Nova Boss Urges Banks to Restructure their Business Model

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Anya Duroha

Obinna Chima

The Chief Executive Officer/Managing Director, Nova Merchant Bank Limited, Mr. Anya Duroha, yesterday stressed the need for banks in the country to look beyond their traditional means of operation and embrace innovation.

Responding to questions from journalists during a virtual interactive session with Duroha said with the advent of the Covid-19 pandemic, financial institutions must embrace creativity and innovation in terms of their product offerings as well as services.

The Nova Merchant Bank boss explained: “The traditional ways of doing business cannot suffice. Therefore, every bank or financial institution needs to get very creative about the products they sell and how they offer these services in the market.”

He pointed out, however, that with the pandemic, there are sectors that are winners in the market. These he listed to include information technology, fintechs and healthcare sectors.

“Therefore banks would need to refocus and support those industries clearly, even while fulfilling their role of working with the sectors that are not performing very well, to bring them back on stream. It is something we take very seriously. One of the things we do at the advisory side of our business is also to work with industries we had identified that are struggling, to see how we can work with them,” he said.

According to him, since inception, Nova Merchant Bank has been an information technology-driven bank. This, he said has placed the bank above its peers in the industry.

Speaking about the bank’s recent bond offering that was 300 per cent oversubscribed, Duroha said: “As part of Nova’s strategy, we knew that at this point we needed to get long-term funds to be able to finance long-term assets. Being a merchant bank, we would like to do a lot more developmental financing and you need long term funds to do that.

“So, that was why we went to the market to raise that bond. Our plan was to raise N10 billion for seven years tenor, callable after five years and again subordinated bond, such that it would count as tier-2 capital. So, it was oversubscribed by about 300 per cent.

“That means we got about N31 billion, whereas we set out to get N10 billion. But the instructive is that the investors were diversified. From individuals to corporate entities, to asset management companies, insurance companies as well foreign investors. The bond was issued at 12 per cent and it was good outing for us,”

He said the proceeds of the bond would be used to finance corporate loans for customers, he said.

According to him, the bank would be looking at supporting customers in the agriculture, fintechs, telecoms as well as healthcare, saying, “these are the areas where we see opportunities now and a substantial amount of the money would go into building capacity for export for the country.”

Duroha added: “For Nova Merchant Bank, we are looking at where we have core competence which hovers around advisory services, asset management, and security business. We understand that what differentiates a bank from the other is the way they offer their services, and that’s why we are deliberate about the things we want to do, and we actively think through them.”