Sterling Bank Obtains CBN Nod To Spin Off Non Interest Banking Arm, Holdco

Sterling Bank Plc on Monday informed investors through the Nigerian Stock Exchange (NSE) of an Approval In Principle from the Central Bank of Nigeria (CBN) to enable it restructure into a holding company.

This, the bank noted is part of efforts to spin-off its non-interest banking window to compete better in the nation’s fledgling ethical banking space with fewer competitors and growing customer base. Recall that the bank began testing the waters over six years ago in January 2014 when it opened a non-interest banking window, which it now seeks to spin-off into an autonomous entity.

The move, it believes, will incorporate “efficiencies around operations and financing efforts that will support the individual businesses reaching full potential.”

In a statement by Temitayo Adegoke, the Company Secretary, the bank said it is currently in the process of meeting set conditions for the final regulatory approval.

It hopes to achieve such operational efficiencies through increased portfolio diversification, enabling the NIB and other non-core businesses achieve greater results based on focused management of the distinct businesses.

The holding company structure, the statement noted, would entrench he bank’s “business model premised on social capitalism where we believe that private sector capital and market-based tools will offer the best types of solutions to Nigeria’s most pressing social and environmental challenges. The Holding Company gives us the structure to explore our business model further.”

Subject to final regulatory approval, the conventional bank is expected to “focus on building skills and using technology to provide solutions in the areas that are critical to development in the country – Health, Education, Agriculture, Renewable Energy, Transportation (HEART).”

The Non-Interest Bank, on its part, “will focus on building partnerships that connect individuals and businesses leveraging technology to create business optimization while solving for an individual’s daily financial needs (while) the overall business will focus on social impact, corporate responsibility and religious compliance in its dealings.

The group’s “digitization drive will create an enabling environment for both financial institutions to grow while providing services and support to build efficiencies in different ecosystems.

“The execution of our plans is fully dependent on our interwoven operating model of Agility, Specialization and Digitization. Essentially, for us to be successful, we require people who are adaptable and knowledgeable running processes that are simple, quick and tech-led to ensure efficiency”.

Abubakar Suleiman, MD, Sterling Bank Plc

The move is also expected to result in the consolidation of key functions like compliance, risk management and other support functions, yielding improved prospects for individual business growth; in addition to enhancing corporate governance which serves to promote a consistent culture across the group and quality of service to customers thereby facilitating sustainability of earnings.

There will also be better access for the group to access capital by leveraging the consolidated financial strength of the group which would have been otherwise difficult for each individual subsidiary company.