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FirstBank Launches Chatbanking On Whatsapp

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Determined to ensure effective service to its customers, First Bank of Nigeria on Thursday unveiled its chat banking on WhatsApp.

Mr Chuma Ezirim, the bank’s Group Head, E-Business, said the application would enable customers leverage the real-time messaging capabilities of the WhatsApp Business Solution to check their account balance.

Ezirim said that customers would also leverage on the solution to perform simple banking queries.

He said in a statement in Lagos that the launch which took place on Aug. 1 was at its pilot phase and would be available to a select group of customers after which it would be made available to all customers.

Ezirim said additional details on the solution would be provided in the coming weeks as customers are encouraged to keep interacting with the bank on its various social media channels for updates.

“Customers expectations are constantly changing and it is our duty as a customer-focused bank to ensure that our customers are provided with the means to carry out banking services through any channel they desire.

“We are constantly seeking new ways and opportunities to meet customers at their preferred touch points and we understand our customers are actively engaged on WhatsApp.

“With First Bank chat banking on WhatsApp, it is not just about staying connected with friends and loved ones, but also keeping in touch with your bank anytime and anywhere you are,” Ezirim said.

First Bank is the premier bank in West Africa with about 14 million customer accounts and also provides a comprehensive range of retail and corporate financial services with over 750 business locations.

It has international presence through its subsidiaries, FBN Bank (UK) in London and Paris, FBNBank in the Republic of Congo, Ghana, the Gambia, Guinea, Sierra-Leone and Senegal as well as a representative office in Beijing.

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FirstBank Hits 27,000 Banking Agents, Deepens Financial Inclusion Across Nigeria

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Nigeria’s premier bank and leading financial services provider, First Bank of Nigeria Limited has announced that it now has over 27,000 Agents on its Firstmonie Agent Network. This feat reinforces the Bank’s steering role at promoting financial inclusion in the country. The over 27,000 Firstmonie Agents are present in almost all Local Government Areas across the country.

In line with the Financial Inclusion objectives of the Central Bank of Nigeria (CBN) to bring financial services closer to Nigerians, Firstmonie Agent Network is a unique channel designed by FirstBank to solve the challenge of access to financial services. Firstmonie Agents are empowered with secured digital channels to provide basic financial services such as account opening, Cash-In, Cash-Out, Funds Transfer, Airtime topup, and Bill payments to customers across the country.

FirstBank, through this Financial Inclusion drive, is making very impressive impact on job creation, women and youth empowerment, and entrepreneurship development – fundamental pillars of overall economic development.

Alhaji Bashir Aliyu Muhammad Rimin-Gado, a Firstmonie Agent operating from Rimin-Gado area in Kano State said, “I have been with Firstmonie since they started and I can say that it has been a life changing experience, I have been able to build trust of the communities around me as many workers in my area have forgotten the last time they visited any bank branch for basic banking services. I am a proud employer of labour and as a result my staff are well paid and comfortable.

Sharing his excitement on the impact FirstBank Agent Banking has had in his immediate community, another Firstmonie Agent in Abia State, Ephraim Osinachi of Jozzy NetComputer Services. Nig Limited, said, “FirstBank’s Firstmonie has created an enabling opportunity for dwellers of my immediate community and neighboring towns to carry out banking transactions with less time, money, resources and risks as people don’t have to waste time embarking on long journeys to the city, added to the dangers of being robbed on the highway.”

“My experience as a Firstmonie Agent has been a rewarding one, as I receive hundredsof Thank You and God bless you from customers each day, because of the relief the Agent Banking gives to them. The people of Ukwa will always remain grateful to CBN and FirstBank for bringing banking to their door step with Agent Banking”, he concluded.

On the back of its drive to deepen inclusion through Agent Banking, FirstBank has also partnered with National Union of Road Transport Workers (NURTW). The (NURTW) partnership seeks to leverage the human traffic and commercial activities at various motor parks across the country to ease access to financial services. First Bank is also in partnership with Azuri Technologies Limited, an off-grid power distribution company to make access to off-grid power easy, especially in rural communities, as well as other institutions, who are seeking to provide resources to cushion the effects of economic and social shocks on low income individuals.

