Oloketuyi: Why Wema Opted out of Bid for Keystone Bank


Obinna Chima

The Managing Director/Chief Executive Officer, Wema Bank Plc, Mr. Segun Oloketuyi has said that the bank opted out of the bid for the acquisition of Keystone Bank Limited because the expected synergy values from the target bank may not be realised.

Oloketuyi, who disclosed this during an interactive session with journalists in Lagos at the weekend, said Wema Bank was one of the financial institutions that initially bidded for the Keystone Bank, a commercial bank that is wholly owned by the Asset Management Corporation of Nigeria ( AMCON).

AMCON is expected to announce the buyer for Keystone Bank in the coming days.
“We were one of the first set of people that wanted Keystone Bank. But we re-appraised our strategy somewhere along the line. Growth comes in two major stages – organic and inorganic. Organic by what we are doing today at Wema Bank and inorganic through mergers and acquisition (M&A) opportunities. So, we looked at the M&A opportunity and essentially what we looked at was the fit of the target.

“First you define your strategy and what you want to do as a bank, and then you go look at the other opportunity, to see if it has a fit in what you are doing. We went some distance in the process and we decided we should get out of it because there were a whole lot of overlap between what we are and what the target is. Essentially, what you are looking at is the value addition.

“In M & A, if you add one plus one, in arithmetic, the answer is two, but in M& A, it is not. In M & A, if one plus one gives you two, it has added no value to you. In fact, if anything, you have taken on more trouble. So, if you take on a target, one plus one should give you multiples of two. It can be three or four. But if one plus one gives you just two in M& A, it is not value creating. But that does not mean the target is not good. But what i am saying is that it did not align with my growth aspiration. That was the consideration and at some point in time, we decided to opt out of the bid,” he explained in response to an enquiry from THISDAY.

Furthermore, Oloketuyi said the withdrawal of public funds through the implementation of the treasury single account (TSA) policy of the federal government impacted the volumvolt deposits at Wema Bank by about N50 billion, adding that the larger banks would have been more impacted.

“Over N2trillion left the entire banking system for TSA and it impacted the volume of deposit in the system. Deposit is our raw material. Certainly, if the sector lost over N2trillion, it would impact. You will see the impact on the liquidity of every institution.

“Wema Bank lost almost N50 billion to TSA, but some banks would lose a lot more. In our annual report in 2015, we grew deposit in spite of the loss by about 15 per cent, compared to 2014.

“So, what that means is that perhaps we would have grown better than we did. So, the impact was that we were not able to meet our deposit obligation, neither were we short on the liquidity ratio required for banks. But certainly we lost some money to TSA that otherwise would have helped the performance of the bank better than we recorded in the previous year,” he said.

Wema Bank’s non-performing loans (NPLs) stood at 2.9 per cent as at 2016, which is below the Central Bank of Nigeria’s threshold of five per cent. The Wema Bank boss attributed this to the assistance from credit bureaus in the country.
According to him, Wema Bank currently has over 200 ATMs, as against 40 as at 2009. As part of expansion, Wema would be opening more branches in five different states in the country.