The Mauritius Commercial Bank Group (MCB) hosts 40 top executives representing 40 African banks at the week-long 2016 Africa Forward Together conference which opened few days ago at the five-star Ravenala Attitude Hotel.

Africa Forward Together (AFT) is an annual event organised by MCB since 2009 to showcase its “Bank of Banks” initiative.

Since its inception, 351 delegates representing 108 financial institutions and representing 27 countries have attended the conference, which also aims at fostering better understanding and mutual co-operation between African banks.

Main focus
Opening the conference, MCB Group Chief Executive, Pierre Guy Noel said: “Africa remains our main focus for growth. There are plenty of things we can do in Africa and loads we can achieve together.” African banks can leverage MCB’s unique position in the region. Established since 1838, MCB is a strong regional leader, currently ranked first in East Africa and 17^th among African banks according to The Banker.

The Bank of Banks
« Bank of Banks » aims at positioning MCB as a regional platform offering bundled banking and financial industry capabilities to its counterparts. Bankers attending the Africa Forward Together event get first-hand knowledge of MCB’s human expertise and technological capabilities while exploring collaboration possibilities that could allow them to boost their services through outsourcing in Mauritius.

Over the last few years, an increasing number of African banks have teamed up with MCB to serve their customers better and more efficiently. Some have managed to offer new services to their customers in record times without investing heavily in technology or human resources. Others have discovered opportunities to expand their businesses through intelligent collaboration with one of Africa’s leading banks.

A True Partner
The « Bank of Banks » initiative is a key component of MCB’s African growth strategy. Instead of opening outlets across the continent and competing with local banks, MCB prefers to position itself as a privileged partner for institutions that want to scale new heights.

As Africa gradually fulfils its promises and realises its enormous potential, the continent’s banks are facing new challenges and have to meet growing and changing customer needs.
Summing up the challenges Africa has to face, Raoul Gufflet, Deputy Chief Executive, MCB, insisted on the fact that Africa is at a crossroad where it has to choose the right way forward.

“This is where MCB fits in. AFT is not solely meant to showcase MCB’s value proposition but to explore new avenues of collaboration and sharing between African banks. AFT is about you, about your objectives and goals and what you would like to put into practice,” Raoul Gufflet, Deputy Chief Executive of MCB, told African bankers today.

Adding Value to Banking
MCB offers a full range of value added services to banks. This includes the issuance of documentary credits, international payments, management of cards services and electronic banking, internal auditing, risk management, non-banking financial services, custody services, SWIFT transfers and consulting services among others.

By leveraging MCB’s world-class expertise, rich experience and state-of-the-art technology, other banks have an opportunity to speed up their development while delighting their customers.  Raoul Gufflet also indicated that MCB intends to expand its Private Banking arm in Africa.

A Regional Leader
Established in 1838, MCB is today the largest bank in East Africa and the 17^h biggest on the continent. It is a blue chip on the Stock Exchange of Mauritius where it accounts for nearly a quarter of market capitalisation.

Its strategy is to continuously diversify its services and its markets. To date, MCB’s international operations account for 55% of its results. It is currently present in Mauritius, South Africa, Kenya, Seychelles, Madagascar, Maldives, Réunion, Mayotte and France through a network of branches, associate companies and representative offices.

It also has a vibrant network of correspondent banks across Africa and the rest of the world.

Overview

The old demon known as de-marketing has made an inglorious return to the banking sector after few years of resting behind the scene.

De-marketing manifests in some banks spreading false and malicious rumours to undermine other banks in the market.

As far back as 2006, the Central Bank of Nigeria [CBN] identified the scourge and promptly issued a strongly-worded circular [BSD/08/2006] titled: ‘The Unethical and Unprofessional Practice of De-marketing Colleagues/Other Banks in the Industry by Spreading False Rumours’ on April 12, 2006.

In the circular, the CBN stated: “Banks are advised to caution their staff on this practice as henceforth, any staff of a bank found to be involved in such an act will be summarily dismissed and blacklisted.”

And two years later, the apex bank was also forced to issue yet another circular on the same issue: ‘BSD/DIR/CIR/07/VOL.2/016 October 21, 2008 CIRCULAR TO ALL BANKS DE-MARKETING OF BANKS BY OTHER BANKS.’

The circular signed by Mr. Ignatius Imala, the then Director, Banking Supervision of the CBN, read in part:

 “It will be recalled that the CBN had earlier issued a circular reference BSD/08/2006 on the above subject titled “The Unethical and Unprofessional Practice of De-Marketing Colleagues/Other Banks in the Industry by Spreading False Rumours”, dated April 12, 2006.

The CBN has again noted with serious concern the recent practice whereby some officers of deposit money banks engage in the de-marketing of other banks through disparaging comments and the use of negative text messages.

