ECOBANK Plots Market Dominance - 2008-09-22

ECOBANK Transnational Incorporated (ETI)'s $2.5 billion Cross Border Hybrid Offer, the most audacious capital raising offer so far in Africa, is a bold move to alter the continent's banking landscape. Kenneth O Eze traces the making of Africa's megabank.

The advert sums it up nicely: While most other African banks count in branches, ECOBANK counts in countries. Which is only to be expected, for the bank currently operates in 25 African countries, namely: Benin, Burkina-Faso, Burundi, Cameroon, Cape Verde, Central African Republic, Chad, Congo-Brazzaville, Côte d'Ivoire, Democratic Republic of Congo, Gambia, Ghana, Guinea, Guinea-Bissau, Kenya, Liberia, Malawi, Mali, Niger, Nigeria, Rwanda, Sao Tome and Principe, Senegal, Sierra Leone, and Togo.

However, not prepared to rest on its oars, ECOBANK has hatched a plot to totally dominate the African market. It has served a notice of the intent to spread its tentacles to seven more countries in Africa and in the other four continents before the end of this year, a feat that would see the bank operating in 32 countries in Africa and in all major business locations of the world, thus firmly establishing it as the bank to beat in Africa.

To clear the path towards achieving this, ECOBANK needs to muster the necessary financial muscle, which explains its ongoing transnational public offer. The big offer has been on since August 25 and closes on October 3.

ECOBANK, through the offer, is inviting discerning investors to share in its “desire to weave an efficient and effective financial services web across . . . the continent and create opportunities for improved business relations, according to a release from the bank.” This biggest and first cross-border hybrid public offering and rights issue in Africa is being sold simultaneously on three stock exchanges in Nigeria, Ghana and Cote d'Ivoire.

The objective of the offer, according to Mande Sidibe, Chairman of ETI, is to reposition ECOBANK to dominate the African banking landscape, by opening new outlets in Africa and other continents, as well as strengthening the capital base of already existing business offices in the continent. 

Sidibe said the proceeds of the offer would not only be used for expansion but to recapitalise already existing subsidiaries. He maintained that ECOBANK was determined to consolidate its position as the leading pan-African banking group, adding that the increased capital would also help upgrade as well as modernise the group's technology platform.

According to Arnold Ekpe, the Group Chief Executive Officer of ETI, the landmark offer is targeted at Africans all over the world, “hence the bank held non-deal Road Shows in 70 locations with institutional investors in 18 countries across North America, Europe, Asia and Africa.” Ekpe hinted that the feedback from the investing public indicates that the offer would be fully subscribed.

Throwing his weight behind the unique offer, former ECOBANK chairman, Chief Phillip Asiodu, described it as an indication that the economies of African nations have recorded appreciable growths over the past few years. He attributed the continent's economic growth in the past 10 years to the relative political stability in a majority of African countries.

It is Asiodu's opinion that the ETI offer is coming at an opportune time of continental economic upswing. He called on Africans at home and in the Diaspora, especially the apostles of regional integration to buy into the offer because “the opportunities in an enlarged, much more unified African market is so enormous that anyone who invests in it stands to multiply every dollar so invested.”

Speaking on ECOBANK's plans, Mr. Offong Ambah, Managing Director of the bank in Nigeria, said: “Our intention is not just to build Africa's biggest bank, but also to build the continent's best financial services group in terms of: processes, products, services, technology and people. In the process we would have raised a world-class bank fully owned and managed by Africans.”

He sees the ongoing offer as “a very big offer for a very big constituency.” Continuing, he stated that part of the proceeds would be needed “to capitalise our existing subsidiaries.” 

Prior to the opening of the ongoing offer, ECOBANK had its shareholder register populated to the tune of almost 7,000, comprising institutional investors and individual Africans of various nationalities. The current offer opens this register for many more Africans to put their names on, by subscribing to the shares on offer, and availing themselves of  the opportunity of bountiful returns, according to Asiodu.

