World Report

After a stint with the Oyo State Ministry of Agriculture and Natural Resources, you first joined First Bank as Agricultural Credit Officer (ACO), Kano in 1977 and since this time you have risen through the ranks to be appointed to the position of Managing Director/Chief Executive in 2002. What objectives and priorities did you bring to the role of MD/CE in 2002?

My immediate task when I was appointed as MD/CEO of the Bank was that of ensuring stability because I took over when the bank was passing through a difficult period. There was this unfortunate incident of our loan to a company called IILL which had submitted a bid to acquire Nigerian Telecommunications Limited (NITEL). We had given the loan to the company and the loan later became a controversial issue. At that time, it was not very clear whether the bank would survive or not.

There was the issue of perception as to the quality of management; there was the issue of customers having less confidence in the bank. The press really hyped up that particular incident. Everything about the bank at that time seemed to be negative.

The immediate priority at that time was to ensure stability, convince our staff and other stakeholders especially customers and investors that everything would be all right. This was necessary because we had begun to witness movement of funds to other banks as some customers were not sure of what would eventually happen to FirstBank. The first thing I tried to do, therefore, was to restore stakeholders' confidence by emphasizing our financial strength.

How have these objectives developed in the three years since?

The main objective, apart from the distractions of the past, is to make FirstBank the clear leader in the industry. We in FirstBank are now even more determined than ever before to achieve this objective. That has been our objective from day one. We concede the fact that, with the merger of STB and UBA, we now have to deal with a serious challenge to our market leadership.

FirstBank was established over 100 years ago and has contributed immensely to the growth of the Nigerian economy. In fact, the bank once played the role of a central bank not only for Nigeria, but also for some governments in West Africa. The British government of West Africa in those days relied on the bank for their banking needs. Clearly, the bank actually pre-dates the Central Bank of Nigeria, which was established in 1959. So we were the banker to the government and we have always been in the vanguard of economic development in many respects.

In a recent poll from The Banker publication in the United Kingdom's Financial Times, FirstBank was voted the number one bank in the country and a clear leader in profitability, assets and branch network. On top of this, FirstBank was reputed to be the seventh best bank in the continent of Africa. Considering this, what have been the keys to success for the bank?

The key to our success has always been sound management and good corporate governance. The bank was established along the British business model. We also have a highly dedicated staff who operate within what, I believe, is a well-established system. Our workers can be said to be the bank's greatest asset. Then, of course, we have committed shareholders and board of directors as well as loyal customers. In summary, the critical elements are sound management, dedicated staff, committed shareholders as well as loyal customers.

‘There is room for more British interest in Nigeria. There are vast opportunities’

To satisfy the needs of its customers, FirstBank has diversified into a wide range of banking activities and services. These include Corporate and Retail Banking, Registrarship, Trusteeship and Insurance Brokerage. What is the vision driving the offering of a range of diversified products and services?

Our vision is to be a one-stop financial supermarket offering a wide range of products and services that can take care of all the financial needs of our customers. We are also able to satisfy our numerous customers countrywide through our extensive branch network, which is the largest in the country. We also engage in specialised banking activities through our subsidiaries.

We are also active in international banking. We own a UK subsidiary, FBN Bank (UK) Limited, an offshoot of the branch we had in the UK for 20 years, which became a full-fledged subsidiary in 2002. We have just got approval from our board to go into insurance business, both life and general. We see ourselves going into other areas. The whole idea is to ensure that we are able to meet all our of customers' financial needs. This is the whole essence of universal banking.

You mentioned insurance and also other areas you intend to move into. Could you tell us more about these plans?

We are increasing our interests in the insurance sector because of the potential opportunities and benefits yet to be fully exploited. We are even going into the e-payment systems, which would provide a number of synergies with the insurance business.

