Sterling Bank has announced plan to undergo restructuring after receiving approval in principle from the Central Bank of Nigeria (CBN) to form into a Holding Company. The announcement was made by Sterling Bank's Chief Executive Officer, Abubakar Suleiman.
Sterling Bank requested for permission to become a Holding Company in order to make its Non-Interest Banking an autonomous entity. AllNews gathered from a statement obtained that the Holding Company license will enable Sterling Bank's Non-Interest Bank and other non-core businesses have their own management focus.
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"Going into the Holding Company structure, our desire is to entrench our business model premised on impactcapitalism 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."
How The Holding Company Will Affect Sterling Bank Operations
In the statement, Sterling Bank split the impact of the Holding Company on the lender, "The Bank believes that the proposed structure incorporates efficiencies around operations and financing efforts that will support the individual businesses in reaching full potential through:
(1). Increased portfolio diversification – The Holding Company structure enables the Non-Interest Bank and other non-core businesses to achieve greater results based on focused management of distinct businesses.
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(2). Improved efficiency resulting from the consolidation of key functions such as Compliance, Risk Management and other support functions, yielding improved prospects for individual business growth.
(3). Enhanced Corporate Governance which serves to promote a consistent culture across the group and quality of service to customers thereby facilitating the sustainability of earnings.
(4). Better access to capital by leveraging the consolidated financial strength of the group which would have been otherwise difficult for each individual subsidiary company.
How Sterling Bank's Holding Company Will operate
Sterling Bank said the Holding Company will operate along three guidelines; Specialization, Partnership and Digitization, "The Conventional Bank will 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 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. The overall business will focus on social impact, corporate responsibility and the highest ethical standards in its dealings." Sterling Bank said in the statement.
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Although Sterling Bank is still waiting for final approval from CBN, it explained that, "Our Digitizationdrive 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”.
Note that Sterling Bank is not the only Nigerian lender planning to become a Holding Company, as GTBank also plans to become a Holding Company.