This development, which constitutes a threat to the safety and soundness of the banking system, is unprofessional, unethical and unacceptable. Banks and their staff are by this circular reminded that the responsibility for ensuring the safety and soundness of the banking system is a collective one for all stakeholders.

Banks are therefore advised to caution their staff on this practice as henceforth, any staff of a bank found to be involved in such an act will be summarily dismissed and blacklisted. Also, if another staff of the same bank is involved in such a practice, the institution will face severe sanctions including but not limited to a monetary fine of N10 million (Ten Million Naira only).

Appropriate channel will be opened by the CBN for the report of such unwholesome practice by banks’ customers and the general public. Furthermore, in the overall interest of the banking system, all banks are advised to enthrone an appropriate corporate culture that would guide against such practices in the future.”

It is pertinent to remember that in late 2008, there were rumours and Short Message Service [SMS] messages alleging that the then Intercontinental Bank Plc was facing critical liquidity challenges and was on the verge of collapse. The SMS message asked customers of the bank to immediately withdraw their deposits from Intercontinental Bank Plc and place same in healthy banks.

The de-marketing SMS message was eventually traced to a first generation bank in the country.

Later in 2009, the management of Intercontinental Bank Plc and few others were sacked by the CBN under Mallam Sanusi Lamido Sanusi on the ground of insolvency as a result of huge non-performing loans, especially to operators in the downstream sector of the oil industry.

Market analysts believe that the unprofessional practice of de-marketing is fueled by the cut-throat competition in the banking sector as operators struggle to win and retain the patronage of high networth individuals and blue-chip multinationals.

The situation is made even worse today in the face of prevailing economic recession which has resulted in dwindling deposits from individual and corporate customers.

The New Challenge

Market watchers however attribute the current resurgent of de-marketing to two recent decisions of the CBN: sack of the Board and Management of Skye Bank Plc and suspension of nine banks from the forex market for allegedly flouting the Treasury Single Account [TSA] policy of the Federal Government in respect of N2 trillion belonging to the Nigerian National Petroleum Corporation [NNPC].

• Skye Bank Plc:

On Monday, July 4, 2016,  the CBN sacked the Board and management of Skye Bank Plc and installed an interim Board and management led by Mr. M.K. Ahmad as Chairman and Mr. Tokunbo Abiru as Group Managing Director/CEO.

The action of the CBN quickly re-opened the debate on the health of banks in the country, given the negative results declared by most banks for the year ended December 31, 2015.

Like wild fire, unfounded rumours ran through the market alleging that Skye Bank Plc is not the only troubled bank in the industry, urging the CBN hammer to also fall on others in same situation.

The CBN’s decision on Skye Bank leaked to the market even before it was made, thus creating an avalanche of tension, anxiety and speculation amongst operators, shareholders and the general public.

Despite spirited assurances from the CBN and the new Board and management of Skye Bank that the bank remains healthy and was not on the verge of collapse, the rumour mills were saying otherwise, thus deepening the possibility of customers withdrawing their deposits from the bank enmasse, but also bringing into negative focus, the overall health of the entire banking industry.

• Suspension of Nine Banks

Then on August 23, 2016, the CBN also suspended nine banks from any form of transaction in the forex window, alleging that they flouted the federal government policy on the Treasury Single Account [TSA] in respect of NNPC’s N2 trillion funds.

The CBN action, coming just six weeks after its decision on Skye Bank Plc, quickly created negative perception of the entire banking sector, giving impetus to critics who claim that the regulator was simply glossy over endemic problems in the industry.

Incredibly, the CBN reversed the suspension order on the nine banks a few days later [August 31] but the damage had already being done in the perception of the banking public to the extent that some banks are simply not healthy.

This situation therefore opened the door for the unethical practice of de-marketing to emerge from the shadows once again to haunt one or two unfortunate victims.

Heritage Bank: New Target of Vicious De-marketing

The birth of Heritage Bank Company Limited on March 4, 2O13 heralded the evolution of customer-centric financial solutions provider ready to impact positively on customers and the industry.

Indeed, the vision of the bank was aptly laid out by its chairman, Mr. Akinsola Akinfemiwa:

“We are going to be focusing majorly on Small and medium businesses to ensure that we boost their operation. We are not there to compete with the so called big banks; our services are going to be quite different from what other banks do.

We will work closely with the small and medium businesses to nurture them to greater height. We will be enlightening them on her to keep proper books of accounting, how to manage their businesses and make them grow.

Continuing, he said, “our services is going to be technology driven. We may not have many branches, but we are going to deploy technology to reach our customers. It should be noted that SGBN pioneered Automated Teller Machine (ATM) which many thought will never work.

