Managing Director, Ecobank Nigeria Plc, Mr. Jibril Aku

With about seven million customers and presence in virtually all the nooks and crannies of the country, Ecobank Nigeria Plc has transformed into a niche player in the Nigerian banking industry courtesy of its merger with Oceanic Bank International, report Festus Akanbi and Obinna Chima

Less than a year after the merger between Ecobank Nigeria Plc and the defunct Oceanic Bank International became a done deal, there are reasons to describe the business combination as hugely successful judging by the sheer leverage the exercise has given to the new Ecobank.

The Journey
The merger arrangement between the two banks was concretised on July 31, 2011 when Ecobank Transnational Incorporated, the parent company of Ecobank Nigeria Plc, signed a transaction implementation agreement with Oceanic Bank Plc.
And on September 30, the same year, Oceanic Bank received the final approval of the Central Bank of Nigeria (CBN) for the scheme of arrangement.  On October 13, 2011, Asset Management Corporation of Nigeria (AMCON) injected a financial accommodation amount., while the enlarged Ecobank Nigeria announced a new board on January 18, 2012.
So, 10 months down the line, the bank’s management said the business combination has been a blessing having provided the needed muscle not only to compete favourably with industry giants, but also to realise the dream of both the shareholders and board of the bank in positioning Ecobank as one of the major players in the Nigerian banking industry.

The Gains
Managing director of the bank, Mr. Jibril Aku, was at his best when asked to list the gains of the merger with Oceanic Bank.  An excited Aku said the gains could be seen in terms of scale the bank has achieved in recent times, explaining that the new Ecobank was still savouring the gains of a large pool of customers inherited from the legacy Oceanic Bank.  “What I will say is that it gave us scale and the scale is clear. If you look at the total assets, deposit and customers that came into the banks, the ATMs and the Point of Sale (PoS) that we now use to service the customers, but the greatest advantage was the customers’ acquisition. Oceanic bank came in with 4.5 million customers. How long would it have taken us to acquire 4.5 million customers? That was a huge advantage. We got about N500 billion deposits into the bank with the 4.5 million customers and these are stable deposits. So these are huge numbers. We have about 890 ATMs that we use to service the customers. So from that base alone, we have seen a growth in our revenue profile.

“Our revenue is now double of what we used to grow before. Revenue of Ecobank as a standalone was about $360 million and now we have about $700 million in revenue. If you look at the combination of the banks, you will see growth, but that has not started translating to the profit before tax (PBT) because clearly, there are investments that we are doing to integrate the bank. But you will begin to see more efficiency come out of it in the subsequent years.

“For us we are excited by the fact that we are a scale operator in Nigeria today. Today we are looked at as a systemic bank and the group has recapitalised the bank. Our Capital Adequacy Ratio (CAR) now is about 16 per cent and we are growing.

“You will begin to see the efficiency come out of the bank as we put together the systems. We want to make sure that we can service customers of both banks because presently we have close to seven million customers. So you need a robust platform to service that customer base efficiently and that is what we are building now. We are excited about doing that. We know the profitability will come, but we want to make sure that we get it working.”

An Incursion into Retail Segment
Interestingly, Ecobank, prior to the merger, had remained dominant in the corporate segment of the market. However, the merger with Oceanic Bank has given the new bank a competitive edge in the retail market. This was confirmed by Aku, who disclosed that Oceanic Bank came with a large pool of retail customers given the flight of corporate customers at the height of the crisis that eventually wrecked the bank (Oceanic Bank).
Aku said, “We are excited by the customer base that came with Oceanic Bank. Most of the wholesale customers had left the bank, so the bank actually came with a retail base and some of the government business that they had. So what came were the public sector business and the retail business.
They also had a microfinance business inside the bank. So the bank was fully embedded in the retail market and we like that because we can service that sector with our products. We have cards that go beyond Nigeria and covers all out network. So, that is what is exciting to us. Again, for that customer base, what they are looking for is the efficiency. They just need an efficient bank that can provide them with good banking services at a low cost.”

Integration...
However, in spite of the inherent gains of the merger, THISDAY gathered that the integration process in the bank is still ongoing.
The chief executive explained that although, certain milestones have been achieved, some issues are still pending. He said, “Since we started the integration in January, we have completed the rebranding of all the branches, we have completed the customers’ integration, and we have completed the harmonisation of payroll for the permanent staff. Yes, there are still some issues. But I can say that largely we have dealt with all the issues about integration.

“You cannot deal with that 100 per cent, there will still be issues. Even when we downsized, we paid them all their allowances and we had the full support of the unions. So, what we are doing now is training on the new culture and equipping the people to be able to operate the new policies and procedures of the bank.

“The last bit of the integration that is not yet complete is the merger of the two systems – moving Oceanic Bank Finacle application, moving the customers out into Flexcube because it is a big bank with big customer base.
“We are taking our time to do that gradually. So we still run two systems, but we have an interface that allows the two systems to talk to each other. So, if you go to any former Oceanic branch, you can get service if you are an Ecobank customer and vice-versa, but not as it would be if we have one platform. But ultimately, our aim is to drive towards a single platform which is to put all the customers on Flexcube.

“We have been able to scale up because they were opportunities that allowed us to grow exponentially rather than organically. So we have achieved that and we are now in the phase of optimising what we have acquired, that is trying to integrate all the institutions that we acquired.

“In 2007, the workforce of Ecobank was less than 1,000, but today, when you include the outsourced players, the workforce is over 10,000. You can see the massive acquisition of people with different cultures into one bank. So, this is the time we must begin to integrate them so as to bring some efficiency into the operations of the bank. For us, the benefits of these six years have been the opportunity to grow and today we now have the platform to compete,” he explained.

Acquisition Binge
Justifying the bank’s acquisition binge, Aku said the plan to widen the scope of the bank in Nigeria was initiated by the parent company of the bank, ETI.
“We say we wanted to be a significant player in any market where we operate. In some of the West African countries, we have achieved that scale.
In Togo we are number one, Liberia we are number one, Burkina Faso we are number one and in Mali we are number two. We wanted to be among the top three because we know that once you are a bank of scale, there are many things that come to you. So the journey in Nigeria to become a bank of scale was a long journey.

“If you want to move from number 21 to top three, you have to do things differently to get there. So, that started our acquisition phase and combination. The first transaction we did was with AIB Bank – one of the banks that did not pass the 2005 consolidation exercise. That gave us some branches and some assets. Then we acquired Hallmark Bank which gave us some branches and assets and then we were opening branches. But all of that just took us to number 14 because the other banks were also growing. So when the 2009 challenge came up and eight banks were in trouble and the Central Bank of Nigeria (CBN) advised the local banks to express interest in any, we also expressed interest in some of them and that led us to the acquisition of Oceanic Bank by our parent company. So if you look at the journey from 2006 to date, we will say we have moved to about the sixth position in terms of assets and if you look at customers, we are probably number two.”

Ecobank is now present in key locations nationwide with 511 branches as against174 branches pre-acquisition. Today, the bank can boast of relatively new branch infrastructure.  Today, the enlarged banks can boast of savings deposits of over N150 billion versus N40 billion pre-acquisition; making Ecobank one of the few banks in Nigeria with savings above the N100 billion mark.

The bank also experienced growth in customer base with over 4.9 million additional accounts from Oceanic Bank versus 1.2 million Ecobank customers pre-acquisition. Now it has over seven million customers .