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Zenith Bank CEO, Peter Amangbo reveals why Nigerian banks fail

The Chief Executive Officer (CEO) of Zenith Bank, Peter Amangbo has identified the quality of ownership and faulty business strategies as the cause of bank failure in Nigeria.

Published

1 year ago

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Peter Amangbo, Why Nigerian banks fail

The Chief Executive Officer (CEO) of Zenith Bank, Peter Amangbo has identified the quality of ownership and faulty business strategies as the cause of bank failure in Nigeria.

Amangbo said a bank is prone to fail if the lender is established by different characters that have personal agenda. He stated the need to have an anchorman and a unified objective that drives the operation of the bank.

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He made this assertion during an interview with Vanguard, citing the number of banks that were in operation between 1988 and 1989, disclosing many of them failed because of lack of focus among the founders. Adding that quality of management is essential to keep a bank in operation.

“To me, I think on a scale, the first thing I will probably say is ownership. If the ownership is not right, forget it, it can never survive. If you come together and have people who are not of like minds, there is no way it can survive. If you check, as at 1988 and 1989, we had about 126 banks.

“How come many of them failed? It is because people of all forms of characters, without focus came together to own the banks. You have your own agenda, and others have their own agenda. The second thing is the quality of management which also will derive from the quality of ownership.”

He also faulted the system of bank shareholders seeking an internal loan, stressing that once a shareholder request for a loan, other shareholders will follow-up. Amangbo gave an insight into how Zenith Bank handled such request.

“When you start a bank and you start borrowing from the bank, it is a problem. We even have it as a policy that time that none of our shareholders should borrow money from us.

“If anything, they were giving us deposits. If shareholder A takes a loan, shareholder B will start looking and asking for his own and so on. So those are the key things.”

Zenith Bank consolidation plan

Last year, Access Bank and Diamond Bank announced a consolidation agreement that will transform the two lenders into one of the biggest lenders in Nigeria and Africa. Despite the move unsettling the balance in the banking sector, Amangbo said Zenith is one of the banks that loves to grow organically.

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He said each bank has their own style and structure, adding that Zenith Bank has its own strategy, which doesn’t necessarily mandate Zenith to dance to the same tune or walk in the same path of other lenders.

“The way that you want to dance depends on your style and structure. We have our own strategy.

“If you look at Zenith, we always grow organically; if you look at the consolidation in 2004 during the Soludo consolidation era, many banks came together; some 10 banks, some 12 banks, some 13 banks; it depends on what they want.

“We are one or two banks that did not merge with anyone. Today you are in a better position to compare each of the banks in terms of any parameter whether in terms of profit or size; you can judge what position Zenith Bank belongs. Everybody must dance their own way; some people are better in some areas and you leave them and focus on your own. At the end of the day, it will be better for the industry.”

Consolidation: Crisis or deliberate strategy

Amangbo has described consolidation of banks as more of a deliberate strategy to grow within the ranks than it is of crisis or distress of a lender. In the interview, he stated though most merger and acquisition is regulatory induced, consolidation decision is taken based on deliberate business strategy.

“So we can decide to come together not necessarily being in distress before we can talk of acquisition. Do you know how many companies that the likes of Apple and Microsoft acquire on a regular basis? They would have probably acquired over 100 medium and small fintechs, not necessarily because of the issue of distress; it is a deliberate business strategy.

“I want to remove the issue of distress. The issue of M & A in the banking industry in Nigeria is always regulatory induced. There are very few cases that you can think of that are not regulatory induced.”

Amangbo noted that consolidation without distress shows the sector and economy are maturing. He said a company can offer itself for a merger without having to wait until distress period, but when such offer is on the table, the companies involve must weigh the value proposition and corporate benefit.

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Patricia
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Olalekan is a certified media practitioner from the Nigerian Institute of Journalism (NIJ). In the era of media convergence, Olalekan is a valuable asset, with ability to curate and broadcast news. His zeal to write was developed out of passion to shape people’s thought and opinion; serving as a guideline for their daily lives. Contact for tips: [email protected]

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Appointments

Fidelity Bank appoints Chike-Obi as Board Chairman

This announcement was contained in a notice signed by the Company Secretary.

Published

27 mins ago

on

July 6, 2020

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Fidelity Bank has announced the appointment of Mustafa Chike-Obi as Chairman of the Board of Directors. The appointment has been approved by the Central Bank of Nigeria, and will take effect on August 14, 2020, after the expiration of the tenure of the current Chairman, Mr Ernest Ebi.

This announcement was contained in a notice signed by the Company Secretary, Ezinwa Unuigboje, and sent to the Nigerian Stock Exchange.

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Also in the notice, the bank announced the retirement of Mr Seni Adetu, who served as Independent Non-Executive Director on the board. He stepped down from the board after completing his tenure on June 30, 2020.

The board of directors and the management of the bank appreciated Ernest Ebi and Seni Adetu for their contributions to the progress of the bank during their tenures.

“Under the chairmanship of Mr Ernest Ebi, the bank recorded significant growth across key financial metrics, with both Messers Ebi and Adetu playing significant roles, complementing management efforts in the delivery of these milestones; in service of the long-term vision of the bank. The banks market share position has also been materially strengthened over the period,” the notice read.