But today, it is working and making withdrawal easier for people. We are going to do same as we resume operation. Our employees have been trained; we attach importance to technology, excellence, professionalism, innovation, dynamism, tenacity and solutions.”

With such lofty ideals from Day One, Heritage Bank entered the market and within the space of time, carved out an indelible niche in the hearts and minds of individual and corporate clients, leading to impressive results and strategic partnerships.

For instance, Heritage Bank reported landmark earnings of N24.2 billion and Profit After Tax [PAT] of N1.1 billion in the financial year ended December 31, 2015 at a time when established banks were reporting huge declines in earnings and profit for the same period.

The bank quickly moved on to earn a well deserved appointment by the CBN as Partner for Pilot phase of the N3 billion Youth Innovative Entrepreneurial Development Programme [YIEDP] initiative, a huge plus for a bank of its size and age.

Sensing the great stride of Heritage Bank in a space of mere three years, the African Export Import Bank (Afreximbank) announced a $150 million funding support for the bank.

In a statement announcing the development, the Divisional Head, Corporate Communications of Heritage Bank, Olusola Longe-Okenimkpe said:

“HBCL Investment Services Limited (HISL), a major shareholder of Heritage Bank Limited has executed the term sheet for the issuance of guarantee for its $150 million Convertible Bond with the African Export Import Bank (Afreximbank) to support Heritage Bank Plc in its next phase of growth.”

The support from Afreximbank was a stamp of trust and Vote of Confidence on the Board and management of Heritage Bank Limited.

And in yet another show of confidence on Heritage Bank, the Lagos State Government commended the bank’s Financial Literacy Initiative meant to drive financial inclusion for youths in the country.

Indeed, Her Excellency, Dr. (Mrs.) Oluranti Adebule, Deputy Governor of Lagos State showered encomiums on the bank for the initiative and its entrepreneurial support to businesses despite its short period of existence in the market.

The Long Knives

Within a very short period, Heritage Bank Limited has made tremendous impact in the banking industry.

But as they’d say, success breeds both friends and detractors-and so came the long knives by detractors of the bank.

In a rather comic sense, the controversial blog, Sahara Reporters, went to town with a tweet alleging that Heritage Bank will soon join Skye Bank on the list of banks taken over by the CBN.

The bank quickly doused the controversial tweet thus:

Sahara Reporters’ Tweet: The Heritage Bank Statement

Our attention has been drawn to an obnoxious tweet by a news blog, Sahara Reporters, which has alluded to the fact that the Management and Board of Heritage Bank is “next in line” for dissolution by the Central Bank of Nigeria.

This is falsehood and at best reckless journalism meant to destroy the emerging bank. For the avoidance of doubt, the Central Bank of Nigeria has no such plan towards the bank.

Consequently, Heritage Bank wishes to encourage customers of the bank and the general public to disregard the wicked misinformation, clearly borne out of the imagination of the mischief makers and continue enjoying the excellent service the bank is rendering to its growing clientele.

Heritage Bank will not also sit back and allow its hard earned reputation to be tarnished on the pages of an irresponsible blog. The bank will also leave no stone unturned to ensure that those peddling unfounded rumours and speculations are brought to book.

Why Heritage Bank?

As the false and malicious rumours floated within and outside the banking industry, ardent watchers of the unfortunate development were asking just one critical question: why Heritage Bank?

The answer is that the successful entry of Heritage Bank into the banking industry took many by surprise, given the conventional record of start-up banks in the country. This was quickly followed by its daring acquisition of Enterprise Bank last year and seamless integration of people and systems which defied the skeptics in the market.

Heritage Bank raised the bar in the industry via rapid deployment of innovative, technology-driven products and services, thus earning a place in the digital transformation space.
But the bank’s unparalleled commitment and support for Micro, Small & Medium Enterprises [MSMEs] was the icing on the cake, driving operators in that segment of the economy towards the bank in large numbers.

At a recent event, Mr. Ifie Sekibo, Managing Director/CEO of Heritage Bank Limited said the bank has committed over N23.5 billion to MSMEs in the past two years to underline its support towards sustainable growth of small businesses in the country.

Given such track record, the bank rapidly became known as a small business-friendly financial institution of repute in the industry and national economy..

Spot the Detractors

It is always important to identify the source of real or fake fire to contain it before irreparable damage is done.

Who the hell are those spreading these malicious misinformation about the impending demise of Heritage Bank?

First on the list are desperate politicians scheming to acquire ownership of the bank through the backdoor on the premise that the Saraki family are the major owners of the financial institution.  However, a quick look through the ownership structure of Heritage Bank clearly reveals that the Saraki family own less than 10 percent equity in the bank, thus giving lie to such insinuations.

