By Babajide Komolafe
For most Nigerians visiting a bank is no more a regular routine to look forward to. It is not because banks have become less important to our lives, but essentially with the era of smart technology and mobile banking, customers can transact business without visiting the banking hall. However in one of such moments, I recently found myself in one of Skye Bank’s branches where I had gone to do my Bank Verification Number (BVN) registration to avoid the CBN hammer. Whilst in the bank, I noticed a certain excitement in the atmosphere. There was evidence of a people working together in the interest of the customer at least going by the level of customer service I experienced on that day.
Although I later understood that the bank was marking the customer service week. Customer service week has in recent years been deployed by those in the service industry, especially banks, to woo more customers tempting them with incentives. Beyond the customer service week, my emotion was taken in by the warmth and conviviality that bonded everyone in the banking hall.
Most of the staff were clad in uniform outfits of native Fulani extraction that reminded one of the cultural legacies of a multi-ethnic Nigeria. The men equally complemented this with their elegant Hausa native attires.
Whilst the traditional issues about acquiring technologies and products, creating economies of scale and strengthening brand presence are the juicy benefits of every M&A, unfortunately on the other hand, people and their cultures can neither be merged nor acquired. Culture as in every M & A has remained the dominant barriers to effective business integration, accounting for 30 per cent of failed integrations across the world.
Skye Bank is the outcome of the Chukwuma Soludo inspired consolidation regime which brought together five legacy banks: Prudent, EIB, Bond, Reliance and Co-operative banks, which have been in harmonious existence since 2006. The major strengths of the bank include its diverse ownership structure, quality management Board and staff, prudent financial management and strong reputation on service delivery.
According to information on the bank’s website, the bank has a cumulative wealth of experience spanning over 50 years, which makes the bank one of Nigeria’s oldest banking institutions. Even before it acquired Mainstreet Bank in late 2014, the bank was quoted on the Nigerian Stock Exchange (NSE), with a shareholder list of over 450,000 names, made up of individual and corporate investors.
Mainstreet Bank was, until August 5, 2011, known as Afribank Plc., and was listed on the Nigerian Stock Exchange (NSE). Afribank was a top 5 Nigerian Bank by balance sheet size, before the 2004/5 consolidation exercise. However, the Bank failed the stress test conducted by the Central Bank of Nigeria (CBN) in 2009, Mainstreet Bank popularly called MBL emerged as a bridge institution to take over and manage the assets and liabilities of Afribank.
Prior to acquisition, MBL had over 220 branches and 125 ATMs strategically located across Nigeria. It offered traditional commercial Banking as well as electronic, collections, amongst others. Apart from that, the then Mainstreet Bank had a total of nine subsidiary institutions most of which though ailing, held a lot of promise if well managed.
The nine subsidiaries include: Bureau de change, Capital markets, Real estate, Insurance, Microfinance, Registrars, Securities and Trusteeship, including a financial service outlet in Ireland. The expectations of the shareholders is for the new larger bank to match top competitors in the areas of asset size and acquisition of loyal Mainstreet Bank customers, improve liquidity to create better performing risk assets, and increasing profitability
Whilst Skye Bank and Mainstreet can boast of great degree of confluence in business and strategic levers, same cannot be said of both institutions’ cultural background. Indeed, most mergers across the globe have either succeeded or failed on account of how well they manage the people issues. Building a bond of trust after an M& A is so difficult to achieve that most institutions soon after the merger begin to record poor business performance leading to attrition of key employees.
Either by sheer providence or sheer dexterity in strategic execution, Skye Bank has assumed a distinct reference case study of successful M&A within the sub-Saharan space of the emerging markets. This is more so when no one gave the bank a chance to survive let alone soar.
Given the fenzy and the perceived cultural gap that existed between Skye Bank and Mainstreet Bank, it was projected that managing the acquired bank and its resources would be a herculean task.
Yet, Skye Bank, drawing from its experience of managing a previous M&A has successfully proved critics wrong. Unlike many institutions, Skye Bank resisted the temptation of running multiple wage system. The bank immediately upon acquisition harmonised its pay structure, compensations and privileges a move which which experts believe is one of the determining factors for successful acquisition. When employees understand that they are given equal opportunity and rewarded in the same manner with their peers, they are likely to embrace the new entity as positive change.
Most of the staff I interacted with in the branch which incidentally had equal measure of both legacy Mainstreet and Skye Bank explained that the bank is conscious of its history and has indeed designed “staff bonding activities such as Skye Day, Customer Service week Village Meeting activities which created specific roles for the executives and staff members., This is amidst other sporting activities that are designed to stimulate and bond staff together around a common vision and purpose.
The unique benefit in fusing the two cultures however lies even more in the aspirations of the average Mainstreet Banker. The average staff of Mainstreet Bank desires a stable management and leadership and a caring organisation. Amidst that, they also seek an organisation that will support their career aspirations; an opportunity which they seem to cherish in Skye bank.
The 2015 third quarter result figures showed that the Mr. Timothy Oguntayo-led merger has been positive on the bank’s financial performance. Skye Bank recorded a sharp 33.1% rise in gross earnings to N129 billion as at September 2015 compared to N97 billion in the corresponding period of 2014. The significant increase in gross earnings was boosted by a considerable increase in interest earned on loans and advances, which shot up significantly by 25% to N99.5 billion from N79.5 billion within the same period.
A few commentators acknowledge that most of the specious media attacks the bank has faced in recent times can largely be attributed to the acquisition of Mainstreet Bank.