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The appointment is in line with the bank’s high governance standards and best practices, and in compliance with internal succession policies; Mr Ebi will, over the next six weeks, ensure a successful transition and smooth handover to Chike-Obi.

Mustafa Chike-Obi has over 40 years’ experience in investment banking and the financial services sector, working with reputable global investment banking and asset Management firms. He is currently with the Alpha African Advisory, where he provides leadership and oversees the capital-raising division.

He was the inaugural CEO of the Asset Management Corporation of Nigeria (AMCON), from where he joined Alpha African Advisory.

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He was also founding president at Madison Advisors, a financial services advisory and consulting firm in New Jersey, where he specialised in hedge funds and private equity investment advice.

He holds a bachelor’s degree in Mathematics from the University of Lagos, and an MBA from Stanford University Graduate School of Business.

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Companies

Nigerian Content Intervention Fund increased to US$350 million

The fund expansion was one of the decisions taken at the board’s recent meeting.

Published

42 mins ago

on

July 6, 2020

By

NCDMB, output cut, Petroleum Industry Bill to be passed by mid-2020, says Sylva, FG discovers crude oil in north, says there’s more , OPEC, non-OPEC countries to meet as Saudi, Russia price war affects Nigeria’s budget, FG considers fuel price reduction, OPEC deal: Nigeria to generate additional $2.8 billion revenue as FG reacts

The governing council of the Nigerian Content Development and Monitoring Board (NCMB) announced on Sunday that it has approved a $150 million expansion of the Nigerian Content Intervention Fund, raising it from $200 million to $350 million.

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The fund expansion was one of the decisions taken at the board’s recent meeting on June 16, 2020, chaired by Minister of State for Petroleum Resources, H.E. Chief Timipre Sylva, who is also the Chairman of the Council.

The board said that $100 million from the additional fund would be used to boost five existing loan products, which include manufacturing in the oil and gas industry, asset acquisition of rigs, marine vessels, contract financing for Nigerian oil service providers, contract financing for oil and gas community contractors, and loan refinancing with Nigerian banks.

The council also announced that $20 million and $30 million would be used for 2 newly developed loan product types (the Intervention Fund for Women in Oil & Gas and PETAN Products) which include Working Capital loans and Capacity Building loans for PETAN member companies.

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Started in 2017, the Nigerian content Intervention fund was developed as a $200 Million fund managed by the Bank of Industry, to facilitate on-lending to qualified stakeholders in the Nigerian oil and gas industry on five loan product types.

The NCI Fund is a portion of the Nigerian Content Development Fund (NCDF), aggregated from the one percent deduction from the value of contracts executed in the upstream sector of the oil and gas industry.

According to the NCMB, “About 94 percent of the NCI Funds has been disbursed to 27 beneficiaries as at May 2020.”

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Coronavirus

COVID-19 Update in Nigeria

On the 5th of July 2020, 544 new confirmed cases and 11 deaths were recorded in Nigeria bringing the total confirmed cases recorded in the country to 28,711.

Published

6 hours ago

on

July 6, 2020

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The spread of novel Corona Virus Disease (COVID-19) in Nigeria touched a new milestone as the latest statistics provided by the Nigeria Centre for Disease Control reveal Nigeria now has 28,711 confirmed cases.

On the 5th of July 2020, 544 new confirmed cases and 11 deaths were recorded in Nigeria, having carried out a total daily test of 2,933 samples across the country.

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To date, 28,711 cases have been confirmed, 11,665 cases have been discharged and 645 deaths have been recorded in 35 states and the Federal Capital Territory. A total of 151,121 tests have been carried out as of July 5th, 2020 compared to 148,188 tests a day earlier.

COVID-19 Case Updates- 5th July 2020

  • Total Number of Cases – 28,711
  • Total Number Discharged – 11,665
  • Total Deaths – 645
  • Total Tests Carried out – 151,121

According to the NCDC, the 544 new cases were reported from 19 states- Lagos (199), Ebonyi (65),Oyo (47), Ondo (46), Ogun (31), Edo (30), FCT (28), Katsina (25), Plateau (15), Bayelsa (11), Kaduna (10), Adamawa (10), Akwa Ibom (8), Gombe (7), Kano (4), Taraba (3), Rivers (2), Abia (2), Ekiti (1).

Meanwhile, the latest numbers bring Lagos state total confirmed cases to 11,244, followed by Abuja (2,181), Oyo (1,513), Edo (1,383), Kano (1,268), Delta (1,227) Rivers (1,183), Ogun (1,005),  Kaduna (865), Katsina (604), Borno (528), Gombe (520), Bauchi (516), Ebonyi (503), Ondo (456), Plateau (436), Abia (385), Enugu (372), Imo (352), Jigawa (318).

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Kwara state has recorded 269 cases, Bayelsa (245), Nasarawa (225), Osun (165), Sokoto (153),  Niger (122), Akwa Ibom (112), Adamawa (99), Benue (97), Kebbi (84), Zamfara (76), Anambra (73), Yobe (61), Ekiti (44), Taraba (22), while Kogi state has recorded 5 cases.

