Leaving the Bank in a position many described as envious, Segun Agbaje has proved his mettle as he prepares to bow out as chief executive officer (CEO) of Guaranty Trust Bank and its ancillary holding companies. Looking back at some of the outstanding impacts of his leadership, one couldn’t help but point to the major role he played in putting together Guaranty Trust Bank’s landmark US$350million Eurobond offering in 2006 and later in the same year, the listing of its US$750 million Global Depository Receipts (GDR) in an unprecedented concurrent global offering in the domestic and international capital markets – which made Guaranty Trust Bank the first Nigerian company and first African bank to be listed on the Main Market of the London Stock Exchange.
Group Managing Director of GTBank, Segun Agbaje
But it has not always been like this. When fate trust the leadership of the Bank on his after the death of co-founder Tayo Adenirokun, Mr. Agbaje came under severe criticisms and the Bank also lost a lot of positive perception mileage as many worried whether he could step into the big shoe left by Tayo as he was fondly called by members of staff. Shortly after becoming CEO, he led the bank to launch the first Sub-Saharan Africa financial sector benchmark Eurobond when the Bank launched its US$500million Eurobond without a sovereign guarantee or credit enhancement from any international financial institution.
Agbaje no doubt possesses a deep sense of loyalty and is driven by values of hard work, integrity, and discipline. He is probably one of few banking executives who stayed with one bank for thirty years, attaining the peak of his career there. This is not because of a lack of better options, but because of Agbaje’s commitment to the bank he had seen and groomed from its infancy days. He also helped in developing the Interbank Derivatives market amongst dealers in the Nigerian banking industry and introduced the Balance Sheet Management Efficiency System.
His deep understanding of the Nigerian business environment has seen him initiate and execute large, innovative and complex transactions in financial advisory, structured and project finance, balance sheet restructuring and debt and equity capital raising in different sectors like Oil and Gas, Energy, Telecommunications, Financial Services and Manufacturing industries.
According to Agbaje’s recount, the several responsibilities he handled in the bank over the years exposed him to the international financial markets and the people who worked in them – merchant banks, investment bankers, lawyers, and investors. It also gave him a deeper understanding of what people wanted from a first-class bank.
Under his leadership, GT Bank Plc won several awards including Best Bank in Nigeria by Euromoney; African Bank of the Year by African Banker Award; Best Bank in Nigeria by World Finance UK; Most Innovative Bank by EMEA Finance; Best Banking Group by World Business Leader Magazine and Best Bank in Nigeria award by the Banker Awards; Best Mobile Banking and Mobile Money awards, Best Digital Bank awards and, Digital Wallet of the Year award.
Ahead of the disruption in the banking sector, Agbaje gave GT Bank a headstart when he launched the Habari mobile platform in November 2018 for customers to carry out a wide range of services including “pay for tickets, book holidays, stream music, buy online, watch videos, and then, because we are a bank, we can provide the payment engine.” He predicted even then that any bank that does not transform itself into a trusted single, integrated platform will get smaller and smaller as the fintechs and telcos grow larger and take over.
Agbaje won the African Banker of the Year award in 2012. He serves on the boards of other business concerns including Guaranty Trust Bank in Kenya, Rwanda, Uganda, Ghana and the United Kingdom. Agbaje has other commitments as well, but none of them run parallel to that of GT Bank. He is a member of the board of directors and audit committee of PepsiCo, a position he resumed on 15 July 2020. He is also a member of the Mastercard Advisory Board, Middle East and Africa.
Kelechi Deca
Kelechi Deca has over two decades of media experience, he has traveled to over 77 countries reporting on multilateral development institutions, international business, trade, travels, culture, and diplomacy. He is also a petrol head with in-depth knowledge of automobiles and the auto industry
As part of efforts aimed at expanding its continental footprints, Nigeria’s biggest lender by market value, Guaranty Trust Bank (GTB) plans to acquire a Kenyan bank to deepen its foothold in the East African region. The move which forms part of its overall post Covid-19 recovery strategy will help grow the bank into a leading lender in the continent.
Group Managing Director of GTBank, Segun Agbaje
According to the Bank’s Managing Director Segun Agbaje “I think the place we will still like to do business or do an acquisition is Kenya,” though he did not reveal the time-line for the acquisition, inside sources say that efforts are on top gear for the process. Guaranty Trust Bank already has offices in 10 countries outside Nigeria including Kenya. It wants to increase the contribution of African subsidiaries to the bank’s income to about 30% of profit before tax in the next three years from 15.3% in 2020.
