With the acquisition of Keystone Bank Limited by Sigma Golf-Riverbank consortium, the new owners are tasked with the responsibility to inject fresh capital, rebuild trust and attract patronage among others, writes Olaseni Durojaiye
The eventual takeover of Keystone Bank Limited by the new owners, the Sigma Golf-Riverbank consortium, brings to an end a long-drawn rescue mission embarked upon by the Asset Management Company of Nigeria (AMCON) when it took over the bank in 2011, and marked the beginning of a new chapter in the bank’s history.
AMCON had earlier announced Sigma Golf Nigeria Limited and Riverbank Investment Resources Limited as the new owners of the bank thus paving the way for the processes of actual takeover.
As part of the takeover process, a completion takeover meeting between the representatives of Sigma Golf-Riverbank consortium, AMCON management, board and management
of Keystone Bank; the advisers to the buyer (KPMG Professional Services, Boston Advisory Services, Giwa Osagie & Co., and Pan-African Capital Limited), as well as those of the seller (FBN Capital Limited, Citibank Nigeria Limited, Banwo & Ighodalo, and CrosswrockLaw) held last week.
The completion meeting signified the effective handover of the bank to the buyer and the commencement of a transition process that will culminate in the reconstitution of the board and management of the bank to reflect the new ownership.
Underscoring its determination to hit the ground running, the new owners almost immediately commenced the process of transition governance and announced key appointments which take effect by April 1, 2017. Before then, the bank has been run by an AMCON-appointed board headed by Mr. Philip Ikeazor as Managing Director and Chief Executive Officer of the bank.
Keystone Bank was taken over by AMCON in 2011 alongside Afribank Plc and Spring Bank Plc. The two banks were renamed Mainstreet Bank and Enterprise Bank respectively while an AMCON-appointed management was put in place to stabilise the bank and prepare it for sale to new investors.
Issues before the Sale
The sale and acquisition process may have been completed, it was however, not bereft of controversy.
Sign that all was not well first emerged last year when some senior officials of AMCON alleged that the Managing Director of AMCON, Ahmed Kuru, had concluded plans to sell the bank to a coalition of influential Nigerians of northern extraction and insisted that it contravene extant takeover provisions of AMCON in the process.Even then, the sale process went ahead.
The controversy may have become history as the new owners have taken control and now saddled with the challenges of delivering quality financial service and setting Keystone Bank on the path to competitiveness. AMCON reiterated that much last week when the new owners were announced.
While announcing the new investors, AMCON had said that the Sigma Golf-Riverbank consortium emerged the preferred bidders after a very transparent and competitive bidding process.
“The emergence of the Sigma Golf-Riverbank consortium will bring a new lease of life with the expected injection of fresh capital that would position the bank to play competitively in the banking space and actualise its full potential,” it said.
“In moving the bank forward as a major player in the industry, the new investors will be backed up by a pool of reputable professionals both currently within the bank and across the industry.
“Keystone Bank therefore assures all its stakeholders that the transition process will reposition the bank to serve its customers better, creating enhanced value for all stakeholders,” it added.
Taking the Bull by the Horn
In line with standard practice and a demonstration of it resolve to reposition the bank for the task ahead, the bank last week announced the appointment of Umaru Modibbo as Chairman of the new Board and Hafiz Bakare as the acting Managing Director. The announcement which was contained in a statement signed by the bank’s Head of Corporate Communications, Omobolanle Osotule, added that the appointment takes effect on April 1 2017.
The statement read in part: “The successful conclusion of the divestment of Keystone Bank Limited by the Asset Management Corporation of Nigeria (AMCON), which culminated in the Completion Meeting of 23 March 2017 and the formal handover of the bank to the Sigma Golf-Riverbank Consortium (the Consortium).”
“The transitional governance arrangement, which will take effect from the 1st of April 2017, is subject to approval by the Central Bank of Nigeria,” the statement said.
When Modibbo and Bakare assume their new positions this week, they will be faced with few challenges. As one financial services insider noted last week, It is now time to face the challenges ahead.”
Industry insiders, who spoke with THISDAY were in agreement that the challenges to surmount will include building trust all over again and inject fresh capital to carry out activities that will make the bank become attractive to the banking public and thus attract. Two of the respondents to THISDAY enquiries, however disagreed on the need to increase branch network.
“Two of the immediate challenge will be to bring in fresh capital and build trust to attract the interest and confidence of the banking public. As we speak we’re not aware of the bank’s capital base as they have not released their financial report in a while, but what we know is that the acquisition capital was N25 billion; we don’t know about the shareholders’ fund. If it is too small, they may need to inject fresh funds to carry out some activities including creating new products that will make the bank attractive again,” Executive Director, Corporate Finance, BGL Capital Ltd, Femi Ademola, stated.
Continuing, he added that “The new owners will also need to build trust in the bank. They will also need to address perception issue. May be through a total rebrand but they have to disabuse the misgivings that it was a bank that was almost dead and inspire confidence that it is not in any way endangered.”
A banker with a third generation bank who prefer not to be identified agreed with Ademola but added that the bank also need to increase its branch network adding to be more visible for patronage.
“According to him, “The new owners will need to inject huge funds into the bank if they really want to play big and be competitive. The bank needs to increase its branch network to become more visible and attract business,” he stated.
Ademola, however, differ on the need for more branches. He argued that increasing branch networks is not crucial and drew an analogy between First Bank and GTBank.
“Increasing numbers of branches has nothing to do with it. How many branches does GTBank has yet they are posting great results whereas First Bank has more branches and we can all see their performances; so it’s not about increasing branches,” he added.