Nigerian Banking – Personalities of Record

Nigerian banking has transformed beyond recognition from the simple financing of international merchandise trade with which it began in 1890 to the complex, borderless, high-technology driven operations of large banking institutions in a post consolidated trading. Banking business began in Nigeria as an expatriate seed to which Nigerians have, through the thick and thin of times, grafted in indigenous roots and extensions to give the banking business a truly Nigerian complexion.


Nigerian banking developed from a titration of expatriate conservatism and indigenous high growth ambition, which has produced some of the world fastest growing and well managed banks. Nigerians have truly revolutionised banking by accomplishing in just a quarter of a century what took over a hundred years for British-style banking to achieve.


Breaking out from narrow focus

The high growth and development ambition of Nigerians did not let the initial narrow focus of banking operations thrive in the country for too long. It was a constant source of pressure on expatriate banks to widen their focus to accommodate the financing needs of an economy hungry for growth and rapid development. As far back as that time, both bank promoters and businessmen discovered the missing link of customer service orientation in the expatriate banking culture.


When foreign banks could not be persuaded, Nigerians themselves took up the challenge to build their own banks. Many failed in their mission but some continued to press on with the desire to change the banking orientation from merchandise trade financing to economic and industrial development. There was a conviction that banking is supposed to provide support to the business of the people rather than drag the people to predetermined activities of interest to the bank.


A change of orientation

The Nigerian economy was at a rudimentary state at the time banking began here and there is a consensus that it couldn’t have changed much without a change in the banking orientation. The foundation for Nigeria’s blooming banking industry of today is said to have been truly laid at the very moment the first group of local businessmen found the courage and the boldness to organise a bank. The towering success of the banking business of today is credited to Nigerians who persevered in their vision to build customer friendly banks.


The establishment of the Central Bank of Nigeria is one of the most important phases in the development processes of Nigerian banking. It provided both the launcher and the anchor for growth and development of banking operations. Unlike in many countries where the development of financial markets preceded the setting up of the central bank, the Central Bank of Nigeria provided the pivot for the development of financial markets.


A move against tradition

Foreign financial experts wanted to see well functioning financial markets before recommending the establishment of a central bank in Nigeria. To the contrary, Nigerians needed the central bank to first create the instruments for trading in the financial markets and consequently spur the development of money and capital markets. That eventually was how Nigeria’s highly sophisticated financial markets of today came into being – a kind of shortcut strategy that established the markets in a fraction of years it took many countries to have their financial markets evolve.


Another major phase is the change of policy from indigenisation to privatisation in the changed economic environment of the 1980s. Economic philosophy changed from one of state controls to deregulation and banks were the main channels for ushering in the operating freedom.


Great innovations in banking services

Entry restrictions into banking were liberalised, which opened the floodgate to the entry of new generation banks. The development changed the operating environment and jolted the existing banks from the armchair into the competitive field. With competition and technology came great innovations in banking services and a shift towards customer orientated financial services delivery. Ever since, it has been from one level of product and service innovation to another and the Nigerian banking business has never been the same again.


The competitive market place of the 1980s and 1990s turned out to be a lethal combat, as the struggle for survival among banks raged in an economy that was undergoing a painful process of structural adjustment. There were a lot of casualties involving the closure of more than a quarter of the banks in operations.


The consolidation solution

The next phase that followed is banking consolidation – a regulatory induced policy to create fewer but stronger banks. Regulators faced a lot of challenges in dealing with the problem of financial distress in the banking system and the effort to tackle the problem culminated in a major reform and consolidation policy in 2005.


The reform provided the most pragmatic approach to rid the banking system of financial distress. By enforcing what then appeared to be over capitalization, the policy opened up the economy for massive foreign capital inflow into the financial sector and prepared Nigerian banks for the global financial crisis that followed in 2007/8.


There were two major accomplishments of the banking consolidation policy. The first is the return of Nigerian banks to the league of the world’s largest banks, a status they lost due to sustained exchange rate depreciation in the 1980s. The second is the empowerment of banks to compete in offshore markets. That takes Nigerian banking full circle – from a business expatriates came to do in Nigeria to a business Nigerians have added a lot of value and have taken it back to the rest of the world.


The return of caution

The current phase in Nigerian banking is the post financial crisis operations, which has witnessed another round of consolidation as well as sustaining growth of banks in terms of key operating figures. The first round of banking consolidation placed enormous financial resources in the hands of banks, which led to excessive risk taking and compromises of risk management rules in a number of banks. Many banks are still nursing the resulting loan loss injuries from massive lending to a few major sectors and industries.


Regulatory emphasis then shifted to strengthening risk management practices and reinforcement of corporate governance rules. The measures enabled bank managements to strengthen their risk management frameworks and moderate their risk appetite considerably.


A major strength for the banks in operation is an adequate level of capitalisation, which has provided them with a robust cushion to absorb unanticipated losses in an era that has witnessed the biggest credit losses imaginable. Also, every bank in operation now has built up a lot of managerial expertise, having withstood the vicissitudes of business boom and financial distress, physical expansion and consolidation, financial crisis and recovery as well as many regulatory shocks that kept on jolting the system all the way.


Who makes the list?

On the path of Nigeria’s banking history can be found names of great personalities whose contributions have helped to shape the business of banking from both operational and regulatory dimensions towards the attainment of its present glory. Combing and probing diligently through the times, Top 10 has fished out top personalities from a long list of outstanding men and women whose names ring a bell of respect and commendation for their roles in the growth and development of Nigerian banking.


The final top 10 leading personalities comprise living legends whose involvement in banking sums up to ‘mission accomplished’. They are people whose seeds have survived domestic and global economic and financial tempest and are yet abiding today, making even greater promises for tomorrow.