Ambah has assured that ETI would play according to the rules in wooing investors both in the countries where the Pan African Bank is listed on the stock market and where it is not. He vowed that ETI would do everything legally allowed to encourage “individuals and institutions who find it advantageous to invest in any of the other 25 countries” where it is not listed.

Ambah pointed out that in those countries where ETI is not listed on the stock exchange, it is “not permitted by law to advertise publicly.” He, however, explained that this does not make it illegal for investors from those countries to subscribe, adding that the bank would seek to reach interested investors in the affected countries privately, as the law allows.

Smart Moves to Swamp Competition

ETI was established as a regional bank holding company in 1985 with head office in Lomé, Togo. It has grown into a fullservice regional banking group, having over 500 branches and offices with over 10,000 employees in West, Central, East and Southern Africa. There is no gainsaying that ETI has accomplished its opening mission, conquering the subcontinent of West Africa (ECOWAS), from which its name is drawn. It is therefore building on the success achieved over its short period of existence, just over two decades, by moving to dwarf the competition further, not only in coverage and capital base but in weaving an efficient and effective financial services web across the length and breadth of Africa and beyond.

According to Asiodu, “ETI's expansion plan includes the opening of new subsidiaries and branches in Middle Africa as well as representative offices and international banking facilities in the major financial centres that have substantial trading and transaction links with Africa including London, Paris, Dubai and Beijing.” No competitor has this large coverage in the continent, not to mention being represented in the major financial centres of the world.

Considering the knack of ETI for success, which is beaming on the ongoing $2.5 billion hybrid offer, and the Pan African Bank's unrelenting desire to combine businesses with First Bank of Nigeria Plc (FBN), arguably Nigeria's most surefooted bank with over 500 branches in Nigeria and a fully operational independent unit in London, it would serve the competition better to take notice. The coming together of the oldest banking institution in Nigeria, FBN and ETI, the fastest growing banking phenomenon in Africa only portends danger for competitors.

According Ambah, the Pan African Bank's “first merger talk with First Bank (of Nigeria Plc) started in 2005. The First Bank transaction was a very interesting transaction meant to give scale to ECOBANK in Nigeria and to First Bank in the rest of Africa.” For various reasons, ranging from volume of transaction to diverse legislations in countries in which the banks operated, the transaction had to be kept on hold. But Ambah maintains; “the transaction is not over.  I can assure you, the First Bank transaction is still ongoing.” Parties to the mega transaction see it beyond the two banking institutions involved, but as something that would colour the African economy glowingly.

Declaring that ECOBANK wants “to move very quickly into the various markets where we are not yet present,” Ambah said that “one of the fastest ways to do that is through acquisitions.” The money being raised through the hybrid offer, aside from funding these acquisitions across the continent, would embolden existing ECOBANK business offices against competitions in countries of operation where such is deemed necessary by ETI management.

It leaves little to doubt that being bolstered by the power of massive capital and people endorsement, ETI would dwarf competition in almost all the markets in which it operates. A combination of businesses between ETI and FBN gives the institution emerging there-from unassailable dominance in Nigeria as well as the continent.  Considering ETI's business thrust of expanding through acquisitions, leading banks across Africa have genuine reason for concern.

In Nigeria, however, the combination of businesses between ECOBANK and FBN is awaited by the banking public with much concern. A respondent, who would not want his name in print because he works for a competitor asked: “How long is it taking ECOBANK and FBN to conclude a transaction? How come FBN and ECOBANK refer to this seemingly moribund transaction only when soliciting money from the public?” He insinuated that the much trumpeted merger moves may after all be a mere marketing gimmick.

Megabank, Mega Moves

ECOBANK set off “to build a world-class African financial institution” using a world-class international institution as foundation. This much was disclosed to the media by Ambah, who recalls that “ECOBANK was set up at a time when there was no private sector managed banking institution in West Africa.” He added that “ECOBANK came in to develop and integrate the financial market in West Africa.  The people who founded the bank wanted an institution that would target the middle market and therefore facilitate the development of banking culture among the teeming African population.”