According to the Chief Executive Officer of First Bank of Nigeria Limited, Dr. Adesola Adeduntan “Our Firstmonie Agent Banking network, spread across the nook and cranny of the country, is a demonstration of our resolve to promoting financial inclusion and business in the country. This indeed has been achieved with the concerted effort and commitment of our partners and registered Firstmonie Agents to taking banking to Nigerians regardless of where they are. With them, we are committed to leave no stone unturned at bolstering the economic involvement of many more Nigerians, especially through our robust electronic services like *894# USSD banking, Firstmobile, Firstonline and ChatBanking on WhatsApp”

FirstBank recently announced that over N1 trillion Naira had been processed through the Agent Banking Network. The First Bank to achieve this milestone.

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NAFDAC Bans Sniper In Open Markets, Supermarkets

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As more people continue to use popular agricultural pesticide, Sniper to commit suicide in the country, the National Food, Drug Administration Control (NAFDAC) has ordered agro-dealers to withdraw the product from open markets and supermarkets.

NAFDAC’s Director, Veterinary Medicine and Allied Products Directorate, Dr. Bukar Usman, disclosed this on Wednesday at the International Institute of Tropical Agriculture (IITA), Ibadan.

Usman, speaking during the launch of a new herbicide for cassava farmers, “Lifeline”, by UPL, Sprinfield Agro and IITA, said that the agency had asked agro-dealers to stop the sale of the product in open markets and supermarkets.

According to him, sniper is an agro-cultural product meant to be used only in the farms and not for households.

He urged manufacturers and dealers to cooperate with NAFDAC to mop up the 100ml size of the product which were cheap and easily acquired.

He maintained that the directive was not an outright ban of the product but a restriction of its use and availability to farms alone, adding all agro-chemicals meant for farms should not be used in households.

“There are appropriate products for the control of mosquitoes and other household pests” he pointed out.

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The Sad Inside Story Of Heritage Bank

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Three months ago Proshare had cause to commit resources to investigate and produce an hitherto unpublished Confidential Report on Heritage Banking Company Limited, in direct response to the promptings of the advisory board members who wanted to know the true state of the bank which had another financial institution handling clearing operations for it at some time.

By this time, and curiously; it wasn’t such a big news that some of the bank depositors had experienced recurring challenges with withdrawals and staff exits did little to help matters. Yet, the restraint was important in order to ensure and support financial system stability as well as give the institution an opportunity to execute its resolution strategies without hindrance. After all, the institutional frameworks were in place to protect depositors and the system in general.

The task involved a lot of stakeholder engagements including sources we understood to be in a position to recognize, appreciate and make informed decisions. The revelations offered little comfort from history to, interventions up to the current state. We limited ourselves however to facts, data and evidence and submitted the report.

Further to the completion of this initial review, and in the interest of giving the financial system an opportunity to resolve the bank’s challenges through normal regulatory intervention and management effort at recapitalizing the institution or determination of the banks going concern status through a merger and acquisition (M&A) arrangement; the report remained private.

The burden of a moral hazard however appeared a bigger burden than tolerable or envisaged, especially given the evident ‘sailors survival’ approach that appears to have kicked in as seen through senior management exit, non-improving conditions, non-progressing talks around mergers and acquisitions; and recapitalization plans.

It has become compelling to highlight concerns about the bank formally; with the hope that ‘some intervention’ can happen to alter the trajectory of an inevitability. and remove the spectre of a bank waiting to die that overshadows the institution, unfortunately.

Proshare’sinvestigation into the bank revealed a few major concerns related to corporate governance and operational stability/sustainability. The primary issues included, but were not limited to the following:

  • The acquisition of Enterprise Bank which is turning out to be a major strategic error;
  • HBL’s non-performing loans (NPLs) portfolio, which are amongst the most challenged in the industry. Impairment charges in H1 2018 was estimated at N37.5bn but by year end, we extrapolated that the figure should settle around N634.5m;
  • The bank posted an operating loss before tax of N38.5bn in H1 2018 and a loss of N4.4bn in the unaudited figures for the month of December 2018;
  • The bank’s leverage has been a major sore point for management. The banks debt to equity ratio was -0.17. The negative value reflected negative shareholders fund which could be impaired by as much as $1bn;
  • Equity capital has been virtually wiped out by accumulated losses, a legacy issue;
  • The bank’s regular recourse to the CBN’s short term borrowing window highlights persistent liquidity resolution issues;
  • Corporate governance has been a challenge as a number of the bank’s directors have allegedly been involved in a series of poor performing insider loan transactions, and little known about such resolutions (if any);
  • The bank’s 2018 unaudited financial figures shows a dire situation in several operational metrics; and
  • The bank has not been engaged in direct cheque clearing for a while, HBL’s instruments have been cleared through a third party first tier bank which got a full CBN guarantee against clearing loses.

IEI’s Pound of Flesh 

It is instructive to recall how this sorry pass all began. Records indicated that Heritage Bank was in a difficult place from the start. It’s managing director and chief promoter, Ifie Sekibo, was the former Executive Vice Chairman (EVC) of International Energy Insurance (IEI) Plc from where a sizable amount of the acquisition money for the old SGBN was raised. Sekibo has been in a stretch of back and forth with the Board of his former company on this subject, as the directors of the company insist that Heritage Bank should be considered as part of the assets of the Insurance group; going as far as alleging that Sekibo had invested the insurers money in the bank without the approval of then Board members; or indicating/stating IEI’s consideration in the bank acquisition, if any.

The matter of using IEI resources to acquire the former Societe Generale Bank of Nigeria (SGBN) which was renamed Heritage Banking Company Limited has been the subject of a longstanding Economic and Financial Crime Commission (EFCC) investigation and continues to hound the bank’s CEO till date. Our background work on the matter then, enabled us to sight documentations that lends credence if not validity to the role played by IEI as reflected in presentations made to its board.

Proshare Nigeria Pvt. Ltd.

Source: What Happened To The N8bn Raised by IEI Plc in 2007? – Shareholders – Proshare, May 11, 2015

Mr. Sekibo has over the past few years tried to work out an amicable settlement with the IEI Group and directors, but matters are still fluid with necessary concessions being made on both parts. That said, the CEO’s travails still continue as he has had to deal with a few other issues concerning related-party transactions that have crystallized and left the bank’s books in a difficult position.

Weak Governance and Control 

Heritage Bank’s problems have most certainly not been about Sekibo, alone. Far from it, the bank’s Board of directors (including former directors) has created a permissive culture that led to this.

Heritage Bank’s erstwhile chairman was also known to have used the banks tills to acquire two electricity distribution licenses’ the underlying cash flow difficulties of the businesses were subsequently and promptly transmitted to the bank, resulting in large repayment defaults. Indeed the loans have become ‘hardcore’ non-performing assets sitting on the bank’s books and creating both liquidity and profitability difficulties.

Managers of the bank, particularly branch managers, were in the past profligate in granting authorized and unauthorized loans to associates. Temporary overdrafts (TODs) routinely skipped repayment dates while structured loans also habitually missed the terms of the loan indenture, resulting into phantom profits and worsening liquidity.

Huge public sector deposits were beauties turned into beasts. The introduction of the Treasury Single Account (TSA) policy by the federal government in 2015 subsequently left the bank’s Asset and Liability Management (ALM) position in tatters.

The TSA policy did four things to undermine the bank’s fiscal stability:

  • Sharply reduced the bank’s deposits;
  • Significantly raised the banks cost of Funds (CoF);
  • Reduced the bank’s ability to give short term loans; and
  • Weakened the bank’s already fragile profitability.

Since the bank was already nurtured on a culture of entitlement, finding strategic options to wriggle from, under the weight of government policy and patronage became impossible.

Heritage Bank’s narrow retail base and its poor quality risk assets put inevitable pressure on profitability and liquidity. To compound matters, the bank’s internal control and compliance functions appears to have operated under a cloud of breaches than in the protection of standard corporate governance requirements, as directors willy-nilly violated single obligor limits. The poor internal control and audit process and administration at the bank thus complicated an already combustible bad loan and poor liquidity situation.

