By Malachy Agbo
Competitive fever seems to have gripped the banking industry since news broke that former managing directors of United Bank for Africa, Mr. Tony Elumelu and his counterpart in Zenith Bank, Mr. Jim Ovia are back to the saddle. They are not coming back as chief executive officers but as chairmen of the two institutions respectively. Different reactions have trailed their re-emergence and there are fears, as well as, fascinations about their re-entry into banking.
Some people have read the development in the light of a new opportunity to strengthen the two banks’ corporate governance, turn around their fortunes, even though they are considered as doing well. Given the pedigree of the duo as distinguished bankers and their sprawling international networks, the two banks may now enjoy high ratings, both within and outside the country.
The other side of opinion is that the move is a desperate and calculated attempt to continue to pilot the affairs of the two banks legitimately from the board level. The concern is that after running their banks for over 13 and 19 years respectively as CEOs, whether there is any real need for them to stage a comeback. But you can never tell.
For now, expectations are high in the industry that the return of Elumelu and Ovia will trigger a positive change in banking, which could turn the fortunes of the banks and move the two institutions to greater heights. In a recent interview with Businessday, Johnson Chukwu, managing director and chief executive, Cowry Asset Management Limited said: “the return of Tony Elumelu and Jim Ovia to the boards of UBA and Zenith Bank, respectively as board chairmen should bring a lot of intensity to the boards of these banks given the personality attributes of both men.”
“Ovia and Elumelu are credited with growing these banks into their current preeminent positions in the Nigerian banking industry. Both men are imbued with drive, energy and vision required to drive their institutions to the next level particularly during this turbulent period in the industry. In addition, they both have the political reach to influence policy direction in the Nigerian banking industry.
“There is no doubt that as chairmen of their banks, they will bring these attributes to bear in the running of their respective institutions. It should therefore, be expected that the fortunes of UBA and Zenith should improve in the immediate future with the return of their former managing directors as chairmen of their boards,” Chukwu further said.
He added however that “to moderate the influence of core investors sitting as chairmen of banks, the Central Bank may have to impose a higher percentage of independent directors on such banks. To make for an even playing ground, CBN can require all systemically important banks to maintain at least 40 percent of their board members as independent directors. Such a policy will ensure that the banks maintain strong corporate governance standards without compromising the drive for legitimate businesses.”
In the same vein, Bismarck Rewane, chief executive of Financial Derivatives said: “banking in Africa is a dynamic, exciting and an increasingly competitive and challenging industry.” Tony is visionary, courageous and has shown an ability to both, think for the long term, and to create significant shareholder value. The drive, dynamism and competitiveness that we saw during his period as CEO of UBA, were the catalysts of the enormous changes in the Nigerian banking sector,” Bismark added.
For shareholders, it is a good development, according to Farouk Umar, president, Association for the Advancement of Rights of Nigerian Shareholders (AARNS). He said Elumelu’s appointment “bodes well for UBA and the banking industry now and in the future. Elumelu is a transformer and value creator for shareholders. We are excited about his return.”
On the other side of the coin, some argue that since their exit three years ago from the stage, the banking landscape in the country has somewhat changed. The razzmatazz that took the industry like a storm for over a decade has gone down a bit. The ego cum aggressive driven marketing and the fight for media space have all eased.
There seems to be an agreement that the combination of the duo added glamour to a large extent to the entire banking sector. Banking is no doubt a conservative business while the two men were on the flamboyant side. Yet, they never lost sight of their individual targets and ambitions as bankers. Their self-imposed rivalry shaped the industry and triggered a competitive band wagon that was taken to excessive heights by people like Mrs. Cecilia Ibru and Mr. Erastmus Akingbola – former chief executive officers of defunct Oceanic Bank and Intercontinental bank respectively.
Then, every aspect of their life and business activities was hyped as a competitive advantage. From balance sheet size to profitability, branch network expansion and awards were all celebrated with fanfare in the pages of newspapers and billboards. It got to a point where some of the CEOs celebrated trivial things such as handshakes with state governors, federal ministers, heads of government agencies and parastatals.
Foreign media cashed into the opportunity and made a kill out of the sector. They came with fraudulent proposals, sometimes, with introductory letters from the Central Bank of Nigeria or federal ministry of finance. Nigerian banks took centre stage in the media world with all manner of awards being celebrated back home at heavily surcharged early pages of Nigerian papers.
End of the year parties were celebrated with so much pump to the extent that comedians, musicians, masters of ceremonies, decorators, venues and sundry were booked six months ahead at heavy costs. Bank CEOs went about in convoys of SUVs and other motorcades, intimidating other motorists. People were often harassed on the roads with blasting sirens by reckless escort drivers. The government turned a blind eye while it lasted!
It got to a point where chartering jets was no longer the in-thing. It moved from chartering to buying. Some bought more than one with the justification of easing movement amid the frenzied pursuit of public sector funds.
The executive floors of most bank head offices were more comfortable than many luxury homes. They had lavishly furnished living rooms, executive lounges, meetings rooms, Jacuzzi and other state-of-the-art components that you can find in apartments of wealthy-oligarchs. The trappings of office simply encouraged executives to sit-tight and swagger.
The razzmatazz in the industry slowed when the principal actors left the stage – which many refer to as the “cow boys’ era” in the banking industry. Nevertheless, they engineered a lot of positives for the industry. They took industry from the irritating arm-chair practice to customer oriented banking. The aggressive banking of that era created jobs for thousands of Nigerians. They exported Nigerian brands to foreign shores and made Nigeria the cynosure of the international business community.
Now that Ovia and Elumelu are back to the tuff, what are we to expect? Is the industry going to ignited again on the part of show-biz or to strengthen the corporate governance of their respective institutions? One may be quick to say that in the last three years, they have garnered different experience and exposure beyond the banking industry.
They have gone into other sectors such as power, oil & gas, hospitality, manufacturing, telecommunications among other things. They now influence public sector policies and have secured juicy appointments for their ‘boys’. Their wallets are ranked among the world’s richest individuals. They have become more influential than they were when they were CEOs.
In reality, did they actually leave? During their exit in 2010, one was lavishly hosted while the other allegedly insisted that no one can send him off from his asset. The recent events show that he was right. Their return shows clearly how they missed the industry. Nevertheless, they are both welcome on board.
