ETI Catapults Ecobank Into Major League

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Eco Bank

Eco Bank

As the business combination between Ecobank Nigeria Plc and Oceanic Bank International Plc is rounded up, the management of Ecobank Transnational Incorporated (the parent company of Ecobank Nigeria) said last week the experiment which was successful in a number of other African countries is bound to catapult the bank into third position in the banking system, reports Festus Akanbi

Following the successful completion of all change control processes pertaining to the acquisition of Oceanic Bank International Plc by Ecobank Transnational Incorporated on October 24, there is no doubt that the days of Oceanic Bank as a going concern are numbered.

Industry watchers familiar with its acquisition by ETI said barring any last minute hitches, the nation’s banking industry will in a couple of weeks begin to notice significant changes in the operations of Ecobank Nigeria Plc, the Nigerian arm of ETI, which is the beneficiary of ETI’s deal with Oceanic Bank.

According to plans by the pan-African bank, Oceanic Bank will be merged with Ecobank Nigeria, an exercise which the group chief executive of ETI, Arnold Ekpe described as a strategy to increase scale needed to catapult it into the top ranking of the Nigerian banking industry.

Oceanic Bank International was among the eight rescued banks taken over by the Central Bank of Nigeria following a joint stress test to determine the capital adequacy of banks and liquidity. The rescue programme entailed a N620 billion capital injection into the eight banks, following which they were required to recapitalise, after the Asset Management Company of Nigeria Limited had moved in to rid them of all their toxic assets.

Other banks which were acquired in the process include Intercontinental Bank Plc, Union Bank of Nigeria Plc, Finbank Plc and Equitorial Trust Bank. They were taken over by Access Bank Plc, African Capital Alliance (a private equity firm), First City Monument Bank Plc and Sterling Bank Plc, respectively.

Three other banks which failed to demonstrate capacity to secure new investors lost their licences to operate as bank and were nationalised. They included the erstwhile Afribank Plc, Bank PHB Plc and Spring Bank Plc. They were liquidated but their assets and liabilities were taken over by AMCON which secured new licences to operate as Mainstreet Bank Limited, Keystone Bank Limited and Enterprise Bank Limited.

ECOBANK/Oceanic Bank Deal

Some banking industry watchers who perceived Ecobank as a conservative institution had wondered if the deal with Oceanic Bank was not a marriage of strange bedfellows considering the fact that Oceanic Bank was once considered to be one of the fastest growing banks in the industry before it failed the CBN audit in 2009.

However, speaking with THISDAY at the bank’s headquarters in Lome, Togo last week, the group CEO, Ekpe, who dismissed the notion that ETI was conservative, said the business combination with Oceanic Bank was a perfect deal.

“I think it has been proved that being too fast and daring can be fatal to one’s operation, so what we need to do is to bring a bit of our conservatism so that they make us a little bit less conservative and we make them less aggressive but we have lot of experience in doing this. Whether you like it or not, Oceanic Bank has some good assets, a lot of good things they have done in the past. We now resolved to push those things not properly done aside and use those good things they are noted for,” he said enthusiastically.

In Nigeria, Ecobank had acquired former Hallmark Bank, Allstates Trust Bank and Africa International Bank during the consolidation exercise of 2004-2005, making its latest acquisition a walk in the park.

Growing Scale

Explaining the rationale for seizing on the opportunity to take over another Nigerian bank, Ekpe said it has been part of the growth strategy of Ecobank to increase scale through acquisitions.

He said: “We have always had the plan to merge Ecobank Nigeria with another bank in order to build a bigger bank because of scale. Whether you like it or not, scale is very important, the bigger you are the more resources you can deploy, the more you can invest in people and services, so we have always believed in scale and we have always looked to see if we could have a partner with the same objectives and work with us to create a bigger bank. It so happened that of all the banks we spoke with, Oceanic Bank seemed to have what we were looking for.”

Ekpe said what made Oceanic attractive was the complimentarity between Oceanic and Ecobank. “Ecobank is strong in corporate banking; Ecobank is very strong in international banking. Oceanic is very strong in the local market in terms of retail banking, its franchise in public sector, and flowing together we have the complimentarity of scale.

“But there is also a fear which I want to debunk, that is, Ecobank is conservative. We are not conservative. We have a low profile and that is not the same thing as being conservative. If you think of a bank that started in Togo and now has presence in 35 countries, more than any other bank in Africa, I think we have been a little bit adventurous, although we don’t do things aggressively because I think we focus more on results rather than talk.”

When prodded further on the deal with Oceanic Bank, he said the process was chiefly driven by the desire of the bank to raise its ante. “Oceanic Bank’s acquisition was not a big deal. It was just one of our plans. In Benin, we are the number two bank; in Togo, we are the first; In Ghana we are number two; in Cote d’Ivoire, we are number one; in Guinea Conakry we are number one; in Senegal we are number five; In Mali we are number two; in Burkina Faso we are number one; in Central Africa, we are number one; in Gabon, we are number four.

“Our plan is to be in the top three in all the market because in this business, scale is important. In Nigeria, we are not in the top three. We can grow organically but that will take a long time or we could acquire so we have chosen to acquire but we will continue to grow organically if that will be good for us but acquisition is an option which was adopted in Burkina Faso where we were number three. We acquired and moved to the first position.

“In Ghana too, we are in the process of acquiring a bank and then we will move to the number one position. As far as Nigeria is concerned, the Ocean Bank deal was transformational because it moved us to the fifth position and it gives us the scale in Nigeria to be able to compete with any of the major banks such as First Bank,” he said.

A combination of the branches of the two banks will give the new Ecobank Nigeria about 650 branches given the fact that Ecobank Nigeria currently has 250 branches while Oceanic Bank has 400 branches. The combined bank will also have 1,450 Automated Teller Machine platforms and customer count of close to 5 million.

Diversity

Speaking about the mission of ETI, Ekpe said, “Our vision in Ecobank is to build a world class pan-African bank and to contribute to the development of Africa. We do several interesting things. We employ currently, over 23,000 people – more than any other bank. We dedicate one percent of our profit after tax to the Ecobank Foundation. It is a foundation that renders support in health care, children’s projects, culture and education across a number of countries.

“We have set up a $50 million technology centre in Accra and that is the number one technology centre in Africa. We connect our branches across the continent via Ecobank communications system and it is the largest company telecommunications system, apart from investing in developing and training of our people.”

To demonstrate the diversity of the bank, the GCEO said: “Ecobank’s board has nine nationalities, while the senior management is made up of people from 14 different nationalities, so Ecobank is an embodiment of Africa and that is why it is an exciting institution because in our opinion, we represent the future of Africa.

“Whether we like it or not, we have to see ourselves as one, we have to break barriers to trade so that business will be able to move across the countries seamlessly. That is the future of Africa. If we leave Africa to be fragmented the way it is fragmented, that is not a good future.”

 

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