In recent time, the bank has taken giant steps in electronic banking, and is highly acclaimed for its bold and leading initiative in deploying Information Communication Technology ICT, in its operations across the country. Today FirstBank is the foremost Interswitch member bank in Nigeria, providing an avenue for the populace to use debit cards, and now MasterCard, at over 74 ATM locations nationwide. What are your aspirations in terms of development of technology, in terms of bringing the bank into the modern age of operations?

Undoubtedly, ICT has enhanced the speed of business processes. Technology is no longer seen as the cutting edge, but a necessary tool for efficient service delivery.

Our vision is to be the first choice in banking and this we intend to achieve by providing excellent service for our customers so that they can seamlessly run their businesses without necessarily visiting our branches. In Nigeria, business transactions are still cash-based. We haven't achieved a cashless society, and customers still go to the banks to do business. That is why we introduced ATMs and internet banking. Our customers can now make transactions right from the comfort of their homes or anywhere. They can check their account balances and transfer funds without visiting the bank. With over 262 branches connected online, real-time we have made it possible for our customers to transact business with the bank from any branch of their choice. This is in line with our strategy to have a "one-branch bank".

In addition to these significant achievements, we have started issuing debit cards. We have some merchants already who have acquired point of sale terminals where these cards can be used. We have been acquirers of Mastercard since 1986 and by the end of this month; we will be issuing MasterCards direct. What we have been doing so far is to acquire for merchants who come to Nigeria from abroad. You can use your MasterCard here while we acquire from MasterCard International and then settle them on your behalf. But now we shall be issuing cards directly to our customers.

We are also a member of the ValuCard Consortium of Nigeria, issuers of ValuCard, an electronic purse used in the local economy. Since its introduction, it has helped in checking our penchant for carrying huge sums of money which often expose our people to terrible risks.

We are exploring the possibility of providing enhanced services using the ATM. Essentially, we intend to reduce the volume of cash in the market through e-payment systems (ValuCard, ATMs, FirstCash Debit Cards, Internet Banking).

For the past 111 years, the Bank has continued to be a leader in financing the long-term development of the economy. We know that you are a big shareholder in Vmobile (one of the leading GSM operators in Nigeria). How do you choose what to finance and how do you finance across the spectrum of the economy? What are your strategies in this regard?

Our priority is to give our shareholders superior value. First and foremost, you want to remain on top in the business; you want your shareholders to be able to count on you and trust that figures will keep improving. At Annual General Meetings, shareholders analyse your annual accounts and discuss how well you have performed. Clearly, the real issue is profitability and creating value for our shareholders. However, beyond profitability, we also are mindful of economic development in Nigeria because the banks can only be as prosperous as the country is. It is, therefore, important that we strive to develop other critical sectors of the economy such as agriculture, telecommunications, small and medium-scale enterprises, manufacturing, as well as oil & gas.

FirstBank has continued to provide strong support for these sectors. Also, aside from agriculture, manufacturing and SMEs, one area that we have veered into, even though there have been some problems, is the privatisation of companies by the Bureau of Public Enterprises (BPE). We are in the vanguard of financing the companies that are being privatised by the government. There are some success stories: the Oando (which used to be UNIPETROL) story, and African Petroleum, where we are also providing strong support. Another success story we were involved in was Nigerdock. In fact the only one that became a problem for us was the botched NITEL take-over, which we co-financed. The bid was unsuccessful because the preferred investors could not raise the required amount and, as a result, they lost their initial deposit. Apart from financing manufacturing and agriculture, we also partner with government to ensure that public utilities provide improved services.

What sort of competitive advantage does the bank offer in terms of financing projects on a small, medium and long-term basis?

There is the advantage of having a bigger balance sheet. This enables us to do bigger deals than most banks. We are able to go longer terms than most banks. Although with the ongoing reforms in the sector, other banks may be able to finance mega-projects, our experience will continue to stand us out.

You told us that the bank plays a strong role in areas such as agriculture financing and supporting of SME's. How is the bank helping to finance and promote economic development in these two important business areas?

