Michael Larbie is the Chief Executive Officer of Rand Merchant Bank Nigeria, a subsidiary of FirstRand of South Africa, which last week achieved five years of operations. In this interview, he spoke about the bank’s experience and efforts to distinguish itself in the highly competitive Nigerian banking industry, as well as its outlook for the economy.
WHAT has been the experience of Rand Merchant Bank (RMB) Nigeria since its entrance into the banking industry?
Rand Merchant Bank (RMB) Nigeria is a subsidiary of FirstRand, one of the largest financial services groups in Africa. As a leading African corporate and investment bank, we seek to offer our clients innovative advisory, financing, trading, corporate banking and principal investing solutions.
In Nigeria, we have over 15 years of transacting experience ranging from advising on infrastructure projects to funding various transactions in real estate, oil and gas, manufacturing, telecoms, steel, fast-moving consumer goods, and cement, among others.
Fast-moving consumer goods
RMB Nigeria was licensed in 2012 and became fully operational in April 2013. Prior to that, we had a representative office in Lagos from 2010.
We bring our wealth of global and African experience accumulated over the years to the Nigerian banking landscape both from within the country and from other jurisdictions.
Over the past five years, we have created a core client base of solid local companies, multinationals and financial sponsors. Our very targeted approach has enabled the bank to meaningfully support key clients through different economic cycles and strengthened relationships as a trusted partner.
Having been around for five years, what milestones have been achieved over the period?
We opened our doors in Nigeria as a merchant bank in April 2013. Being awarded a merchant banking license and starting a new business were our first milestones. Every client we have engaged and worked with was, and still is, a key milestone. Emerging from the recent economic downturn stronger than we were before it started, was a milestone. The annual growth of our balance sheet and profits are others.
We are also proud of the number of pioneering transactions in which we have participated over the past five years including; advising GB Foods and Helios on their acquisition of Watanmal West Africa, advising Actis on its acquisition of Sigma, advising the sellers in the sale of Ikeja City Mall to Hyprop Investments and Attacq, as well as the ongoing demutualization of the Nigerian Stock Exchange. The part funding of Azura Power, a greenfields independent power producer is also a good example. We have also availed trade and working capital facilities to key clients such as Unilever, BUA, Dangote, AIG Group, Dufil and Seven – Up. In Oil & Gas, we have participated in the Shell/NNPC, Seplat RBL and Petrobras fund raisings.
RMB Nigeria also acted as joint-issuing house and bookrunner on the African Development Bank’s seven-year medium-term Naira note, a notable capital markets intervention. In 2017, the FirstRand Group added RMB Nigeria Stockbrokers to its Nigerian presence reinforcing its long-term vision to be a full-service financial player in this market.
Apart from banking capabilities and relationships, RMB Nigeria takes pride in being a good and leading “banking citizen”. The bank’s strong corporate governance and conservative approach to risk management and strict compliance with regulations and banking best practice has seen a very measured approach to doing business. We are not trying to necessarily become the biggest bank, but rather aiming at becoming a trusted, reliable and solutionist partner to our clients and other stakeholders.
In which sector of the economy do you have most of your clients and investments, and why?
Our client base cuts across all sectors of the Nigerian economy – fast-moving consumer goods, manufacturing, telecoms, oil and gas, agro-processing, services, and infrastructure. On balance, we are currently more skewed towards manufacturing. In our Global Markets business, majority of our clients are in financial services sector – banks, insurance, PFAs and asset managers.
How have you handled competition?
Increased competition is a testament to the resilience of the Nigerian economy and to the potential for future economic growth. We embrace competition as we believe there is room for multiple players to fulfill the needs of the broader market and economy.
To promote economic growth and development, Nigeria requires significant amounts of capital which a few banks alone cannot provide. Each bank has a limit as to the amount of funding it can supply both to a country and to different sectors; it is therefore wise to diversify exposures.
We prefer to partner with other financial services players if it is to the benefit of our clients. Given we are a merchant bank our competition includes other merchant banks, retail & commercial banks and capital market operators. We also see other banks as partners with whom risks can be shared and deals jointly structured.
What unique benefits – products, ideas, skills or services – do you bring to the Nigerian economy?
RMB is an innovative and solutions-driven bank. We believe in building long-term sustainable relationships with our clients by providing them with innovative ideas and solutions to suit their unique circumstance. We bring hard thinking and a can-do mindset to issues and opportunities.
We are very proud of our diverse talent pool who do the hard thinking. Our strength is our ability to bring local and international solutionist thinking to the table. We structure the most appropriate financing solutions to meet the needs of our clients, whether extending project finance, structured lending or plain corporate lending. We leverage the global reach of FirstRand, its higher ratings and access to efficiently priced dollars to support our clients.
What is the outlook for RMB Nigeria in Nigeria?
RMB Nigeria will continue to leverage its merchant banking license to develop new platforms off which it will grow businesses in future. We plan to introduce a wider range of products to suit our clients’ needs.
We are busy engaging with our clients, regulators and other stakeholders to roll out several risk management and structured products.
RMB Nigeria recently introduced a stockbroking business which we will launch during our five-year anniversary celebrations in June.
We are continually looking to invest in the Nigerian economy and are interested in partnering with businesses in various sectors.
The outlook for the country is positive depending on the outcome of the election next year. We anticipate stronger economic growth and a more stable currency in the future and are positive about investments in the country. The steady decline in inflation should ultimately lead to a reduction in interest rates and consequently increase the potential for investments in a variety of sectors thereby aiding the diversification of the economy.
We look forward to continuing our partnership with clients and remaining relevant to them.