By Babajide Komolafe
Managing Director/Chief Executive, Wema Bank PLC, Mr. Segun Oloketuyi said that the decision to apply for a regional banking license was a deliberate decision, informed by the geographical concentration of its branches.

Meanwhile the bank has recovered N31 billion of its non-performing loans while it hopes to recover another N15 billion through the Asset Management Company of Nigeria.

The new banking model recognises three categories of banks namely Regional, National and International bank. A regional bank allowed to have physical presence in 12 contiguous state  in not more than two geopolitical zones including the Abuja, the federal capital territory.

Addressing journalists on the progress of the bank since the management took over 18 months ago, Oloketuyi said that the decision to apply for a regional banking license was a strategic intention that is not influenced by the recapitalisation need of the bank or because it was imposed on it by the regulatory authorities.

“We had a strategic retreat where we sincerely looked at our business and structure and decided that since most of our branches and businesses are in the south west, south south zones and Lagos, there is no point deceiving ourselves by saying we have national spread and hence go for national banking license.

We said since our operation is structurally concentrated in a particular area, we should remain so by going for the regional banking licence.

To us this does not amount to a demotion as it is perceived as there is no difference between a national bank and regional bank but geographical coverage. There is no business that a national bank can do that a regional bank cannot do.

What matters is the profitability of the bank, the value_added to shareholders investment.
A regional bank is simply a bank offering physical operations in a defined area and for Wema Bank that area is the south west, south south zone including Abuja.

This is because out of the 157 branches of the bank, 137 representing 89 per cent are located within south west, south and Abuja. Also 98.8 per cent of the loans of the bank are generated from this region, while 96.9 per cent of its deposits are from the region. This is where we have comparative advantage.

The choice of regional banking however has implications for the 17 branches located out of the regional limit of the bank, customers, staff and deposits.

For example we may have to close down the 17 branches but this would be done in an orderly manner. We would first meet with customers in these branches, while we will treat our strategic relationships in the branches on a case by case basis. Also we would redeploy staff working in those branches to branches within our region or to new branches which would be open soon.

However we would leverage on our electronic banking platform and correspondent relationships with other banks to minimise the impact of the closure on our customers and operations.”

Speaking on the recapitalisation efforts of the bank and the achievement of the new management, Oloketuyi said that the bank was able to raise N7.5 billion from a private placement exercise, and that it recovered N31 billion through aggressive loan recovery effort. He said the other loans which couldn’t be recovered would be sold to the Asset Management Company of Nigeria (AMCON).

He said with these efforts the bank would have supposed the N10 billion capital required for regional banking and the 10 per cent capital adequacy ratio. He said the bank has returned to profitability, and very soon, within a one year horizon, it would pay dividend to shareholders.