Banks in Africa’s most populous country are expanding on the continent and diversifying outside their core operations as they seek to grow after the coronavirus pandemic and two economic contractions in four years shuttered businesses and limited lending opportunities at home.
Guaranty Trust is expecting the approval by regulators of a move to transition into a financial holding company in the second half, which will enable it start payments and asset management units, Agbaje said. It targets 10% growth in the loan book this year and pre-tax profit of 243 billion naira from 238.1 billion naira.
Kelechi Deca
Kelechi Deca has over two decades of media experience, he has traveled to over 77 countries reporting on multilateral development institutions, international business, trade, travels, culture, and diplomacy. He is also a petrol head with in-depth knowledge of automobiles and the auto industry
Nigeria’s leading bank in tech innovations, Guaranty Trust Bank (GT Bank) is moving quickly with its restructuring plans. In March, the bank told investors it would restructure into a holding company which would allow it to offer more financial services beyond pure banking. During its H1 2020 earnings call with analysts, GT Bank’s CEO, SegunAgbaje disclosed that the holding company structure would be completed by Q1 2021.
Group Managing Director of GTBank, Segun Agbaje
“[T]he operational model for the Holco is set,” Agbaje said on the call. “You will have the centre, which is the controlling or holding company and then a couple of business units. Operationally, in terms of Holdco, we are going to do a one for one exchange, which means that the shares of GTBank would move up to the Holdco,” he added.Under the new holding company, GT Bank will operationally be split into four businesses. Guaranty Trust Bank Nigeria will serve the Nigerian market as a business.
It will operate Guaranty Trust Bank East Africa which will house the bank’s operations in Kenya, Rwanda, Uganda and Tanzania.Guaranty Trust Bank West Africa will oversee the bank’s businesses in Gambia, Sierra Leone, Ghana, Cote D’Ivoire and Liberia.The fourth business is GT Bank UK, the bank’s international office which was established in 2008.
“I really am excited about Holdco,” Agbaje said on the call. Hinting at the recent growth of digital payments in Nigeria, he added: “I think everything that has happened with the pandemic has proved that we are on the right path.”
“I think you can see that we’re gearing up the business for another high growth phase, not only are we taking the banking business and operationally splitting it into [four], where we can look at Nigeria very differently from East Africa and from West Africa and people can drill down.”The restructuring comes at a time when the bank is due to appoint a new CEO. Current CEO Agbaje has been at the helm of affairs since 2011 following the death of the bank’s co-founder and then CEO, TayoAderinokun. But according to Nigeria’s banking regulation, a CEO can only serve a maximum of 10 years.
By creating a holding structure, Agbaje might just be elongating his reign over the bank. He could become CEO of the restructured company while the bank is operated by a different chief executive.While GT Bank’s holdings structure operations will be split into these four geographies, Agbaje explains that other non-banking business units would emerge. “The business unit we are looking at commencing with would be Asset Management, a Pension Fund Administrator (PFA) and a payment company,” he told analysts. “Hopefully this week, we would put in our application for final approval for the payment company.”
The choice of a PFA is interesting. Agbaje considers it a strategic position. A recent pension industry regulation will allow customers to switch fund administrators the same way they do with other financial assets. Once that kicks in fully, “we can only go to gain market share from where we want to start,” Agbaje told analysts.Agbaje hinted that the bank will also offer asset management services “which will basically complement our personal banking business for people who are looking for a high yield.”However, payments are really what are driving the bank’s decision to restructure.
GT Bank has a growing e-business operation. In its recent H1 2020 presentation, the bank recorded impressive growth in mobile banking, USSD payments and internet banking.USSD payment volume grew to 356.4 million for the first six months of 2020 but suffered a decline in transaction value perhaps due to the pandemic. While GT Bank added 600,000 new USSD customers, USSD transaction revenue took a hit following the reduction in transfer fees to ₦10 for transactions below ₦5,000. According to the bank, around 50% of all USSD transactions are below ₦5,000. Fees and commissions revenue fell 32.2% as a result.
Mobile banking also rode to 95 million transactions worth ₦5.7 trillion, while internet banking grew 14% to ₦1.2 trillion during the same period.GT Bank has bigger ambitions in the payments business and its interest has been growing for the last three years.The bank has been the most aggressive traditional financial institution competing against fintechs in Nigeria with different digital products.“There is not one thing called payments”, Agbaje said in a March 2020 presentation, “there are different parts of it.”
