Sterling Bank has developed Specta, a digital retail lending platform competing with new age fintechs in Nigeria’s competitive financial services sector. In 2020, there’s a new trend happening in the Nigerian banking sector. After prioritising their core banking services for nearly a decade, some Nigerian banks are restructuring to diversify their revenue base and remain competitive with other financial services. With this drive, some banks are adopting the holding company structure.
Now, to be clear, holding companies are neither new nor rare among Nigerian banks. It dates back to 2011 when the Central Bank of Nigeria (CBN) forced banks to give up their non-banking businesses or restructure into a holding structure. The regulator, like its peers globally, believed that it was an important risk management strategy to separate lenders from entangling with other financial services like insurance or investments.
Following that regulation in 2011, several banks — UBA Group, First City Monument Bank (FCMB), Stanbic IBTC Bank and FirstBank — adopted the holding company structure. The decision was simple if the other businesses represented a sizable percentage of the bank’s revenue.
In the last seven months, three more banks have made strong moves to restructure into holding companies. GTBank, Sterling Bank and Access Bank have either secured or are in the process of securing regulatory approvals for their (HoldCos). The news caused a sensation. Typically, commentators on social media assumed that these banks simply want to compete against fintechs and are shrugging off the traditional barriers that have held them back for so long.
On the one hand, this argument is true, particularly for GTBank. TechCabal has written extensively about GTBank’s CEO, Segun Agbaje’s ambitions for the bank.
But for Sterling Bank’s and Access Bank’s HoldCo ambitions, things are less obvious.
Access Bank’s HoldCo
At Access Bank, the HoldCo structure supports its international expansion plans.
“We want to be present in 22 countries over the next five years,” Herbert Wigwe, Access Bank’s CEO told Bloomberg in March. “And the idea is to be present in the large trade corridors of the continent.”
At the time the bank said it would expand to South Africa, Kenya, Mozambique, Angola and francophone Africa.
Payments and fintech services are also important to Access Bank’s future, Wigwe shared. “[Growing customer base and] Payments, innovations are a couple of things that we’re driving and in that space, you will see a few things come up over the weeks… For us, that’s what is […]
