Banking

Tayo Aderinokun looks everything like the banker that Nigerian financial regulators had in mind when when they introduced changes to rid the country’s banking system of the bands of buccaneers that once made it a depositor’s nightmare.

He is smart, soft-spoken, suave and stylish. Yet, his words, cautiously chosen and carefully spoken, betray the eclectic blend of conservatism and dynamism that have taken the bank that he runs from a small financial institution to one of Nigeria’s biggest banks.

Aderinokun runs GTBank, a bank whose balance sheet of $4bn puts in the big league in the West African sub-region. Its branch network, which was 40 only two years ago, is now 100 and its percentage of non-performing loans, which is 320 percent of total loans of failure, is one of the lowest in the industry, a factor that lends credit to its industry acknowledged rigorous system of credit analysis.

Aderinokun read Business Administration at the University of Lagos and got an MBA from the Anderson School of Management, California LA. He started his career in Chase Bank and left to start First Marina Trust, a finance company that set up GTB in 1990.

When Aderinokun and some of his colleagues left their bank jobs 16 years ago to start GTB, they were assailed by the fear of the unknown. They were not sure, Aderinokun says, of how it was going to work. However, that fear, rather than inhibiting them in their quest, drove them to do all they could to make GTBank work.

GTBank is as much a product of its founder’s drive for excellence and the opportunities presented by the sorry state in which the Nigerian banking sector was in the late 80s and early 90s. Prior to the emergence of GTBank, and others of its ilk called new generation banks, the sector was dominated by large banking behemoths whose huge assets and capital bases made them indifferent to the gains that could be maximised from the provision of efficient customer services. Then, at many of Nigeria’s banks endless queues were common and customers’ complaints were hardly attended to. It was not uncommon to spend three hours or the better half of a day in a long queue trying to cash a cheque or deposit money. Bank staff also carried out their duties as if doing customers a favour.

Watchers credit Nigeria’s new bankers like Aderinokun with helping the industry to completely break away from the old order. GTBank started out by employing university graduates only rather than secondary school certificate holders like the old bank did. They then gave this well-educated workforce extensive banking training, especially the basics of customer relations. They also introduced changes to the aesthetics of the banking hall. Recalling those times, Aderinokun says, that the layout of the old banking halls, which he referred to as ‘unfriendly” were most business-unfriendly. “Bankers were locked up in cages and all the service they could offer was what I would call, ‘armchair banking,” he says.

The new banks also commissioned architects to design simple, yet exquisitely designed structures as bank buildings. They also mandated their workers to adopt very formal dress codes.

And unlike in the old days when bankers would sit in their offices and await customers, the banks formed aggressive marketing teams that sought out depositors in places as diverse as religious centres, homes, offices, schools, companies and government establishments. The arrival of these young Turks changed the scene. The resultant changes were radical. They made the customer king and drew such a line between the old and the new banks that the established banks followed suit.

Many of the innovations, such as online banking, telephone, and e-payments systems that are now common features in the Nigerian banking scene are products of the changes introduced by these banks.

That spirit, Aderinokun says, still drives GT Bank and its guiding spirit, treating the customer as king, is still a core management principle. Other factors that have helped the bank, Aderinokun says, are its commitment to innovation and to its highly trained staff. “We create an environment where people can use their talent and intellect. Hard work is the first reason why GTB has attained the level of success it has in the industry. The introduction of new technology and good staff members, who are vibrant and energetic, have all added up to our success. The staff is a very special breed of people who have the potential to deliver and the bank ensures that its staff embarks on a number of training programmes and courses regularly.

“The basic requirement for joining the bank, at entry level, as a university graduate, is a first-class or a second-class upper degree. The old generation banks had, on the contrary, paid more attention to experience rather than qualification,” he says. While he says that experience is very important, he argues that a potential employee should have a blend made up of the two. “It is more important to have the paper qualification and then acquire the experience. GTB has a number of experienced hands who will impact on these young and vibrant lads who will pick up in no time and sooner than later start to give back what they have picked up moreover, they are usually very innovative in their approach to the job. The danger of putting experience above intellect is that experienced hands are never open to change; they tend to do things the way they have always known,” he says.

So ingrained is the philosophy of helping members of staff to attain their fullest potential in GTBank that Aderinokun sees himself more as a teacher and a coach. He says he is of the belief that people should be given the right tools and an amount of freedom to express themselves, albeit within a boundary.