The bank has been lending indirectly to agriculture before 1977 when the Agricultural Credit Guarantee Scheme (ACGS) was introduced. There was a product that we had specifically for the produce farmers. Through this product, our bank was able to advance funds to agricultural produce buyers. The idea was to ensure a steady market for cotton, cocoa and groundnuts farmers. This helped to ensure a steady market for the farmers. Once their market was assured, the farmers could produce more. In 1977, the Federal Government took a decisive step by establishing what is now known as the Agric Credit Guarantee Scheme. After this, banks like ours started establishing their own agric lending departments. I came into FirstBank as an Agric Officer in 1977. Since then, we have established an Agric Department in the bank, headed by an Assistant General Manager with a full complement of staff.

For the SMEs, there is a fund established in 2001 by the Bankers Committee. Banks are required to set aside 10% of their profit before tax for investing in small and medium-scale enterprises. It is an equity investment scheme and not lending. In our own case, what we did was to set up a subsidiary called First Funds Limited. The role of that body is to manage our funds under that scheme. By the end of this year, we would have set aside almost N5 billion for the project. That again is a pioneering initiative because some banks have preferred to make this investment through a department of their bank. In our own case, we set up a full-fledged subsidiary venture capital company to manage this fund for us and to ensure that they are able to select as well as invest in high-quality small-scale enterprises.

As part of its strategy of progressive internationalisation, in November 2002, the Bank became the first financial institution in Nigeria to establish a subsidiary bank in the UK. On top of this the bank has strong connections with a number of leading institutions internationally. How would you assess the success of the UK Subsidiary?

The subsidiary in London has been a great success for FirstBank. FBN Bank (UK) Ltd, as it is known, was our London branch for many years. With the relevant authorization from the Financial Services Authority (FSA) and the approval of the courts under the Financial Services and Markets Act, the assets and liabilities of the former London branch were absorbed by FBN Bank (UK) Ltd. We had to convert to a subsidiary bank because it was compulsory for the regulators in the UK to carry out the statutory regulatory supervision of our operations. When it was a branch, there was a joint oversight by the Bank of England, later the FSA and then the Central Bank of Nigeria (CBN). For the past few years, they have been encouraging branches of foreign banks to become subsidiary banks so they could operate under the oversight of the UK regulators.

Consequently, our former London Branch became a full-fledged, wholly-owned subsidiary of First Bank of Nigeria Plc and commenced operations on November 1, 2002. Initially, however, there were quite a few start-up hiccups. But having stabilized after the initial problems, the subsidiary has developed into a remarkable success and a very profitable institution. Today, through that subsidiary, we can definitely say we are an important niche player in the UK banking sector.

And what are your plans for further international expansion with First Bank of Nigeria?

Initially, we had planned to set up a branch in New York, USA. In fact, we actually commissioned KPMG to appraise the viability of this option for our business and international expansion. However, the incident of September 11, 2001 halted our plans in that regard. After 9/11, US policy became much stricter for foreign banks, ostensibly as a fallout of the attacks. In spite of that, we are now seriously working towards establishing our presence there. At the same time, with advances in information and communications technology, I believe the idea of setting up subsidiaries and branches all over the world is becoming obsolete. Why do that when you can now present viable banking and finance options to our customers around the world leveraging on ICT? In view of this situation, we have turned our focus to Africa.

Following our success with the launch of FBN Bank (UK) Ltd, our strategy of progressive internationalisation received a boost in 2003, with the commencement of business operations of our Representative Office in South Africa. With this development, FirstBank can assist in facilitating a large portion of the growing trade flows between Nigeria and South Africa. Last week, I was in South Africa for the formal commissioning of our Representative Office. Whilst there, met many investors who showed tremendous interest in partnering with us. For now, I would say we have concrete plans and our main aim is to establish our presence in these areas. For the rest of the world, this is an IT age, and we should be able to get to people anywhere in the globe through our ICT technology.

Throughout its history, the bank has had a strong presence in the West African region. Indeed, at one time the bank was called "the Bank of West Africa." Mr. Ajekigbe, as Managing Director of FirstBank, please tell our readers about what type of strategy is in place to increase the Bank's presence across the region.

