5 August 2012

Nigeria: Osibodu - the Last Man Standing Takes a Bow


Relying on the yet-to-be-confirmed exit time-table for the outgoing managing director/chief executive of the Union Bank of Nigeria Plc, Mrs. Funke Osibodu, it is convenient to start bidding her goodbye to the financial institution where she has been calling the shots since August 2009 when she was recalled from retirement to run the bank as a turnaround manager. According to sources, Osibodu is to proceed on terminal leave in September when she is expected to hand over the mantle of leadership in one of the Nigerian oldest banks to her successor, touted to be the incumbent chief executive, Citi Bank Nigeria Limited, Mr. Emeka Emuwa.

Osibodu, like eight other former bank chiefs, was recalled from retirement in 2009 by the Central Bank of Nigeria (CBN) Governor Malam Sanusi Lamido Sanusi following the removal of chief executives of banks adjudged to have failed the joint stress test conducted by CBN and the Nigeria Deposit Insurance Corporation (NDIC) shortly after Sanusi took over the mantle of leadership at CBN.

The Big Stick

The bank chief executives swept off in the aftermath of that stress test included Erastus Akingbola (Intercontinental Bank Plc); Okey Nwosu (Finbank Plc); Sebastian Adigwe (Afribank Plc); Mrs. Cecelia Ibru (Oceanic Bank International Plc); and Bartholomew Ebong (Union Bank of Nigeria Plc). Others were Mr. Francis Atuche (Bank PHB Plc), Mr. Ike Oraekwuotu (ETB Plc) and Charles Ojo (Spring Bank Plc).

Turnaround Managers

New helmsmen appointed to take over from the disgraced eight bank chiefs were Nebolisah Arah (Afribank Nigeria Plc), Susanne Iroche (Finbank Plc), Funke Osibodu (Union Bank of Nigeria Plc), Lai Alabi (Intercontinental Bank Plc) and John Aboh (Oceanic International Bank Plc). The rest were Mr. Cyril Chukwumah (Bank PHB Plc); Mr. G.O. Folayan (Equitorial Trust Bank Limited); and Mrs. Sola Ayodele (Spring Bank Plc).

Ordinarily, the banking public expected the turnaround managers to have concluded their assignments under their first two years in office. The task included repositioning the bank in a way to win their customers back, operate the banks in a manner that will take them from their negative performance to profitability as well as midwifing the sale of the institutions. Although some of the banks were able to get buyers, three of the banks namely Afribank, Bank PHB and Spring Bank were deemed grossly incapable of attracting credible buyers. Consequently, in 2011, the affected banks were nationalised in a rescue package which the regulatory authorities said was informed by the need to safeguard customers' deposits. They therefore metamorphosed into Mainstreet Bank Nigeria Limited, (Afribank), Keystone Bank (Bank PHB) and Enterprise Bank (Spring Bank Plc.) Expectedly, the change of ownership led to the end of the tenure of CBN-appointed chief executives of the banks as the new boards were constituted for the three bridge banks. Consequently, Ms Faith Tuedor-Mathews, Oti Ikomi and Ahmed Kuru were appointed as managing directors of Mainstreet Bank Limited, Keystone Bank Limited and Enterprise Bank respectively. Chief executives of other banks that succeeded in attracting new buyers also lost their jobs following the spate of mergers that followed. First City Monument Bank combined businesses with Finbank Plc; Access absorbed Intercontinental Bank Plc, while Sterling Bank took over the old Equitorial Trust Bank Limited.

The Last Surviving CEO

As at today, Osibodu stands out not only as the surviving chief executive of the old rescued banks that came on board in 2009, but also as a chief executive who has been able to retain the identity of the institution handed over to her by the CBN. This is because Union Bank is the only bank out of the eight intervened banks that was able to retain its stand alone status and name.

The names of other rescued banks have gone into oblivion after the ensued mergers and acquisition. It is on record that her romance with a consortium of investors, African Alliance Consortium, which now operates under the name, Union Global Partners Limited opened the way for the injection of $750 million into the bank. Banking affairs watchers had predicted a tough time for Osibodu at the time of taking charge at Union Bank because of a number of reasons. First she was inheriting an old bank that had failed to shed its toga of old generation bank at a time when other old banks like First Bank of Nigeria Plc and United Bank for Africa Plc were catching up with the trends in the banking industry. So it was no surprise that Osibodu had to spend considerable time in bringing staff and management of the bank to the level expected of the bank in the emerging dispensation in Nigerian banking industry. One of the steps taken was the remodeling of the bank's branches. She also brought into the bank a regime of courteous and efficient service delivery.

This is obviously one of the reasons why the bank can now be seen to have changed from an old generation institution to a bank that is ready to compete with the likes of GTBank Plc and Zenith Plc.

Union Bank's Q1 Results

Union Bank has also grown from a negative capital and profit position to a highly-capitalised and profitable bank as shown in the bank's first quarter results for 2012. For instance as a mark of the success of its recapitalisation and restructuring, Union Bank was able to grow its group's net profit by 69 per cent to N8 billion in the first quarter of 2012 compared to 2011. Earnings analysis showed a bright outlook for the bank with basic earnings per share of N1.17 in the first quarter 2012 compared with 18 kobo posted in comparable period of 2011 and a loss per share of N14.06 recorded for the full-year ended December 31, 2011. Shareholders' funds stood at N193.84 billion in 2012 compared with deficit of N123.7 billion in the first quarter of 2011. The first quarter performance also showed appreciable accretion above shareholders' funds of N186.99 billion recorded at the end of 2011. Total assets stood at N1.1 trillion with deposit of N565.34 billion in 2012. Osibodu attributed the feat to the efforts by the board and management to return the bank to its place of pride as a foremost financial institution that consistently creates value for all stakeholders.

She led the bank's turnaround-assets recovery, recapitalisation, rebranding and restored customers' and investors' confidence in the organisation. The outgoing chief executive led a process that for the first time in the history of Nigeria culminated in the largest international consortium of foreign investors investing $500 million in a Nigerian bank, and in Nigeria despite the world economic crisis. Analysts attributed the investments by the core investors to the bright prospects of the bank as inspired by the Osibodu-led management.

Union Bank's stock, which is trading at N4.39 per share on the Nigerian Stock Exchange (NSE) as at last Thursday, achieved its longest winning streak in 10 weeks on July 18, gaining 22.6 per cent to N4.24 at the market close, the longest streak of gains since May 7. This was attributed to rising investor confidence. "Those who are buying the stock (Union Bank) are doing so on speculation that the bank will make a turnaround," Raheem Mohammed, a broker at Kundila Finance Ltd. recently told reporters. Analysts said Mrs. Osibodu leveraged on her experience in business turnaround to return Union Bank to its pride of place as one of Nigeria's most formidable financial institutions.

Osibodu... Banking Guru

Osibodu was the managing director of MBC International Bank and Ecobank Nigeria Plc and later joined the board of the Ecobank Transnational Incorporated (ETI). She was early this year named by Financial Times of London as one of World's 50 Leading Businesswomen. She was the only African woman and Nigerian that made the list. According to the global jury of experts constituted by FT, she was chosen in recognition of her achievements at Union Bank. The jury said, "Osibodu was responsible for strengthening the management of the bank, improving discipline and ensuring transparency." The industry will be watching her next move with keen interest; no doubt she will be courted by boards of leading companies to serve on advisory capacity especially in this time of worldwide economic downturn.

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