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Financial Services

VFD Group plans to expand investment portfolio as a pan-African financial powerhouse

Adenubi has disclosed that VFD Group wants a sustainable business where profit and social consciousness are both incorporated.

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VFD Group’s Co-Founder and Executive Director, Adeniyi Adenubi has revealed plans by the Group to expand its investment portfolio as a pan-African financial powerhouse, with a target of about 20% of the Nigerian Banking space by the first half of 2021 (H1, 2021) and further expansions to Ghana.

The disclosure was made by Director, during an interview with CNN’s Eleni Giokos, which was monitored by Nairametrics.

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Recalling how he ventured into co-founding the VFD Group, Mr. Adenubi stated that the decision was borne primarily out of the need to create value and build a business that would impact the country and continent.

Given his experience as an investment banker, he founded an investment management firm, Paragon Partners with a ten-year strategy to build a financial services holding company and a diversified investment company, with a thematic focus on financial services, power, education and media.

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He emphasized that VFD Group wants a sustainable business where profit and social consciousness are both incorporated, in line with the group’s corporate strategy of building a positive and socially conscious eco-system.

What they are saying

When asked on what the Group’s target is in terms of market share, Mr Adenubi said: ‘’Sorry that information is private, but what I will tell you is that we have a race till half year 2021 to gain about 15% of the total banking markets to be on our platform. Once we do that, we ascertain that V-Bank is already a success, and going from there, we start to build on that. But the initial plan is 15-20% of the initial banking market. I think we are doing quite well, and I believe that before H1, 2021, we would have met that target.’

READ: Flying Doctors to raise $1 billion to invest in African Healthcare

Commenting on where the Group wants to be in the next 5-10 years, Mr. Adenubi further added; ‘’We want to be a pan-African investment company, we are already looking at Ghana, we have begun conversations in Ghana, we are looking to deploy a small bank or payment bank in Ghana, using the V-Bank platform. From Ghana, we also look at Kenya which is an exciting market. We definitely have ambitions for Africa and if we get lucky in our lifetime as well, we have global ambitions also.’’

READ: Econet founder Strive Masiyiwa secures $100m investment in Nigeria data center

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Chidi Emenike is a graduate of economics, a Young African Leadership Initiative Fellow and an Investment Foundations certificate holder. He worked as a graduate Teaching Assistant in the Federal College of Education Kano and is also a trained National Peer Group Educator on Financial Inclusion

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Financial Services

Ratings agency, Moody’s reveals it is reviewing First Bank’s ratings

Moody’s explained why it might downgrade First Bank’s ratings.

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Moody’s Ratings agency said on Thursday that it has put First Bank of Nigeria on review for a downgrade after the central bank sacked the board of directors and replaced them with new directors.

Moody’s made this statement in a report titled ‘Removal of Non-Executive Board Members Highlights Governance Shortcomings.’

In a quote, Moody’s said:

“Moody’s Investors Service, (“Moody’s”) has today placed all long-term ratings and assessments of First Bank of Nigeria Limited (First Bank) on review for downgrade. The review will focus primarily on an assessment of evolving governance considerations at First Bank, specifically corporate governance developments. The rating action follows the dissolution of First Bank’s board by the Central Bank of Nigeria (CBN), the bank’s primary regulator, on 29 April 2021. As a result of this action by the CBN, all the non-executive directors were removed while the executive management remained in place.”

The Governor of the Central Bank of Nigeria, Godwin Emefiele, had last week announced the sack of the entire board of directors of FBN Holdings Plc and its subsidiary, First Bank of Nigeria Ltd following the initial removal of its MD/CEO Dr Sola Adeduntan. Following his sacking of the board, he set up a new board for the bank holding company and its subsidiary and also reinstated Adeduntan as MD/CEO.

Moody’s mentioned that the regulatory actions demanded of First Bank by the CBN introduces a clould of uncertainty over the outlook of the bank. For example, the CBN had asked the bank to divest from its holdings in two listed companies while also recovering its loans from one of them.

“The review for possible downgrade reflects the rating agency’s view that the removal of all non-executive directors of the bank’s board by the regulator demonstrates corporate governance shortcomings and weaknesses in board oversight. The bank also needs to implement regulatory directives concerning the resolutions of loans to, and shareholding in non-banking related parties, which reportedly had not been executed in the recent past.

Moody’s notes that the outcomes of these developments are uncertain at this point, and the final and long-term governance, reputational and financial implications of the events for First Bank are also unclear.”

The central bank directive sacking the board of the bank also retained its executive management perhaps suggesting that the CBN had confidence in the ability of the MD and his team to manage the bank. Moody’s also noted this in its briefing.

“While the bank’s executive management team remained the same, the rating agency believes these developments could distract management’s focus on implementing the bank’s strategic plan and road to recovery. First Bank management’s immediate key target was to reduce nonperforming loans (NPLs) to levels comparable with domestic peers. The rating agency recognises that, in the context of asset risks, the bank took steps to reduce its stock of problem loans, with its reported NPL ratio falling to 7.7% at year-end 2020 from 25.9% in 2018.”

Will Moody’s downgrade First Bank?

The rating agency explained that the decision to downgrade will depend on how strong the bank’s corporate governance structure is and whether the CBN will impose additional sanctions. If any of these crystallizes, it could downgrade its ratings.

“The bank’s long-term deposit ratings can be downgraded if flaws in the bank’s governance systems exist, and if the CBN imposes additional sanctions on the bank, including, but not limited to, conditions to address any vulnerabilities that may be discovered. Financial output that is less than anticipated could also result in a rating downgrade.”

Moody’s, however, poured water on any optimism around a rating upgrade.

Given the review for downgrade and the pessimistic outlook on the government of Nigeria, there is a slim chance that First Bank’s ratings will be upgraded. Stronger solvency progress than currently reflected in the ratings, combined with a stabilization of the sovereign outlook, could result in the outlook being stabilized.

Why is rating important?

Corporate Organizations desire positive ratings because of the effect it has on their ability to raise capital as well as the cost of capital. A high credit rating typically attracts positive investor sentiments helping organizations tap the debt and equity markets, especially from institutional investors.

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Business

Insurance companies paid N4 billion in claims after EndSARS protests – NIA

The NIA chief assured that some insurance operators were still working to settle genuine claims as most claims from insured businesses had been paid.

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The Nigerian Insurers Association (NIA) says Insurance companies paid N4 billion in claims to over 2000 businesses affected by the aftermath of the EndSARS protest after hoodlums took to the streets.

This was disclosed by Mr Ganiyu Musa, Chairman, NIA, on Thursday in Lagos.

The NIA chief assured that some Insurances operators were still working to settle genuine claims as most claims from insured businesses had been paid.

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“The number of insured businesses that were affected at the last count was about 2,000 insured loss and the industry has settled N4 billion claims out of N4.5 billion in respect of the #EndSARS protests.

Once they are documented and completed, we have the commitment of our members that the claims will be paid timely,” he said.

He added that the association would continue ensuring members pay genuine claims to clients.

What you should know

Recall Speaker of the House of Representatives, Femi Gbajabiamila disclosed that Lagos State will need about N1 trillion for the reconstruction and repair of the properties and infrastructure that was vandalized and destroyed by hoodlums.

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