Yes, in fact the West African region is a major focus for us at the moment. Especially, as I said, through our focus on e-banking and ICT-related services, we believe that the expansion of our business operations to other West African countries is something that we can easily facilitate. At present, we have a strong interest in a bank in Cotonou, Benin Republic, a neighbouring country. Essentially, our intention is to have a presence in all the major countries in West Africa and this is all part of a five-year plan that we crafted in 2003. Our aim is to achieve remarkable success in the area of regional expansion by 2008. We want to deepen FirstBank's reputation and presence in the West African sub-region. We have three years remaining and, at present, while I can't and won't mention any names, I would say that we are currently in negotiations with a number of potential partners and financiers in this expansion programme.

Obviously consolidation of the banking sector and the efforts to recapitalise is the biggest issue in Nigerian banking today with the Central Bank (CBN) this year directing the top 10 banks in the country, including FirstBank, to acquire the smaller ones in the on-going consolidation. Mr. Ajekigbe, as MD of FirstBank and an industry expert, please tell our readers what your views are on the consolidation process and the role that First Bank is playing in this process.

The ongoing consolidation has been an interesting process, even though it appears that it is not going the way the CBN conceived it. It is important to state, however, that the CBN has definitely not forced any of the major banks, including FirstBank, to acquire the smaller ones. It is still very much a question of choice for each of the banks concerned and the CBN has been very proactive in its regulatory guidelines.

Now, in terms of the progress and developments so far, the idea behind the reforms, which is to essentially ensure the safety of the financial system, is commendable. A few years ago, Nigeria had close to 100 banks, many of them managed by people who didn't know much about banking. The CBN instituted this consolidation process with the idea of reducing the number of banks to 12 or 15, mainly through mergers and acquisitions. The apex bank failed, however, to envisage the response of many banks that have gone to the capital market to raise funds to meet the new minimum requirement of N25 billion. Based on this development, instead of having 12 to 15 banks as originally planned, we might have about 25 to 30 banks. As such, I believe that the process of consolidation is far from over. It is really something that will continue after the first phase in 2006.

As far as FirstBank is concerned, I must mention it that even before the announcement of the new CBN regulations, our share capital was already in excess of the statutory N25 billion. However, we are considering the various strategic options for further consolidation, as we are determined to continue to be the clear leader in the industry even in the post-consolidation era. Of the many options available, we are working on mergers and acquisitions, for which a special committee has been set up at the board level. This committee is currently working on numerous propositions and holding discussions with some potential partners. It is really an issue of compatibility at the moment; we can only engage in a merger or acquisition provided there is a synergy between us and any potential partner.

It is a matter of giving our shareholders superior value -- which is our ultimate goal. In summary, our primary aim during the consolidation process will be to meet the sophisticated needs of our customers by reinforcing our vision to be the clear leader and Nigeria's bank of first choice.

With the renewed focus on economic development, the commercial partnership between Nigeria and the UK continues to prosper. Currently the number of UK companies operating in various sectors of the Nigerian economy is continually growing. As the leader of the first Nigerian bank to establish operations in the UK, how is the bank working to attract the business of potential UK investors, including the many Nigerians in the UK Diaspora?

We have recognised the importance of the United Kingdom and its investors to the growth and development of Nigeria and, as a result, we have continued to leverage on our membership of organisations such as the Nigerian British Chamber of Commerce and the Commonwealth Business Council. We also participate in events organised by the Department for International Development (DFID).

On top of this we, of course, have our subsidiary bank in the UK and a number of affiliations with leading UK institutions such as HSBC and Standard Chartered Bank. We are looking forward to improving our relationship with these and other UK banks and finance outfits. In terms of attracting Nigerians living abroad, I think it would be wise to list our shares on either the London Stock Exchange or perhaps the New York Stock Exchange. In that way Nigerians in the Diaspora could invest in our company directly.

