Sterling Bank goes HoldCo to restructure on ‘social capitalist’ model as CBN gives A-in-P

Charles Abuede

Sterling Bank Plc is joining the league of Nigerian banks that have elected to operate under a holding company arrangement following an approval-in-principle (A-in-P) by its principal regulator, the Central Bank of Nigeria (CBN).

The HoldCo arrangement comes as the bank moves to restructure its business to accommodate its expanded operations that have seen it embrace some niche areas such as Islamic banking, which it now wishes to operate independently, outside its already well-regarded deposit money bank (DMB) business.

In a disclosure signed by Temitayo Adegoke, its company secretary, and sent to the Nigerian Stock Exchange for the purpose of investors and public knowledge, chief executive officer, Abubakar Suleiman, is quoted as saying that the company wants to build its business around the model of ‘social capitalism’.

“Going into the Holding Company structure, our desire is to entrench our business model premised on social capitalism where we believe that private sector capital and market-based tools will offer the best types of solutions to Nigeria’s most pressing social and environmental challenges. The Holding Company gives us the structure to explore our business model further,” Suleiman said.

The bank said its desire to restructure in the HoldCo format is driven by its plan to spin off its non-interest banking window, which became operational in January 2014, into an autonomous entity.

It noted that the proposed structure incorporates efficiencies around operations and financing efforts that will support the individual businesses in reaching full potential through an increased portfolio diversification, enhanced corporate governance to help facilitate sustainability of earnings, improved efficiency and also creating better access to capital by leveraging on the group’s financial strength.

Suleiman further disclosed that the HoldCo will operate on three major premises of specialization, which will see the conventional bank focus on building skills and using technology; the non-interest bank will focus on building partnerships that connect individuals and businesses leveraging technology to create business optimisation, while solving for an individual’s daily financial need; and the bank’s digitisation drive will create an enabling environment for both financial institutions to grow while providing services and support to build efficiencies in different ecosystems, Suleiman disclosed in the statement to The NSE.

The bank stated that its execution plan is fully dependent on its interwoven operating model of agility, specialisation and digitization. In the meantime, Sterling Bank is in the process of meeting the conditions for final approval.