Elumelu, Ovia’s return to UBA, Zenith boosts lenders

From all indications, the policy of the Central Bank of Nigeria (CBN) limiting the tenure of chief executives of banks to maximum of 10 years, with an option of returning in non-executive capacity after three years, may have put United Bank of Africa and Zenith Bank ahead of competition given the return of Tony Elumelu and Jim Ovia as chairmen of their various institutions.

Already expectations are high in the industry that the return of Elumelu and Ovia will further turn the fortunes of the banks and move the two institutions, which are doing well to greater heights.

This is so because analysts believe that given the pedigree of the duo as distinguished bankers and their international network, the two banks will enjoy high ratings, both within and outside the country with the attendant impact on the industry as a whole.

Most importantly, some analysts say last week that the era of appointing figurehead chairmen of companies for political patronage as was the case some institutions may be over as the development will engender confidence with the attendant value addition to stakeholders.

The Board of UBA had two weeks ago appointed Elumelu, as chairman, succeeding Ambassador Joe Keshi. Elumelu retired as group managing director and CEO of the bank in 2010, following the introduction by CBN of the 10-year tenure limits for bank CEOs, after serving as the chief executive of the group for 13 years.

He is widely regarded as one of the most influential business leaders in Africa and has developed a reputation for identifying value and bringing a long term investment orientation and discipline to sectors critical to Africa’s development, including financial services, power, oil and gas, agribusiness, real estate and hospitality.

On July 16, 2014, Ovia returned to Zenith Bank as its chairman and few days after, he was welcomed with a stellar performance of N57.85 billion profit before tax (PBT) in the first half year result of the bank. The second coming of Ovia to the bank he founded after managing it for over 10 years, analysts believe, will enrich the operations of the bank. Some analysts say last week that Ovia’s second coming will make the bank play more prominent role at both the regional and internal levels more than it is playing presently. This is so because they argue that expectations are high considering the wide knowledge and experience of Ovia, and his wealth of experience in management of both human and material resources.

He founded the bank in 1990, which has since grown astronomically to become one of the leading financial institutions in Africa, currently ranking as the sixth biggest bank in the continent. The bank grew its shareholders’ fund of N20 million in 1990 to N509.25 billion, at year end 2013. Today, the bank continues to thrive on strong values, brand equity, corporate culture of professionalism and service excellence, which are the foundations upon which it was built.

Atedo Peterside, another renowned banker and erstwhile managing director of the defunct IBTC, had to assume the position of the chairman of the consolidated IBTC Stanbic Bank, after the merger of his bank with Standard Bank of South Africa.

In an apparent endorsement of his stewardship as the chairman of the bank, he was last week appointed as a non-executive director of the Standard Bank Group Limited board as well as that of the board of The Standard Bank of South Africa Limited.

Underscoring the importance of the new assignment, Peterside said last week that he would be shedding some of his private sector responsibilities in Nigeria in order to discharge his new overseas role effectively.

However, CBN has been advised to increase the number of independent directors on the boards of all systemically important banks, to which the two banks belong so as to moderate the influence of core investors sitting as chairmen of their boards and also to ensure that higher level of corporate governance is maintained.

Johnson Chukwu, managing director and chief executive, Cowry Asset Management Limited said: “The return of Tony Elumelu and Jim Ovia to the boards of UBA and Zenith Bank, respectively as board chairmen should bring a lot of intensity to the boards of these banks given the personality attributes of both men.”

“Ovia and Elumelu are credited with growing these banks into their current preeminent positions in the Nigerian banking industry. Both men are imbued with drive, energy and vision required to drive their institutions to the next level particularly during this turbulent period in the industry. In addition, they both have the political reach to influence policy direction in the Nigerian banking industry. There is no doubt that as the chairmen of their banks, they will bring these attributes to bear in the running of their respective institutions. It should therefore, be expected that the fortunes of UBA and Zenith should improve in the immediate future with the return of their former managing directors as chairmen of their Boards,” Chukwu further said. 

However, he added that “To moderate the influence of core investors sitting as chairmen of banks, the Central Bank may have to impose a higher percentage of independent directors on such banks. To make for an even playing ground, CBN can require all systemically important banks to maintain have at least 40 percent of their Board members as independent directors. Such policy will ensure that the banks maintain strong corporate governance standards without compromising the drive for legitimate businesses.” 

Kenneth Iwelumo, managing partner, CKX Partners Limited, said: “The implications are positive. The two recent examples of former CEOs returning as Chairmen is a very positive development. They built the said banks from ground up. They have tremendous banking experience – over 30 years. They are well connected in terms of government and private sector people. They are major shareholders in the banks in question. They have huge goodwill. They are ambitious and have a great desire to excel. They have a vested interest in ensuring that their banks do well. Being on the board allows them to provide constructive advice and ensure that their respective banks participate in ventures that will assist in the development of Nigeria.”

Speaking further, Iwelumo, a former senior vice president, Merrylinch Bank of America, said: “Experience is an attribute that is in short supply in Nigeria. These gentlemen bring badly needed corporate experience and a long term macro overview in banking business.”

However, he was of the opinion that CBN already has a plethora of rules and regulations covering corporate governance.

Bismarck Rewane, chief executive of Financial Derivatives said: “Banking in Africa is a dynamic, exciting and an increasingly competitive and challenging industry.”

“Tony is visionary, courageous and has shown an ability to both, think for the long term, and to create significant shareholder value. The drive, dynamism and competitiveness that we saw during his period as CEO of UBA, was one of the catalysts of the enormous changes in the Nigerian banking sector,” Bismark added.

Farouk Umar, president, Association for the Advancement of Rights of Nigerian Shareholders (AARNS), said Elumelu’s appointment “bodes well for UBA and the banking industry, now and in the future. Elumelu is a transformer and value creator for shareholders. We are excited about his return.”

Sola David-Borha, chief executive of Stanbic IBTC Holdings PLC, expressed pleasure over the appointment of Peterside, chairman and founder of Stanbic IBTC Bank PLC to the board of directors of Standard Bank Group.

“The Board and Management of Stanbic IBTC wish him all the best as he takes on this additional role overseas,” she said.

Phillips Oduoza, group managing director/CEO UBA, said Elumelu’s return would “bring a depth of knowledge and experience in the African financial services industry that is second to none.”

“We are privileged to have him lead the Board at this critical stage in our development,” Oduoza added.

John Omachonu