ECOBANK has long eclipsed other banking institutions in the West African sub-region, being the only banking institution with operations in all ECOWAS countries.  It has since forayed beyond the West African subcontinent, expanding into most other parts of Africa, distinguishing itself as a truly Pan African institution. With the hybrid offer, being Africa's biggest offer, which underlines the bank's ambition and determination for sustained dominance in Africa, the bank hopes to rapidly spread round Africa by acquiring existing banks in countries where ECOBANK is not currently in operation, establish offices in the major financial centres of the world, fortify IT and capital base in African nations where they already operate. Thus, the ongoing mega offer only reflects the size, work-in-progress and ambition of the institution.

Analysts opine that the success of the offer would catapult ECOBANK to the peak in Africa in terms of capitalisation. Going by the strings of successes recorded by other exercises and the credentials the Pan African Bank are flaunting, the offer is perceived as succeeding and consequently placing ECOBANK in a pole position in banking in Africa, moving it closer to megabanks in the more advanced economies of Europe and Asia. Considering that several banks already celebrated golden jubilees before ETI opened it doors to business in 1985, but twenty years after are trailing the Pan African dream, the feeling is that the success of this mega offer would see ETI running shoulder to shoulder with the world's leading financial services providers.

With ETI scheming to upgrade its IT platform, it is hoped that this would help it improve its services, and allay the fears of many concerned customers, as Dupe, a Nigerian lady who claims to have maintained a banking relationship with ECOBANK and other competitors, expressed. She said that this would go a long way to endear the banking public to the Pan African Bank.

ECOBANK's Conquest of Africa

Established and managed by Africans of diverse professional experiences and nationalities in 1985, ECOBANK has become a unique model of regional integration and co-operation. Its rapid growth is attributable to the vision, values and ambition it was founded upon.  ECOBANK prides itself as coming into existence to bridge the gap, being set up “at a time when there was no private sector managed banking institution in West Africa,” according to Ambah. The bank has also gone ahead to become the first banking institution to have operational business offices in all the countries making up ECOWAS.

Only a visionary and ambitious institution can issue the continent's highest public offering. ETI, the parent company of the ECOBANK Group plays a central role is the definition and implementation of common policies and standards on the basis of a “one bank” concept across the group's network, according to a statement on the bank's website. This concept aims at standardising the Group's processes and procedures irrespective of geographical location or language differences.

ECOBANK prides itself as a scorer of many firsts, being the first Pan African Bank with strong feet on over half of the world's second largest continent, aspiring to establish offices in the world's major financial centres. Asiodu lauded the “management of the Group for the rapid expansion of the past few years that has led to an increase in the operational jurisdictions of ETI to 25 countries. In his opinion, “the development is the only way to bolster economic interaction and development across the different sovereign nationalities in the continent.”

The story of ECOBANK is that of the conquest of the African financial terrain.  Starting with one bold step in 1985, in one location, Lome, ECOBANK has spread like wild fire across the African continent. Ambah maintains that those “who founded the bank wanted an institution that would target the middle market and therefore facilitate the development of banking culture.” The conquest story of ECOBANK today is such that the bank has flourished to play in every market segment, expanding by acquisition in every nooks and crannies of the continent, with sight firmly set on leadership, even in major financial centres of the world.

ECOBANK remains the only bank to evolve and deploy the multi-currency and cross boarder debit card that allows account holders to move from country to country with their card knowing that their bank will support their financial needs at ECOBANK's ATM's in all the branches in Africa. The Managing Director insists that the bank is not resting on its oars, but will soon perfect its system so that this pleasurable service would enable ECOBANK account holders to also do banking transactions on competitors' ATM all over Africa. He says: “If you are travelling to any country where ECOBANK is operating, you can take your debit card, your local currency debit card, to that country and you are capable of withdrawing their own currency from ECOBANK ATMs. You don't need to buy BTA and other things. This is being made possible by way of a group switch in Ghana. But we need to move beyond that, that is, enable card holders to withdraw from other bank's ATMs.”

Given the hypothetical position that the Pan African Bank started in 1985 and has grown to cover Africa at the rate of over one and a half country per year, assuming ETI makes good the promise of opening in seven more countries within 2008, it follows that conquering the entire African continent is just a few months away.