Initially, the arrival of these new banks, though widely celebrated, did Nigerian banking a great deal of good and a few banks like the GTB soon started giving the other established banks a run for their money. But the progress and innovation brought into banking by these banks would soon become mired in unwholesome practices.

Aderinokun says that GT Bank’s blend of innovation and, in the best of banking tradition, conservatism helped the bank to avoid pitfalls.

“Banking is a profession or a business that must be grounded in very conservative principles. Dealing with people’s money must be taken with seriousness and a whole lot of discipline. Because the next most important thing to life is money, when you deal with people’s money, you have to be very, very conservative to ensure that you protect the money so that when customers demand their money, it is made available to them,” he says.

The past days have seen Aderinokun burning more energy and time on GTBank’s latest project, a bid to re-invent the bank’s corporate identity and brand. The bank wants to use the energy associated with change to further expand its share in the sector.

“The need to be vibrant, modern and fresh is catching on in every facet of life in Nigeria, and GTB is not left out,” Aderinokun says as he launches into an explanation of the rationale behind GT Bank’s rebranding. “It is a re-launching of the bank but there are still many more changes and surprises to come.”

For example, the bank’s logo is now an orange square containing a smaller white square. “Using the orange logo for GTB is a calculated move to attract the public and indeed, it is working. It is a sign of rejuvenation,” Aderinokun says. Unlike in the past when it was known as a bank that caters only for high net-worth depositiors, he adds, GTBank is now transmuting into a bank with new services to offer all categories of people. “We are available to everybody and we need to be more visible. You should be able to drive past, see the colours and let it invoke something in you (unlike) when it was more of a national bank trying to cater to a very exclusive set of Nigerians.”

In the aftermath of recapitalisation, banks have been rushing to the capital market for funds. However, there have been complaints by shareholders that bank stocks have depreciated in value. Some investors have complained that some banks are manipulating financial records to lure the investing public to buy bank shares. But Aderinokun says GTB on the contrary gives value for money and does not raise money through stocks when it is not needed.

Given the sorry state of the Nigerian banking sector when it came in, it wasn’t surprising that its customer base shot up or, as some watchers have said, its increasing customer base overwhelmed its capacity to provide value- added services, after a while and threatened to destroy its reputation for customer satisfaction especially at the branch level.

How did GTBank solve this problem?

“The solution to that challenge was that we put the right infrastructure in place, increased and alternated service points and introduced customer interaction centres where the customer can do a lot of banking business over the phone i.e. transfer money, quietly,” he says.

The consolidation exercise in Nigeria’s banking sector is perhaps the toughest task that banks have had to face this year. After the announcement of government’s decision, banks scrambled, and for most unsuccessfully, to source capital to meet government’s minimum required capital. GTBank was somehow lucky: A week before the announcement it went to the capital market to source for funds and as such gave rise to speculations that the bank had prior knowledge of government decision.

Aderinokun dismisses these speculations as unfounded and reveals that preparations for the GTB public offer started five months before the announcement by regulators. It then opened to the public one week to the announcement. Though he admits that the coincidence was startling, Aderinokun nevertheless sees the bank’s success at the capital market as the result of its track record of good returns to shareholders.

“The bank opened to the public one week after the announcement on June 30. It goes without saying that preparations, which include the Annual General Meeting and SEC approval, had started months before. Moreover, Soludo’s appointment (Charles Soludo is the Nigerian Central Bank Governor who introduced recapitalisation) was in May which makes it obvious that the bank’s decision was taken in the nick of time with no prior knowledge,” he says.

Lagos is Nigeria’s commercial capital, this city of an estimated 15 million people where its most viable financial centres and trading concerns are located hence the huge concentration of banks in Lagos. Yet, Nigeria is a nation of 120 million people. Banks have been accused of concentrating in Lagos at the expense of other parts of the country. Is there going to be a shift at GTBank anytime soon? Aderinokun says 60 percent of banking, industrial, economic and commercial activities take place in Lagos. “It is hugely important, despite the fact that it is small in terms of geography. Any bank that knows its onions will do very well to do a significant part of its business in Lagos,” he says. Nevertheless, he says, GTBank, which already has expanded into the West African sub-region is expanding its Nigerian branch network.

