Nigeria’s CBN Approves Sterling Bank’s Plan to Restructure into a Holding Company

Sterling Bank Plc has obtained the approval of the Central Bank of Nigeria to begin restructuring into a holding company. This was disclosed in a corporate action that was sent to the Nigerian Stock Exchange on Tuesday, September 28.

According to the statement, which was seen by Business Elites Africa, Sterling Bank’s desire to restructure into HoldCo was primarily due to its desire to establish its non-interest banking segment into a full-fledged entity. The bank had in 2014 obtained a license to operate its non-interest banking business.

“The Chief Executive Officer of Sterling Bank Plc, Mr. Abubakar Suleiman is pleased to announce that the Bank has obtained the Central Bank’s approval in principle to enable it restructure as a Holding Company. 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,” part of the statement said.

The statement, which was signed by the Company Secretary Temitayo Adegoke, further disclosed that the Hold-Co structure will enable Sterling to achieve its fullest business potentials using the following strategies:

• Better access to capital
• Enhanced corporate governance
• Improved efficiency resulting from the consolidation of key functions
• Increased portfolio diversification.

“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,” CEO Abubakar Suleiman was quoted to have said.

Do note that more Nigerian banks are steadily diversifying into a Hold-Co structure which is believed to enable banks to specialise in specific business ventures, whilst exploring various opportunities in the financial services space. A recent article by Nairametrics quoted analysts who opined that the new era of African banking is Hold-Co.

Recall that earlier this year, Guaranty Trust Bank Plc (which is a tier-1 bank and the second most profitable in Nigeria), had also hinted at ongoing preparation to convert into a Hold-Co structure.

In the meantime, there are three banks with holding company structure currently in operation in Nigeria. They are FCMB Group, Stanbic IBTC Holdings Plc, and FBN Holdings Plc.