Leaving the Tarmac: Buying a Bank in Africa – Handbook on Strategic Bank Management, Growth – By Bola Adesola
When Aigboje Aig-Imoukhuede called to request that I should review his book Leaving the Tarmac: Buying a Bank in Africa, I had no choice but to accept writes Bola Adesola senior vice-chairman at Standard Chartered Bank Group and previously chief executive at Standard Chartered Bank for Nigeria and West Africa.
The first reason is that besides Aig’s NYSC at Continental Merchant Bank, which I considered a “warm-up”’, his real starting point on the tarmac was when he joined Prime Merchant Bank. I also started my banking career at the now-defunct Prime, under the tutelage of one of the banking “masters”, the late Tayo Aderinokun.
Secondly, I have been a bystander over the years observing and oftentimes cheering Aig on in his pursuit of greatness, and have found his remarks, reflections and reactions to professional, and his life discourses most engaging, poignant and sometimes brutal, especially when he speaks truth to power.
And so, reviewing a book that seeks to chronicle his professional journey, against the backdrop of his pedigree and personal values, from the beginning in 1989 to his retirement from Access Bank in 2013, sounded compelling to me. My curiosity for what was between the front and back covers of a book on bank M&As was piqued by the choice of title – Leaving the Tarmac. But then, my recollection of the happenings of the subject-matter years meant this book by Aig would be a front-row view to the episodes in the then unravelling story of Access Bank. The significant events in the banking sector over a fifteen-year period, and how the responses of the sector, regulators and the public resulted in the financial services sector we experience today, is the backdrop to the Access story.
I was also intrigued by the fact that the book was written in 2015, yet is only being presented to the public in 2021! I started reading this book, and by the time I got to chapters 6 and 7, I realised immediately that, truly, this is a manual or handbook on strategic bank management and growth. The easy read and relational style of writing by the author brings the contents of this book to life, and for me evoked a sense of nostalgia of my early and mid-career in banking.
Evident from chapter 1 is that Aig’s path in life was influenced by his background. His parents were civil servants and so he grew up living with and observing the virtues of diligence, honesty, contentment and a commitment to serve. Yet he chose to pursue a private sector career path.
In chapter 1, titled “Entrepreneurial Juice”, Aig provides the motivation for why he “wanted to remove the safety net and test out the strength of my own wings”, as he puts it. He writes that he had no godfather, and shares how he and his friend and business partner Herbert Wigwe embarked on a journey to become owner-managers, and “seized their own journey”. These two gentlemen, Aig and Herbert, drank the entrepreneurial juice, and so their journey to conquer the African banking landscape began.
He explains the book’s title, Leaving the Tarmac, as a recollection of him as a schoolboy returning home to Lagos from school in Kaduna, and being left behind on the tarmac as older and more experienced passengers jostled to embark the plane, elbowing him out of the way. He ended up missing the flight and vowed that “never again would I be left on the tarmac”.
The next two chapters describe personal determination to pursue the dream to buy a bank, in spite of constraints on resources. I recall when the news broke in the market that Aig and Herbert had made a bid for Access Bank, and the chatter about their entrepreneurial ambition being viewed as “disloyalty” to their mentors and bosses, Messrs Tayo Aderinokun and Fola Adeola. In a way, Leaving the Tarmac, is a record of history repeating itself, as the same kind of entrepreneurial dream was what led to the birthing of Guaranty Trust Bank.
Chapter 2, “Buying the Bank”, in my view also seeks to set the record straight for the public about the source of funds for the acquisition of Access Bank, including the resistance and hostility experienced by the duo, all the way to regulatory approval challenges.
The “Growth and Evolution of the Banking Industry” in chapter 3 attempts to catalogue economic, banking and market reform challenges that shaped the Nigerian business landscape – from corruption, to oil, financial liberalisation, the introduction of technology, the advent of finance houses and the banking crisis, to universal banking, GSM and, of course, the fledgling but sustained democratic processes in the country. When I read this chapter, I wished the writer had dwelt a little more on the banking crisis, especially post the acquisition of Access Bank by Aig and other investors, when the bank was run somewhat as an owner-managed bank. However, in subsequent chapters, lessons learnt from the crisis are evident in the business model choices made by the managers of Access Bank, and the regulatory responses listed in chapter 8.
Chapter 8 builds on how successive Central Bank governors – Joseph Sanusi, Charles Soludo and Lamido Sanusi – instituted regulatory-led reforms that established robustness in the banking industry at that time. In subsequent chapters, Aig returns the reader to the detailed Access Bank acquisition through the headline goals – from 70th position to a top 10 bank in five years, and then the “World’s Most Respected African Bank” – and details of how these lofty ambitions were realised.
What appeared like a “Mission Impossible” vision was soon given clarity from 2002, in a systematic, thoughtful and executable process focused on a business model described in detail in chapters 4, 5, 6 and 7. He shares with the reader the razor-sharp value-chain strategy, staff engagement and enhanced client experience that enabled Access Bank to “grow at a triple-digit growth rate” in its first five years. But the writer also does not deny the challenge faced while taxiing on the tarmac in “turning around such an operation” bedevilled by many negatives, including poor market share, limited quality of personnel and culture, and being unable to generate profit.