To be honest, there is room for more British interest in Nigeria. At the moment, South African companies such as MTN are making a big impact on the Nigerian economy while British investors have, over the years, not deepened their interests enough. The Nigerian business terrain cannot be said to be unfamiliar to Britain, once our colonial master. I would like to encourage all potential investors in the UK to take another look at Nigeria as a destination for their investments. There are vast opportunities here.

Recently you have been named as one of the key leaders and investors in the soon-to-be-inaugurated Transnational Corporation of Nigeria, which will be the first Nigerian mega-corporation and is being led by a number of other highly prominent Nigerian businessmen including Aliko Dangote, Jim Ovia and Festus Odemegwu. What are your hopes and aspirations for Transcorp?

The Transnational Corporation of Nigeria will be a company for all Nigerians. The idea behind the corporation is to create a globally competitive industrial and business conglomerate which will supply world-class products and services to local and international markets. Transnational Corporation will go into oil and gas. We are already planning to build a private refinery. Besides, we are looking into the acquisition of a number of marginal fields. The company also plans to invest in ICT software development, tourism, and agriculture, where we are looking at a cassava production project. These are the critical sectors we have chosen. The company hopes to raise N66 billion from the capital market by the first quarter of next year. Nigerians are, therefore, advised to buy shares of the company so that they can have a stake in it. FirstBank is actually one of the company's core investors, along with a number of the names you mentioned earlier.

The focus of our report is on Nigeria at a time when the development of Africa is taking centre-stage both internationally, through Blair's Commission for Africa, and internally through NEPAD. Mr. Ajekigbe, what are your opinions on NEPAD, the idea of pan-Africa co-operation and the role that non-African countries can play in the development process?

Well, NEPAD and the African Union are a great step for Africa. These initiatives are vital for Africa's development. I am against the idea of un-ending aid to Africa, apart from debt forgiveness. A friend of mine often says that if a person is spoon-fed all the time, the only thing he gets to know is the shape of the spoon, and I believe this saying applies specifically to the African situation. If Nigeria and other indebted African countries are to achieve the Millennium Development Goals, they need total debt pardon. While recognising the fact that the situation in Africa has been made worse by bad governance, civil wars and corruption, we appreciate efforts made so far by Prime Minister Tony Blair, and other leaders of the G8, to ensure the cancellation of debts owed by some poor African countries. Going forward, I believe Africa must find solutions to the problems that have hindered it from attaining sustainable social, economic and human development.

I am particularly pleased to know that initiatives such as NEPAD and the African Union helped to advance the cause of the continent at the global arena. Moreover, these initiatives, which have the Millennium Development Goals at their core, have also helped to improve the African condition. The African Peer Review Mechanism is also doing a lot in this area, as the countries that have signed up can now keep an eye on each other, making the whole process of development a lot more open and transparent. These important achievements have assisted in promoting an environment of good corporate governance on the continent.

In closing, what you would like your legacy to be from your time as MD of First Bank of Nigeria?

I would like to be remembered as the Chief Executive who played a great role in propelling FirstBank into the future and helped to strengthen the bank's position as the clear leader in the Nigerian banking industry; who improved customer and staff satisfaction.. Clearly, our people are our greatest asset, and I believe that I have played a crucial role in developing a large number of our staff in strategic positions. I want to be remembered for having helped to nurture a culture of good corporate governance, promote excellent service delivery, enhance shareholder value and accelerate the bank's growth. I wish to be remembered for all of these things.

Any final messages for the 1.5 million readers of the Independent, potential investors or clients in the UK?

I invite them to come to Nigeria to see for themselves the achievements we have recorded, particularly since the start of the new democratic dispensation. To form an opinion on Nigeria based on reports in the international press would mean missing out on the huge opportunities that are available in the country. In view of this, therefore, I invite you all to join in the success of our bank as an investor, client or partner. Indeed, we are a solid institution with a very bright future.

Mr. Ajekigbe, thank you for your time.

Thank you.