The Central Bank of Nigeria, CBN, has granted Sterling Bank Plc approval-in-principle to restructure from a stand-alone commercial bank to a holding company, holdco.
A regulatory filing indicated that the bank has already commenced the process to obtain the final approval for the conversion to holdng company.
Sterling Bank had divested from its non-bank subsidiaries in line with the banking regime, which requires banks with non-bank subsidiaries to either divest from such subsidiaries or adopt holdco structure.
Chief Executive Officer, Sterling Bank Plc, Mr. Abubakar Suleiman said the bank’s desire to operate as a holding company was driven by its plan to spin off its non-interest banking window which became operational in January 2014 into an autonomous entity.
He said the bank believes the proposed structure incorporates efficiencies around operations and financing efforts that will support the individual businesses in reaching full potential through increased portfolio diversification and improved efficiency among others.
He said the holdco structure enables the non-interest bank and other non-core businesses achieve greater results based on focused management of the distinct businesses while there would be improved efficiency resulting from the consolidation of key functions such as compliance, risk management and other support functions, yielding improved prospects for individual business growth.
According to him, the group would also benefit from enhanced corporate governance, which serves to promote a consistent culture across the group and quality of service to customers thereby facilitating sustainability of earnings.
He added the holdco structure would also facilitate better access to capital by leveraging the consolidated financial strength of the group which would have been otherwise difficult for each individual subsidiary company.
“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.
He explained the holding company is designed to operate on three major premises of specialisation, partnership and digitisation.
According to him, while the conventional bank will focus on building skills and using technology to provide solutions in the areas that are critical to development in the country including health, education, agriculture, renewable energy, transportation (HEART) while 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 needs.
“The overall business will focus on social impact, corporate responsibility and religious compliance in its dealings. Our digitisation drive will create an enabling environment for both financial institutions to grow while providing services and support to build efficiencies in different ecosystems.
"The execution of our plans is fully dependent on our interwoven operating model of agility, specialization and digitization,” Suleiman said.