It operates GTPay, a payments gateway similar to Paystack; GTCollections, a payments aggregator; QuickCredit, a digital lending platform; and Habari, GTBank’s e-commerce superapp. The bank is also an issuer, issuing payments cards and operating international money transfer services.Under the new holding company structure, many of these business units could be bundled under a standalone payments business entity.And GTBank has made serious efforts to promote these services by slashing interest rates on loans, deepening uptake of its USSD payments offering and intensifying engagement with small businesses.
“[Payments] is a space we’re coming into,” Agbajesaid earlier in the year, “so we will have to look at the likes of Paystack as bigger than us on the day we start, as knowing more than us, but I promise you we will bridge that gap very quickly.”Earlier in the year, Agbaje told analysts that “today, a good way to gauge what you control of the payment space are NIP payments.”
NIBSS Instant Payments (NIP) is a real-time interbank payment scheme. The online-based system to facilitate instant transfers within the country between member financial institutions in Nigeria including banks and mobile money operators. In the month of August alone, NIP transaction volume was nearly 200 million, while total transaction value was a little shy of ₦15 trillion ($38.9 billion). On the recent call with analysts, Agbaje explained that GT Bank is “actually number one in both NIP inflow and outflow at the moment [and] we have been for a few weeks. The bank is now responsible for over 18% of outflows and almost 17% of inflows.
“When we take that business, we think the payments business is something that is going to do really well.”Earlier in the year, Agbaje summed up GTBank’s payments ambitions: “GTBank is going to win [the payment space] and we’re going to win very easily.” GT Bank’s restructuring is designed to achieve this. In March, Agbaje explained to analysts that the bank could follow a few routes. One option was to “hive off” its current payments business as a standalone, or use acquisitions to develop a separate business. The long term plan is to keep the payments business as a stand-alone business, then possibly prepare the business for a stock market listing.
“[T]he people that will win the payment space won’t operate within the traditional banking framework,” Agbaje believes. “They will operate outside of the traditional banking framework, kind of like what you saw with Worldpay.” UK-based WorldPay traces its roots to 1997 when it was founded in partnership with National Westminster Bank. It later became a part of the Royal Bank of Scotland Group following a takeover of National Westminster Bank. WorldPay took on a life of its own, Agbaje explained and “has become this mammoth company in 2019 that was acquired for $43 billion. So, in that case, you would see that it really wasn’t a fintech per se.”
GT Bank will follow the same route, the bank’s CEO hinted in March. “[GT Bank’s fintech] will definitely be a separate business unit,” Agbaje said. “We will then watch and see whether we want to list it somewhere else. But I think if you are going to leverage the current advantages we have as an organisation it will start as a separate business unit.” GT Bank said its payments arm will have an Africa-focus, hinting that it will expand the business unit to other countries in West and East Africa.
A few things are propelling GT Bank’s payments and fintech ambitions. One is the shot at greater revenue. “About 30% of banking revenue comes from the payment space,” he told the crowd at the Lagos Social Media Week. It is estimated that the [Nigerian] payments market [paywall] could grow between $20 billion and $40 billion in the next few years. But fintechs are eating into this revenue. A consulting firm, Frost & Sullivan predicts that Nigerian fintech revenues will grow from $153.1 million in 2017 to $543.3 million by 2022. “What this means is that 30% of banking income is easily at risk,” he explained. As these fintechs eat up banking revenue, their valuations will increase and it will be very difficult to acquire these companies. Agbaje already considers many of fintechs too expensive, discouraging him from both partnerships and acquisitions.“We’re not going to rush into any partnership[s],” he said, “because we’re also not going to pay any valuations that are overly rich. We can on our own build this business.”
“But if we can’t go on our own… we’re definitely not going into any valuations of like 20 or 30 times earnings, no,” he added. Another reason propelling GT Bank’s fintechambitions is the scale at which rival fintechs are growing in the market. While there’s a risk that banks will lose a significant portion of their revenues, the scale at which some fintechs are growing. “That is what made OPay very scary,” Agbaje said. “Anybody who has the guts to pilot at scale, and has the money, and has the will, and has the drive is someone you really have to watch. And they have grown market share.” Those models are the reason why I’m very encouraged that Guaranty Trust Bank going into the payment space will do very well, because we will pilot at scale and we will be very aggressive, he added.
