Could you tell us more about the bank and its vision?
Heritage Bank is an offshoot from defunct Societe Generale Bank. SGBN as we all know had some challenges with capitalization as a result of capital regime the Central Bank introduced in 2007 and before then the bank had some challenges with clearing.
We came in as core investors when all attempts to capitalize the bank failed. We made a bid to capitalise the bank and IEI Group was able to win that bid. We had negotiations with Legacy investors (former investors of the bank) and we came to agreement that we capitalize to the tune of N12 billion, take up all assets and liabilities of the bank, find some sorts of accommodation for the depositors whose money has been trapped for almost 10 years.
Our vision is simple. Today we might look quite new in the market but the idea of what the bank should be is clear from beginning. We want to be a bank that people will see that generational banking is a way to go. When we say generational banking we mean that it is not enough to amass wealth and the end somebody writes Will.
When he dies, relations fight over the wealth. We want a situation where life is continuation of what legacy left behind. At the end of day, the true wealth is our name. We are trying to refocus our clients to think in that line to leave a legacy in any form wealth, invention or factory which could be left for generations. Our objective is to be the best knowledge driven organization, technology and show the customer that service is what will make this possible. We can’t claim to know what the customer wants, you can’t serve somebody what you think is best for him.
The only way to serve is when the customer tells you what he wants. It therefore becomes important to me that every client becomes a point of product delivery. He defines what the product is. A customer should demand from a restaurant the kind of meal he wants and not the restaurant telling the customer the meal it has. Service is something that is expected of banking and how you deliver that service is a function of what the clients wants.
What was the outcome of the validation exercise of SGBN account holders recently conducted by the bank?
If I take it on the record of the customers that attended the verification, we had about 95 percent retention because we explained to them our vision but only about 5 percent partially took their money. There was doubt when it comes to whether they believe it will work because there had been a validation before which amounted to nothing.
The natural instinct among the depositors is whether it is the same story again. But we were different. For everybody that came in, we had fund for him/her. This is because we brought cash in. Not only that the CBN provided financial accommodation to enable us do this. There was 100 percent cash backing for the amount we met on ground.
There were issues where some clients believe that they deserve interests. We were not there when those things were run. By the time you are doing a transaction of this nature, you are taking liabilities and assets. Having assumed that responsibility somebody wakes up and say because it is a bank where he has kept his money for 10 years, he/she deserves interest.
If I pay interest on N21 billion for 10 years, I will need to be an international bank with a purse deeper than Central Bank. It is not feasible. We are dealing with those kinds of challenges and we are telling the depositors to see us as their better half because if we did not come on board, they would have gotten a token of their huge deposits but here we are guaranteeing the whole deposits we met there. Most people that came agreed with us. We called the CBN to intervene on those who did not agree to our explanations and if there is interest to pay, it is CBN that will pay it and not the new investors who came to rescue the situation.
On the whole how much did you pay out?
We paid out 100 percent of what we met on the ground. We met N21 billion of liabilities in deposit funds. We had financial accommodation of the same amount from CBN at a price of MPR minus 3 percent which is today 9 percent.
You said you want to be a regional bank, which areas are you covering and what are your niche operations
We are covering South-South and South West. That includes Lagos and Abuja. On our niche areas, today’s banking has made it difficult for us to define because we are transiting from a universal banking space to commercial banking space where we have knocked off the issues of merchant banking.
When you say niche, people might think niche in the perspective of regional banking. We think there is a lot of value within the SME space; the banks don’t have the skills to mentor them. You cannot bank somebody you don’t know his business. It is ok to collect the deposits and bank them, that is not banking. We believe that to bank somebody, the bank needs to know the person’s business. You need to see how the bank grows the business.
If a business produces water, the bank needs to know what it takes to produce the water and help him put structures that help him produce the water and grow. If we get it right, he becomes our customer for life. This is our philosophy of generation banking where the client moves from ordinary account holder to high net-worth individual. The objective of a bank is how to help a customer move from a normal account holder to big account holder.
The customer must believe that the bank can do it. This is our selling point. If we can resuscitate a 10 year old dead bank, there is nothing impossible to do. We have to get the customers to begin to believe in themselves that if they think that they can produce water, then the bank can assist you with what you need. Sometimes people erroneously think that money is fundamental to get a business to run. Money is the last thing. If the partners with skills are right, then money is the last thing in business. What is lacking in Nigerian business space is that we want to own everything. And if you own everything, there is tendency that you would not have all the quality to access credit to do everything. But if you share the responsibility with partners, it might work. As a bank we want to educate the public on business model that works.
Who are the owners of Heritage Bank?
The bank is owned by many people. Before we came in, we had about 19 shareholders called Legacy Shareholders. As part of the transaction the IEI Investments Limited issued notes worth N150 million which was sold in the market. Some people bought one; two and some people bought more. The note owners are in a portfolio called IEI Investment Limited.
The holder of the notes is called IEI Investments 80 percent. The remaining 20 percent is owned by Legacy shareholders about 19 of them plus depositors who had indicated interest to convert their deposits to.
Do you hope to expand your branches from the present three?
By June the branches should be 16 branches. They are all under construction in Port-Harcourt, Abuja, and more in Lagos. By the year end we hope to increase it to about 30. We can’t compete on branches but we will have what is more than a branch. We will have points of presence rather than branches where customers will transact their business seamlessly.
I foresee a situation where more banking would be done from homes and offices. If you need a loan, you can do it from your house. Banking is moving somewhere. Technology will be able to help us give that confidence to my client to assess minimum loan to start a small business. We will be at the cutting edge in giving deliveries to customers.
Why choose to play in that niche market where other banks have shied away?
It has to do with philosophy that you believe that nothing is impossible to achieve. The SME person is an entrepreneur that believes that he can achieve something good. He did not set at the beginning to remain small. His dream will die when he loses direction or the day his vision does not align the way to go about it and he probably thinks that money is the reason. I am saying with collective background of people in Heritage Bank, where we have SME group.
We are not here to collect your loan but that SME group is about sustainable banking and tomorrow. We want people who want to be part of that vision and say if you grow us as SME, we will grow with you as a bank. And they will say if we become big, Heritage will be our bank. As a bank, our philosophy is thinking generation and long term. We are here to assist those who are starters and beginners.