Coup de Foudre (Unintended Consequence) 

As a way out of its myriad of challenges, the bank fell in love with another entity, committing a tragic error. In a bold but ill-digested move, Heritage Bank decided to acquire the Asset Management Company of Nigeria’s (AMCON’s) legacy deposit money institution, Enterprise Bank, this was the decision that let all the evil spirits out of Pandora’s box. The acquisition of Enterprise Bank was the classic example of a Cobra Effect or a situation where a cure becomes worse than the original disease.

The decision to acquire Enterprise Bank for N56bn in 2014 resulted in unintended consequence. At the time, the bank’s Board rationale in acquiring Enterprise Bank from AMCON was to rapidly expand the retail end of HBL’s operations and reduce its cost to income ratio based on representations that informed their decision. That gambit has proven to be a disaster and a cautionary tale on acquiring distressed banks unfortunately.

The Enterprise Bank wedlock, as consummated, turned into a fiasco as it added a further two hundred (200) branches to the banks operations and cut interest expense while improving net interest income (see chart 1 below). This led to the following outcomes:

  • A sudden and significant rise in the bank’s bad debt to asset ratio;
  • A leap in the bank’s debt provisioning or loan impairment requirements;
  • A major rise in operational costs;
  • A rise in the banks cost to income ratio (99% in FY 2018, as against the 53% of a bank like StanbicIBTC). (See chart 2 below);
  • Stretching human capacity by lifting managers to their highest levels of administrative and technical (in)competence (The Peter Principle); and
  • Low Interest Income (as a result of slowing lending activities, (see chart 3) and high interest expense (as a result of a relatively low retail customer base, (see chart 4). 

Chart 1 Net Interest Income FY2018, Heritage Bank and StanbicIBTC Bank 

Proshare Nigeria Pvt. Ltd.

Source: Reported Financials Submitted / Estimated

Chart 2 Operating Expenses/Income FY2018,Heritage Bank and StanbicIBTC Bank

Proshare Nigeria Pvt. Ltd.

Source: Reported Financials Submitted / Estimated 

Chart 3   Interest Income FY2018, Heritage Bank and StanbicIBTC Bank

Proshare Nigeria Pvt. Ltd.

Source: Reported Financials Submitted / Estimated

Biting into the Heritage Saga – What The Report  Says

To understand the nexus between weak corporate governance, hubris, regulatory indulgence and Heritage Bank, the reader can send an email to research@proshareng.com for a copy of the report.

The report is an attempt at a  holistic look at the banks realities and lays bare the challenges that occur when individuals and institutions fail to live up to the exacting standards that are required to turn fragile ideas into enduring legacies.

The report was carried out as an intervention guidance to prompt action from the various parties and interested entities; all in the overall interest of the financial system.

To protect the financial system from contagion, the Central Bank of Nigeria (CBN) may need to move into the affairs of Heritage Bank and any of three actions are now plausible:

  • Wind up the institution with shareholders losing their money (as things stand today shareholder’s funds have been completely eroded) while depositors resort to the National Deposit Insurance Corporation (NDIC) for part recovery of deposited funds;
  • Find fresh investors interested in the institution and intermediate a best effort basis sale of exiting shareholder interest and recapitalization of the institution as a going concern; and
  • Liquidation of the institution and the running of the bank under a new franchise as a legacy institution managed by AMCON and available for purchase by third party investors.

The preferred solution would appear to be either the second or third options.

The second option would be of particular preference as it would not involve heavy ‘menu cost’ by way of rebranding but would involve a new ownership – Board of Directors and management staff. The fresh capital inflow would eliminate the need for initial treasury support from public coffers and would likely result in fresh/foreign capital inflows which would be beneficial for the local currency while also protecting domestic employment. This approach would appear plausible given that the CBN recently gave out new licenses to start up banks; premised on their understanding that there exist room for new entrants with fresh ideas and approach.

The CBN would however have to work fast if Heritage Bank is not to be a blight on the Governors no-failure record.

From indicators received, there is a small window to achieve a technical resolution of the Heritage Bank situation, lest it could find itself taking remedial action(s) at a much higher economic cost later than it would now.

Heritage banks weak liquidity, impaired shareholder funds and high loan impairment, according to analysts, needs action not tolerance. The time to act is now!  

Source: Proshare NG

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