At the moment, GTBank has branches in The Gambia, Sierra Leone and Ghana. But Aderinokun insists that Nigeria would remain GTBank’s biggest area of operations, not just for nationalistic reasons, but also because, “Nigeria is the best thing happening in West Africa. Take the whole of the West African economy — Nigeria makes up about 60 percent of it.”

Small businesses, the engine of economic growth, have had a raw deal in the hands of banks in Nigeria. Nigerian banks, small businesses allege, often shy away from short-term lending and the result is little activity in the SME sector. Aderinokun says banks, like other institutions, have to be careful about the kind of risks they expose themselves to. “A large number of small businesses do not have a management system in place and corporate government systems are usually non-existent. Banks are trying to cut down on the risks. They give long term loans, but only where the risks are less. A majority of long term lending is given to multinationals and the bigger establishments. Large corporations like LNG, cement factories and a whole lot more also benefit from these long term loans from banks.

“The banks have stated clearly that they also need sources of long-term funds. Plans are in the pipeline to address this issue. The pension commission and pension fund administration business is just taking off and would introduce long term funding which will translate into long term lending. The level of risks banks can take is limited. Venture Capital companies have the business of pulling risk capital to start off projects. The funds available to banks are provided by depositors who are not interested in what you use their money for; all they are interested in is getting their money when they need it, hence the tendency for the good banks to be prudent in their investment outlets. The investment outlets must be liquid enough. It is therefore necessary for government to invest in venture capital companies,” he says.

Aderinokun’s appointment as GTBank chief executive officer was trailed by speculations that he fell out with his predecessor, Fola Adeola, a co-founder of GT Bank and member of a commission set up by British Prime Minister, Tony Blair, to fight poverty in Africa. Adeola’s exit from the bank three years ago was said to have been as a result of a leadership tussle that also splintered the relationship of the two close friends. Are they still friends?

“Fola Adeola and I are friends. We are close in age and so decided to start a business together on the understanding that he will run it for some time. That was what happened,” he says.

Aderinokun says one of the things the partners wanted when they started the bank was a departure from the common African business model where the typical African business dies when its leader does. “This problem is an African problem and is very common In Nigeria. It is a weakness of many businesspersons, they never leave a succession plan,” he says, as he adds that he intends to move on some day, but his dream is to put a proper succession plan in place before he does. “The vision of the founding fathers of the bank is to create an organisation that will outlive the founders.”

And what is the strength of this partnership that has resulted in one of Nigeria’s most successful banks? “The partnership of GTB has worked for over 16 years just like any other partnership that keeps to the rules of the game. The best partnership is a partnership where the partners have different strengths. The weakness of one complements the strength of the other and vice versa. For a partnership to do well there must be transparency, honesty and perseverance. The partners must be ready to go the extra mile and above all, there must be trust,” he says.

Aderinokun says he does not intend to stay in banking for too long. Besides his zeal to raise a set of young players who would take the bank to higher heights, he wants time to develop his non-banking gifts.

A poet, Aderinokun still finds time in his very busy schedule to scribble down a line or two once in a while. His brothers Eddy and Kayode are established authors and his daughter’s writings, he says, shows a great deal of promise.

In the late nineties, GTBank’s pioneering role in the Nigerian banking sector got an unusual boost when the Harvard Business School turned its story and management style into one of the case studies taught in his famous MBA class.

In 1996, some of the bank’s officials had gone on a management course at Harvard Business School. One of their professors was surprised when the students from Nigeria kept saying their bank in Nigeria had already put some of the ‘new’ theories he wanted them to go back home and try into practice, and with good results.

“He was taken aback that a bank in Africa and Nigeria for that matter could be that efficient. He decided to come over and see for himself if indeed the claims were true. He was quite impressed at what he saw and that was how the study started in 1996,” Aderinokun says. With such attention, GTBank needs little motivation to reach for the sky. -Business in Africa Magazine (West Africa)

Vital Stats
Tayo Aderinokun co-founded Guarantee Trust Bank with Fola Adeola in 1990, and was Deputy Managing Director and Chief Operating Officer for 12 years before he became Managing Director of the bank in August 2002.

Aderinokun read Business Administration at the University of Lagos and got an MBA from the Anderson School of Management, California LA. He started his career in Chase Bank and left to start First Marina Trust, a finance company that set up GTB in 1990.