Kelechi Deca
Kelechi Deca has over two decades of media experience, he has traveled to over 77 countries reporting on multilateral development institutions, international business, trade, travels, culture, and diplomacy. He is also a petrol head with in-depth knowledge of automobiles and the auto industry
One of Nigeria’s biggest players in the financial sector, GTBank has acknowledged the disruptive capacity of fintech to the industry and as a result is already restructuring its operations to be ready to accommodate whatever comes with it. The Bank with operations in other countries in West Africa made this know even as news filters from the sector of the birth of a mega banks through the likely merger of some of the big players in the sector. To be full ready for the likely tsunami that is coming, a source at GTBank says that the Bank is planning to restructure its holding company to give it enough elbow room to maneuver in the market. This said restructuring will allow the Bank to venture into and grow other businesses beyond pure banking, the source said.
Group Managing Director of GTBank, Segun Agbaje
GTBank has been operating a number of non-banking services such as GTB Asset Management for capital market services and GT Assurance, its insurance arm among others, but the 2010 regulation by the Central Bank of Nigeria (CBN) which forced banks to stop operating their non-banking subsidiaries put a stop to that project forcing them to either divest from non-core lending service or restructure as a holdings company. While other chose to divest, GTBank sold GTB Asset Management to another company which today operates it as Investment One while a consortium of investors acquired GT Assurance and renamed it Mansard Insurance, it is presently as AXA Mansard Insurance with investment from global assurance firm AXA.
Speaking on the emerging development, the Group Managing Director of the Bank Segun Agbaje said that GTBank is not restructuring to offer more banking services that the main aim is to develop fintech products and build out its payments and fintech arms. Agbaje further highlights that “about 10 years ago, we made a decision then looking at the operating environment, that we were going to shed all our subsidiaries and become completely bank-focused.”
He added that “everything we have seen over the last two to three years, has told us that it’s time to have a bit of a rethink.” Despite recording a 6.6% profit increase to ₦231.7 billion ($640.4 million) in 2019 and adding over 7 million new customers within two years, Agbaje isn’t satisfied. Sounding like a startup founder hungry for growth, he explained that pure banking isn’t growing fast enough. “Most banks are growing 5% to 7%. We don’t think that’s sustainable,” he added.
“When you take GTBank, which has one of the best valuations in the banking industry, it is valued at a one time book,” he said at a recent social media event in Lagos. “Then you come to the payment space where fintechs and payment companies are being valued at 30x earnings. What is there not to like about this space?” he asked. Agbaje believes that by restructuring into a holdings company, the restructured entity will be able to pursue new growth prospects beyond pure banking. And he has his sights squared at the fintech services.
“There are other lines of businesses that are doing very well,” he was quoted as saying. “If you look at our financial statement, you will see that our payment business is growing by about 60%. So, that is an area we like.” GTBank’s lending service, QuickCredit, is an interesting example of how the bank is competing with fintechs. Last October, a financial consultant who has knowledge of the product told me the service is growing at an impressive rate. When the CBN pressured banks to increase their lending ratios, GTBank crashed interest rate on QuickCredit, making its loans cheaper than loans from startups like Carbon and Migo.
However, it is the payment business that Agbaje is most focused on. “About 30% of banking revenue comes from the payment space,” he told the crowd at the Lagos SMW. It is estimated that the payment market [paywall] could grow between $20 billion and $40 billion in the next few years. But fintechs are eating into this revenue.
Consulting firm, Frost & Sullivan predicts that Nigerian fintech revenues will grow from $153.1 million in 2017 to $543.3 million by 2022. “What this means is that 30% of banking income is easily at risk,” he explained. GTBank is trying to avoid the inevitable for banks. And in addition to building rival payment services, the Bank is scaling up its own superapp called Habari. Launched in 2018, it supports payments, music and video streaming, news content, the whole shebang. Habari is supposed to compliment GTBank’s digital banking app and the hugely popular USSD service, *737#. But so far, the app has garnered mostly negative reviews. Agbaje thinks they’re wrong.
“No matter what anybody says, it [Habari] is the most successful, integrated [and] interactive platform in Nigeria today,” he was quoted as saying. Regardless, GTBank is making a strong push into the fintech world. Its planned holding structure will support this drive. The competition between banks and fintechs continues, and GT Bank is leading the traditional players. Credit cards, debits cards, the emergence of card payments spurred commerce and made it easier for bank customers to access their funds.
Kelechi Deca
Kelechi Deca has over two decades of media experience, he has traveled to over 77 countries reporting on multilateral development institutions, international business, trade, travels, culture, and diplomacy. He is also a petrol head with in-depth knowledge of automobiles and the auto industry