Secondly, in a banking sector facing the combined vagaries of economic recession, loss of public sector funds, negative forex regime and customer movement to more customer-savvy competitors, corporate jealousy becomes the norm in the face of inability to creatively navigate the terrain for survival.

When competitors resort to cheap blackmail in form of de-marketing to move ahead, they waste precious energy that could otherwise have been deployed to innovate and remain in business.

Looking Ahead

Heritage Bank Company Limited has made its mark in terms of customer service, professional excellence, deployment of robust technology to drive seamless operations and unequaled support to the growth MSMEs.

For the bank, the future can only look rosy as it marches confidently to consolidate its gains and etch out a formidable market share in the banking sector going forward.

Bank deposits are mainly short-term in nature and lending such funds to customers long-term can lead to asset mismatch, Managing Director/CEO, Fidelity Bank Plc, Namdi Okonkwo has said.

The bank chief who spoke at the 2016 Annual Conference organised by Finance Correspondents Association of Nigeria (FICAN) in Lekki, Lagos, at the weekend, said although the lenders would want the economy to grow by lending to farmers and other productive sectors of the economy, they also have to keep an eye on the stability of their institutions.

Speaking on the theme: ‘Nigeria Beyond Oil: Financing Options for Non-Oil Exports’, he said:

“A whole lot of people do not realise that banks’ business is to buy and sell money. So, I come to the market to purchase-my raw material is cash and my finished goods are also cash. Every other thing banks do are added services. Banks get a lot of bashing for not lending long-term. Then I ask you, if as a banker, I know that secret place where I can find long-term funds, we will be the number one bank in Nigeria today, because I can lend long-term.”

Okonkwo reiterated that most depositors who have huge amounts to save invest on short-term basis and collect huge interest on such deposits.

“I want to borrow N100 million; then bring me one depositor who will place N100 million with me at 10 per cent and I will lend at 15 per cent. Remember that in calculating those 10 per cent of N100 million, what you have actually given me is N75 million because N25 million will be placed with the CBN as Cash Reserve Ratio (CRR). And for me to access N5 million out of the N25 million CRR cash, I have to lend the money for use in industrial production. Then what are your risk assessment criteria if the industrial sector you want to lend to is fighting for breath.”

Besides the CRR, he said such lender has to pay five per cent of the N100 million initial deposit to the Nigeria Deposit Insurance Corporation (NDIC) premium. “People actually believe that banks are not lending long-term because they do not want to. We do profitable business,” he said.

He explained that pension funds, equity and insurance funds where long-term funds should come from are not forth-coming with such cash.

The Fidelity Bank boss also listed lack of right framework as being responsible for local banks not lending long-term to Small and Medium Scale Enterprises (SMEs).

He lamented the problem of lack of infrastructure, such as power, adding that his bank with about 248 branches generate private electricity to power its operations, that the level of such power generation can serve Lagos State as a whole.

He regretted that a lot of banks collapsed in the past because of assets mismatch.

“When there is a run on the system, the owners of the short-term funds will come for their money and you have to pay them. And if you pay them, the people you gave long-term loans cannot pay up. Then you begin to have distress in the system,” Okonkwo stated.

He disclosed that the Nigerian Export Import Bank (NEXIM Bank) and his bank are taking measures to enhance non-oil export and create wealth for Nigerians. Both lenders, he said, want exporters to explore opportunities presented by the N500 billion Non-oil Export Stimulation Facility as well as the expansion of the export credit Re-discounting and Refinancing Facilities (RRF) to develop the economy, stimulate their operations, and create jobs for the people. He said his lender is always at the forefront of financial services solutions and lending, stressing that supporting SMEs goes beyond funding.

Okonkwo praised the Anchor Borrowers’ Scheme unveiled by the Central Bank of Nigeria (CBN), insisting that the project has the capacity to boost the country’s non-oil export earnings.

“The CBN has ensured that thousands of rice farmers form the anchor borrowers. The CBN lends money to the farmers, but you know it is not like in the past when the farmers saw such cash as government money and find it difficult to repay. What the CBN does now is give them the money in the form of inputs and improved seedlings. And the farmers have formed themselves into co-operatives to make loan repayment easy. And when the produce are harvested, the farmers get immediate buyers for their produce. I believe that over time, Nigerians will feel the impact of the scheme,” he said.

Also speaking at the event, Group Head, Agric Finance, Heritage Bank Limited, Olugbenga Awe said inasmuch as banks would want to lend to non-oil sectors of the economy, the lenders always look out for customers’ history of previous transactions to ensure that the loans would be repaid.

The bank, he added, can also consider the export volume, frequency of export, payment methods and transaction cycle. He said that banks are also confronted with the problems of inadequate export finance resources, inadequate infrastructure to control products quality and lack of dependable source of local product prices and supplier information among others.