Having set the scene in earlier chapters of the “who” (Aig and Herbert and “colleagues”), the “what” (the acquisition), the “why” (leaving the tarmac story) and the “when” (post-reforms), the author delves into the “how” (strategy), and later on in chapter 13 on “International Expansion”, the where (African domination).
Aig elucidates the client-centric business model of “partnerships and alliances”, the high-growth strategy and the culture challenges inherited by the acquisition. In chapter 6, “A Vision for Transformation – Mission Impossible”, the vision for Access Bank is further described as the need to embed the chosen core values in the “gridiron of professionalism” in the quest for excellence. The vote of confidence in the vision and in the visioners, Aig tells us, was testified to by the FMO loan sought and obtained at an early stage of the acquisition.
“Finding and Developing the Best People” (chapter 7) is then the bedrock for execution of the transformation strategy.
Chapter 8 ends with a meeting called by Professor Charles Soludo, the CBN Governor of bank chairmen and bank CEOs, to announce the bank-recapitalisation policy that was dubbed the “Soludo Solution”. Aig vividly describes on pages 99 to 101 the proceedings on that day, at which I was present, including the deafening silence, or “shock and awe”, at the sound of Soludo’s voice! Regulatory-led reform cleaned the Augean stable, and provided a clear path for ambitious and disciplined bankers to thrive and positively impact the industry and support the banking public.
Chapter 9 – “Raising Twenty-Five Billion” – stands out for me as encapsulating the crucible moment for Aig and Herbert in the Access Bank transformation story. The author first regales us with the slew of awards and industry recognitions given to Access Bank, and then describes in detail how the bank set about attempting to meet the 25-billion naira minimum capital requirement. Particularly impressive was the public offer, which was followed by the Marina Bank and Capital Bank acquisitions, and the nail-biting episode securing a much-needed pivotal top-up convertible loan from the FMO.
“Blind Pursuit of Growth”, the title of chapter 10, describes the unbridled and cavalier pursuit of returns on the excess capital that many Nigerian banks raised, including in the international capital markets, to meet regulatory requirements. Aig admits on page 116 that Access Bank joined this fray somewhat in the vicious competition for market share. He states that in 2008, the bank accelerated the pace of execution of its strategy, became “quite opportunistic” and moved “down market” in its approach to business, and eventually ended up having to adopt an “aggressive debt-recovery effort” to reverse the resulting poor quality of its loan portfolio.
In de-risking its balance sheet, and reverting to its erstwhile banking discipline, Access Bank succeeded in 2009 in receiving a clean bill of health from the CBN stress tests at that time. Having learnt the lessons of the unfolding huge systemic risks that were stemmed by the systematic stress testing imposed by the Lamido Sanusi-led CBN, Aig opens chapter 11 – on “Good Governance and Risk Management” – by telling the reader that the long-term success of Access Bank was underpinned by “successful risk management” and embedding good corporate governance practices in its management and operations.
An enterprise risk management function was created, and a chief risk officer appointed whose mandate encompassed all forms of risks that the bank could be exposed to. As described in chapter 12 – “Earning the Respect and Confidence of the Debt and Capital Markets” – the sound risk management practices, the focus on fortified corporate governance and robust capital management strengthened the foundation of Access Bank and the ability of the bank to utilise leverage. With what Aig describes as a “cogent, sensible story to tell our investors”, the bank successfully issued a three-year local currency bond in 2006, and then in 2007 a USD Global Depository Receipt (GDR), and later in 2012 a dollar Reg S144A Eurobond.
It is interesting to note that Aig and Herbert embraced challenges throughout the journey chronicled in this book. They successfully took head-on the myriad hurdles from internal and external factors, and the bank grew in leaps and bounds. The international expansion of the bank was another major milestone – the writer describes the modes of entry, from start-up banking licences, to partnerships, to acquisitions in West, East and Southern Africa. Aggressive expansion resulted in some poor judgement on select country footprints, mainly due to cultural differences. It is commendable that “well chastened” by some negative experiences in a few countries, the bank’s leadership chose to “fail forward” by cutting their losses and exiting three of the countries, and concentrating resources in stronger and more sustainable markets.
In reviewing this book, I adjusted my front-row seat when I got to chapter 14 – “A Significant Acquisition”. The reforms arising from the outcome of the CBN stress tests in 2009 led to eight banks being taken over by the CBN and being offered for sale. The objective of the apex regulator was to restore public confidence and to ensure that no Nigerian bank would fail. In this chapter, Aig explains how Access Bank acquired Intercontinental Bank. Aig, with Herbert’s support, agreed that Access Bank was in “robust health” and was at the time the “fourth (most ) capitalised bank in Nigeria”. The writer gives the reader the historical antecedents of Intercontinental Bank, and the acquisition timeline. It was fortuitous that Access Bank ended up being the sole bidder for the bank.