 

READ ALSO: COVID-19: Western diplomats warn of disease explosion, poor handling by government

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Lock Down and Curfew

In a move to combat the spread of the pandemic disease, President Muhammadu Buhari directed the cessation of all movements in Lagos and the FCT for an initial period of 14 days, which took effect from 11 pm on Monday, 30th March 2020.

The movement restriction, which was extended by another two-weeks period, has been partially put on hold with some businesses commencing operations from May 4. On April 27th, 2020, Nigeria’s President, Muhammadu Buhari declared an overnight curfew from 8 pm to 6 am across the country, as part of new measures to contain the spread of the COVID-19. This comes along with the phased and gradual easing of lockdown measures in FCT, Lagos, and Ogun States, which took effect from Saturday, 2nd May 2020, at 9 am.

On Monday, 29th June 2020 the federal government extended the second phase of the eased lockdown by 4 weeks and approved interstate movement outside curfew hours with effect from July 1, 2020.

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READ ALSO: Bill Gates says Trump’s WHO funding suspension is dangerous

DateConfirmed caseNew casesTotal deathsNew deathsTotal recoveryActive casesCritical cases
July 5, 2020287115446451111665164017
July 4, 202028167603634611462160717
July 3, 2020275644546281211069158677
July 2, 2020271106266161310801156937
July 1, 2020264847906031310152157297
June 30, 202025694561590179746153587
June 29, 20202513356657389402151587
June 28, 20202486749056579007149957
June 27, 20202407777955848625148947
June 26, 20202329868455458253144917
June 25, 20202261459454977822142437
June 24, 20202202064954297613138657
June 23, 20202137145253387338135007
June 22, 20202091967552577109132857
June 21, 202020242436518126879128477
June 20, 202019808661506196718125847
June 19, 202019147667487126581120797
June 18, 20201848074547566307116987
June 17, 202017735587469145967112997
June 16, 202017148490455315623110707
June 15, 20201665857342445349108857
June 14, 202016085403420135220104457
June 13, 20201568250140785101101747
June 12, 20201518162739912489198917
June 11, 2020145546813875449496737
June 10, 20201387340938217435191407
June 9, 2020134646633654420688937
June 8, 2020128013153617404084007
June 7, 20201248626035412395981737
June 6, 2020122333893429382680657
June 5, 20201184432833310369678157
June 4, 2020115163503238353576467
June 3, 2020111663483151332975227
June 2, 20201081924131415323972667
June 1, 20201057841629912312271579
May 31, 20201016230728714300768687
May 30, 2020985555327312285667267
May 29, 202093023872612269763447
May 28, 202089151822595259260647
May 27, 202087333892545250159787
May 26, 2020834427624916238557107
May 25, 202080682292337231155247
May 24, 202078393132265226353607
May 23, 202075262652210217451317
May 22, 2020726124522110200750337
May 21, 2020701633921111190748987
May 20, 202066772842008184046377
May 19, 202064012261921173444757
May 18, 202061752161919164443407
May 17, 202059593881826159441837
May 16, 202056211761765147239737
May 15, 202054452881713132039544
May 14, 202051621931683118038154
May 13, 202049711841646107037374
May 12, 20204787146158695936704
May 11, 202046412421521090235894
May 10, 202043992481421777834794
May 9, 202041512391271174532784
May 8, 202039123861181067931154
May 7, 20203526381108460128184
May 6, 20203145195104553425071
May 5, 2020295014899548123704
May 4, 2020280224594641722912
May 3, 2020255817088240020702
May 2, 20202388220861735119522
May 1, 20202170238691035117512
April 30, 2020193220459731715562
April 29, 2020172819652730713692
April 28, 2020153219545425512322
April 27, 20201337644102559942
April 26, 20201273914152399942
April 25, 20201182873632229252
April 24, 202010951143312088552
April 23, 20209811083231977532
April 22, 2020873912931976482
April 21, 20207821172631975602
April 20, 2020665382311884662
April 19, 2020627862221704362
April 18, 2020541482021663562
April 17, 2020493511841593172
April 16, 2020442351311522772
April 15, 2020407341211282672
April 14, 202037330111992632
April 13, 202034320100912422
April 12, 20203235100852282
April 11, 202031813103702382
April 10, 20203051770582402
April 9, 20202881471512302
April 8, 20202742260442262
April 7, 20202541661442042
April 6, 2020238650351982
April 5, 20202321851331942
April 4, 2020214540251850
April 3, 20202092542251800
April 2, 20201841020201620
April 1, 2020174352091630
March 31, 202013982091280
March 30, 2020131202181210
March 29, 2020111221031070
March 28, 20208919103850
March 27, 2020705103660
March 26, 20206514102620
March 25, 2020517102480
March 24, 2020444102410
March 23, 20204010112370
March 22, 2020308002280
March 21, 20202210001210
March 20, 2020124001110
March 19, 20208000170
March 18, 20208500170
March 17, 20203100030
March 16, 20202000020
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