Atedo Peterside has made an outstanding mark in Nigerian banking by being the man who held the light and led the way to investment banking. That aspect of knowledge-based financial services delivery was yet in its infancy in Nigeria when he set out on a mission to make it big. He picked it up from infancy and led it to maturity. That earned him the reputation as the father of investment banking and the astute dealmaker of corporate Nigeria.
That line of financial services – raising capital, underwriting, corporate restructuring, including mergers and acquisitions and other ancillary services was not a well trodden path in the Nigerian market of the 1980s. While the retail banking market space was then overcrowded, investment banking was yet at a developmental stage. Peterside looked a different direction from other bank promoters and decided to set up Investment Banking & Trust Company Ltd in 1989.
Anybody could set up a bank, collect deposits, lend money and collect interest. However the skill and expertise needed to structure and close deals in corporate positioning do not lie in the realm of anybody. To be able to see what competitors aren’t seeing or to do what they can see but unable to do is the distinguishing mark that Peterside has registered in Nigerian banking. He is the man behind a number of the biggest investment banking deals that have happened in the country.
Investment banking is a knowledge-based business, not a large asset carrying endeavour as do commercial banks. The business doesn’t need a relatively large capital investment neither does it need building a large network of branches and carrying so many people on the payroll. Peterside therefore didn’t have to carry a large portfolio of risk assets, neither did he have to scramble for deposits to earn his income.
While other banks scurried for deposits to build large earning assets, he assembled a couple of other young professionals and built the income capacity in the head. With a small office on the Marina, he developed the capacity to package deals of any size and nature. The seed of a leading investment banking institution in Nigeria had just been sown and the dealmaker had taken charge.
His bank did the biggest deals in the market in the areas of capital raising, mergers & acquisitions, divestment, project financing and corporate restructuring. It structured and executed many landmark transactions, which attracted local and international recognitions of both the bank and its leader. In 1996, for instance, the bank sealed about 80 per cent of the major mergers and acquisition deals in the country valued at about N10.5 billion.
By the nature of the business, investment banking thrives on fee income at low operating cost. That positioned IBTC as a leading bank in terms of ability to convert revenue into profit and was clearly unmatched in the industry on rates of return.
The massive bank closures that quickly followed the removal of entry restrictions in the late 1980s happened because most banks competed with themselves excessively on basic commercial banking services. Peterside’s IBTC wasn’t part of this crowd and was therefore equally shielded from their troubles.
It is a business founded on professionalism and Peterside anchored it on integrity. Growth naturally followed to the point of IBTC becoming a reference point in modern investment banking in Nigeria. It undertook landmark public and private sector capital raising deals and carried out major corporate restructuring mandates.
The Opobo-born investment banker attended City University, London where he read economics. He also attended London School of Economics and Political Science from where he obtained a second degree in economics. He also attended the Owner/President Management Programme of the Harvard Business School. On return to Nigeria, he started his banking career with the then NAL Merchant Bank where he rose through the ranks to the position of assistant general manager in 11 years.
Many bankers did shift focus from the business that earned them success to the money that came. Consequently, they lost the business and the money went too. Peterside never deviated from the path of professionalism and never joined the flamboyant parade of bankers in a profession that is founded on conservatism. He maintained surefootedness and a scholarly disposition that set him apart from his contemporaries in the financial services business.
Building a successful bank is one face of the coin; the other is preserving it into the future amidst the often tempestuous regulatory changes that Nigerian banking has witnessed through the years. Many people did build banks that either closed shop of disappeared into somebody else’s brand. Peterside is one of the few Nigerian bankers that have succeeded in navigating their institutions through the many operating and regulatory hurdles to stand them on a solid foundation.
Peterside’s IBTC was jolted from its clearly defined purpose of investment banking by the Soludo-led banking consolidation policy of the CBN in 2004. The investment bank didn’t need the minimum capitalisation requirement of N25 billion to do its line of business. But regulation said it has to have it and so survival became an expedient issue at stake.
The result was a merger with Chartered Bank, which was an admixture of investment and commercial banking. Chartered Bank brought in a portfolio plenty of bad loans that diluted the quality that IBTC used to know. It was a case of buying by compulsion a product not needed. To the extent that it guaranteed the scaling of the regulatory hurdle, it provided a way forward.
It was however a way forward that was strewn with great challenges. A forced change of operating direction had happened without the necessary retooling to secure the retail banking expertise needed to provide effective leadership in the new direction. Going forward therefore presented even a greater challenge for Peterside than crossing the consolidation bar.
The change of direction required a new type of leadership, which Peterside did not find in house even in the post consolidated structure. The dealmaker, who had closed complex deals for others, had a big challenge in his hands and that was how to structure a complicated one for himself. It was a deal in which he would be out and someone who had the expertise to drive the changed operating structure had to be in.
Many people in Peterside’s shoes would have chosen to hang on to the management of the enlarged bank until they drive it under. He understood that the new leadership needed should have majority ownership and he was ready to concede. This is a great sacrifice for the future, putting the interest of the bank ahead of his.
This paved the way for structuring the acquisition of the enlarged IBTC-Chartered Bank by Standard Bank of South Africa in 2007. The deal, which put a seal on Peterside’s distinguished career, remains a landmark in the history of corporate mergers and acquisitions in Nigeria. His parting words at the end were “we are happy, our future is secured”.
Peterside quit the scene in order to secure the future of the bank – a decision which could have saved so many banks that failed had their CEOs decided to make a similar sacrifice. He has firmly established himself as the man that revolutionized investment banking in Nigeria and there is no way the history of Nigerian banking can be correctly written without detailing the professionalism he added into it and the selfless example he has displayed in the business.