You can see that it was a long challenge we had at the time. But what we did was that we sat down in the bank and formulated strategies within the context of the activities and the time of the activities that will be accomplished to be able to meet the N25 billion capitalisation. And the summary of that plan which we concluded by August 2004 was as follows: we believed that if we needed to have N25 billion by December 2005, by December 2004 which was just under six month from the date of announcement, we ought to have at least N10 billion and also by the middle of 2005 which was June. We also should have at least N15 billion, so we can have just a gap of N10 billion. If any bank didn't meet those benchmarks at that time, it was going to be difficult for it to have N25 billion by December 2005. Now, for us then, the big challenge was how do you get N10 billion by December.
At the time we were not even a quoted company. We were a private company and if we then try to do an IPO, we realised there's a time required in terms of activities you need to undertake for you to have to do an IPO. So, we decided to do a private placement. So our plan was do a private placement. After a placement, the Year End for us at the time was April. So by April 2005 with a profit retention, we would be at about N18 billion and then seek to merge or acquire another institution to just cover the gap of N10 billion and that's exactly what we did. What did we do with about N5 billion or thereabout as at the beginning of consolidation, we did a private placement and some people raised N9.5 billion by December. So, that took us to about N14 billion or thereabout and with the profit retention for the year ended April 2005, we were at about N18 billion.
We then acquired Lion Bank which at the time had about N3.5, N4 billion and that took us to about N23 billion and also as we were acquiring Lion Bank, we did an IPO and raised about another N4 billion thereabout. And all these was done according to our timetable. By December 2005, we had about N28, N29 billion and that's how we survived the consolidation. You can imagine why you have to go out to prepare yourself because actually if you are going to raise capital you are almost like going for a beauty parade because every other bank was in the market trying to raise money. And so, we had to prepare ourselves soliciting for investors in the bank and by the time we concluded that by December, we were prepared to have our first listing to be listed by March/April 2005 to enable us then do an IPO. So, for that whole eighteen months you can imagine how many hours of sleep we were getting everyday. So, I think that was the biggest challenge I had and my colleagues as well."
He admitted somewhat that consolidation opened the doors to opportunities most banks hitherto didn't know existed. "Well we knew that the market was largely under banked and also very fragmented with about 89 banks vying to explore opportunities in financial industry space. Because each of us didn't have enough capacity prior 2005, we had challenges trying to take advantage of available opportunities."
Banks Running Amok With Cash
After consolidation it seemed as if the banks became saddled with too much cash competing among themselves, immediately started targeting N100 billion and even more. The banks became reckless because they had too much cash than they knew what to do with and were responsible for the bubble capital in the market. His response was measured as he chose his words very carefully. Hear him: "I will say it was to an extent but that's not the entire picture, more so at a time that the entire global economy was facing a very major boom and investors were seeking return both from the developed market and also from the emerging markets, but more for the emerging markets because they had better returns from the emerging market.