In 2020, there’s a new trend happening in the Nigerian banking sector. After prioritising their core banking services for nearly a decade, some Nigerian banks are restructuring to diversify their revenue base and remain competitive with other financial services. With this drive, some banks are adopting the holding company structure.
Now, to be clear, holding companies are neither new nor rare among Nigerian banks. It dates back to 2011 when the Central Bank of Nigeria (CBN) forced banks to give up their non-banking businesses or restructure into a holding structure. The regulator, like its peers globally, believed that it was an important risk management strategy to separate lenders from entangling with other financial services like insurance or investments.
Following that regulation in 2011, several banks — UBA Group, First City Monument Bank (FCMB), Stanbic IBTC Bank and FirstBank — adopted the holding company structure. The decision was simple if the other businesses represented a sizable percentage of the bank’s revenue.
In the last seven months, three more banks have made strong moves to restructure into holding companies. GTBank, Sterling Bank and Access Bank have either secured or are in the process of securing regulatory approvals for their (HoldCos).