The chapter reveals the gaping hole in the target bank, and how 17 months after the Expression of Interest was submitted, a Memorandum of Understanding was eventually signed with Intercontinental Bank in March 2011. Meanwhile, the Asset Management Corporation of Nigeria (AMCON) had been established in July 2010 after the transaction discussions had commenced. The managers of Access Bank turned to AMCON to fill the hole and recapitalise Intercontinental Bank.
The reader can feel Aig’s palpable glee as he concludes this chapter with the 27-month transaction journey to acquisition, which led to a combined entity that would “rank fourth in total assets”, and was named the “Best M&A Transaction in Africa 2012” by The Banker magazine.
The opening line of chapter 15, “Integration”, summarises the rest of the chapter and the woes that came with trying to integrate the two banks. Aig writes, “As is often the case, even in the most well-planned operations, the unexpected happens.” Integration issues ranged from employee resistance and a risk of a liquidity run on the acquired entity, to technology integration, discounting AMCON bonds, and human/branch/product rationalisation. He describes the planning, combining, stabilising and optimising of operations and synergies required to take effective control in a situation of divergent cultures.
What comes across as one reads chapter 15 is that it appears it was written with much sober reflection by the writer, though not once is there a hint of regret. It appears that the pair of Aig and Herbert took the mountains in their stride and levelled them one after the other to put the building blocks in place for a bank “that would not be any different from Zenith or GTB”. Aig concludes the chapter by stating that “that day appeared to be on the horizon”. Having left the tarmac, and having experienced the pain and gain of multiple M&A mazes, Aig posits that in 2011 he took the decision to retire in 2013, timing his exit with the strategy cycle of Access Bank.
In tandem with the business aspirations of the bank, there was also the aspiration for Access to be the “World’s Most Respected African Bank”. In chapter 16, Aig dwells extensively on sustainability being at the core of the identity of Access Bank, and elaborates on the various sustainability initiatives aimed at achieving “excellence on all fronts”, and not “excellence at all costs”. Aig, in addition to describing the institutional philosophy, reveals his own personal contributions in the areas of economic development, health, anti-corruption and nation-building.
Fast-forward to 2021, and Aigboje Aig-Imoukhuede has remained consistent in his purpose to uplift society through various impact interventions. After chapters 1 and 4, which are both 19 pages long, chapter 16 is the second-longest at 18 pages. In pursuit of the accolade captured by the chapter’s title, the bank defined what “respect” means and focused on the attributes that would win it this acclaim. Aig shares with us on page 189 the attributes that would make Access Bank worthy of the respect of employees, customers, the government, society and regulators.
He identifies innovation as having played a key role in his success as CEO. He, immodestly, accepts analysts’ description of Access Bank as “Africa’s most successful banking growth story in the new millennium”.
Finally, in chapter 17 – “The Next Chapter” – Aig unabashedly presents a table that validates the contextual storytelling of the previous 16 chapters. It compares a list of metrics in 2002 with the same in 2012. With this astounding leadership scorecard, Aig left the bank when the ovation was loudest.
His leadership of Access Bank delivered a stupendous financial return in excess of 4 100%, so he has a tremendous amount to be proud of, especially having built “a strong platform for consistent and continuous success in the future”. The bank’s leadership succession in 2013 was also watertight, with excellent transition from Aig to Herbert. An observer today in 2021 would say, without a doubt, that eight years after Aig stepped down as CEO, the bank, under the leadership of his successor, has sustained a growth and impact trajectory that Aig would be proud of.
Overall, this book is a delightful read. Aig records factually the most interesting, if tumultuous, period in banking in Nigeria, and takes the reader on an enlightening voyage of understanding the backstory to many events that took place at the time. This would be particularly illuminating for non-bankers who have been fed the media’s opinion of developments in the financial services sector. Aig strives, in writing this book, to clear the air on, for example, some misgivings at the time on the Intercontinental Bank acquisition, or the perceived “aggressive” tendencies of Access Bank.
Even though the chapters are not necessarily chronological in storytelling content, Aig succeeds in placing the overlapping stories within the relevant circumstances and factors influencing outcomes, facilitating ease of cross-referencing by the reader. The notes at the end of the book are detailed and very much afford a non-Nigerian or a non-banker reader a fuller understanding of the names and places mentioned in the book.
I would be remiss if I did not point out that there are a few typos and grammatical errors on pages 5, 59, 66,135,137,157,170 and 194. The most notable is on the first page of chapter 1, where Mr Gbolade Osibodu is referred to as Chief Gbolahan Osibodu. I urge the writer to proofread and correct other printer’s devils in the book.
In conclusion, it is interesting that a book that was completed in 2015 is only being released in 2021. Over the years Aig’s legacy has been sustained, and I assume that Herbert Wigwe will be writing volume 2. Our popcorn is ready!
Bola Adesola, senior vice-chairman at Standard Chartered Bank Group and previously chief executive at Standard Chartered Bank for Nigeria and West Africa