at N4 per share to the Public in an offer that was to close by January 2004.
91. In typical, TOE style he reportedly gave his comrades a target to raise the N4 billion, the total envisaged IPO purchase consideration.
92. In one remarkable account, it is understood that he alone took of the challenge of selling 500m units of the stock and then giving
93. the staff another 500m to sell. TOE will personally raise the N4 billion while he expected his marketing team to raise a combined N2b
94. The marker was laid down and in 2003, just when the jingle bells were ringing, Nigerians will come to witness an IPO like never before.
95. STB marketers will market the shares in the same vigour and tenacity they did when they were driving for deposits.
96. Immediate Family Members, relatives, friends and well wishers, colleagues of spouses and family members, church members, associations
97. No one was spared in this never before seen marketing of an IPO.
98. Road shows were organized across the length and breadth of the country with TOE traveling to about 17 locations to sell the IPO
99. By the time they were done, about 60,000 Nigerians had subscribed to the shares of STB by more than 2 folds.
100. The Standard Trust Bank IPO was oversubscribed by 154%, unprecedented at the time.
101. Instead of raising N4 billion, the bank raised a whopping N8.4 billion. TOE had the cash he needed to fund any potential acquisition
102. And so, by the summer of 2004, the CBN Governor, Prof Charles Soludo jolted the banking sector, who had promised to change banking,
103. jolted the banking sector, in one of the most brazen regulatory pronouncements ever made in corporate Nigeria
104. He will announce to the world that a Nigerian bank that the CBN had increased the minimum capital base for branks to N25 billion
105. The banking sector, bemused by this singular action, commenced intense lobbying to get this brazen policy reversed.
106. TOE soon disappeared from the scene as he pondered on his next move.
107. Across the Island, where the older generation banks held sway, there was an air of confidence that they would make the N25b cut
108. It was inconceivable that new generations banks would raise the required amount without being swallowed let alone being a prey
109. But as HBO licked his wounds and pondered on his corporate future, a received a call from TOE
110. Just like he had done in the acquisition of Crystal Bank, TOE made HBO an offer he couldn't refuse
111. It was an offer to acquire an estimated 35% of his shares in UBA and one that would put STB in a position to acquire its bigger rival
We have come to the second and final part of this #naijacorporatestories on UBA/STB Merger.
Thanks for being a part of this thread and do sending your comments and questions on any aspects of the thread.
Remember to follow @Nairametrics for your daily Financial Literacy updates and business news.
#CorporateNews will be back on Sunday God Willing.
A tweetchat with @fidelitybankplc is also scheduled for Monday so stay locked.
A tweetchat with @fidelitybankplc is also scheduled for Monday so stay locked.
Thanks for all your wonderful messages of support and encouragement.
Enjoy the rest of your day.
*End*
Enjoy the rest of your day.
*End*
Sorry for the typos and spelling errors guys. I understand they were many of them. Pls bear with us, we will do much better in Part 3
Third and final part here
