STRATEGIC MANAGEMENT AS A TOOL FOR THE ATTAINMENT OF ORGANIZATIONAL PERFORMANCE IN SELECTED NIGERIAN DEPOSIT MONEY BANKS IN ENUGU METROPOLIS

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ABSTRACT

The  study  focused  on  strategic  management  as  a  tool  for  the  attainment   of organizational  performance  in  selected  Nigerian  deposit  money  banks  in  Enugu Metropolis. The specific objectives sought to:  ascertain the extent value chain affects growth in Nigerian deposit money banks profitability, determine the extent of effects of strategic change on market share in Nigerian deposit money banks productivity, examine  the  extent  strategic  leadership  affects  customer  satisfaction  in  Nigerian deposit  money  banks  effectiveness  and  determine  the  key  challenges  of adopting strategic management in Nigerian deposit money banks. The research design adopted in  this  study  was  survey  which  is  characterized  by  direct  interaction  with  the population. The target population of the study is 2093 comprising both the senior and junior staff of the three selected commercial banks in Enugu metropolis Nigeria. Taro Yamane’s formula was used to determine the sample size of 336. The key instrument of data collection was questionnaire and oral interview guide. The questionnaire was structured  in  5-point  Likert  scale.  The  data  were  presented  using  sample  table frequency and the formulated hypotheses were tested using simple linear regression and Friedman Chi-square. The study found that value chain to a great extent affected growth in Nigerian deposit money banks profitability (r = 0.882; F = 1.057E3; t = 11. 249; p = 0.05).  Also the study discovered that strategic change to a great extent had effect on market share in Nigerian deposit money banks productivity (r = 0.917; F = 11. 596E3; t = 21.169; p = 0.05). Strategic leadership to a great extent affected customer satisfaction in Nigerian deposit money banks effectiveness (r = 0. 573; F= 148.292; t = 5.866; p = 0.05).Further  the study revealed that economic and  poor structures  were the key challenges  of adopting  strategic  management  in  Nigerian deposit money banks (X2cal  = 492.352 >X2critical = 11.14, p 0.000 < α = 0.05).The study concludes that, the performance of deposit money Banks depend on the types of strategic they adopted. The study recommends that the organizations should intensify every effort to assess and monitor both internal and external variables in order to checkmate   the  unprecedented   failure   that  could  be  controlled   by   continuous improvement.

CHAPTER ONE

INTRODUCTION

1.1       Background of the Study

Strategic management is a disciplined approach that utilizes the principles and process of management  to  identify the corporate  objective  or mission  of any  business.  It determines   an  appropriate   target   to   satisfy   the   objective,   recognize   existing opportunities and constraints in the environment, and device a rational practical way by which an objective can be achieved. Strategic management is a technique used by organizations to create favorable future as well as help helping them to prosper. The key to strategic management is to understand that people communicating and working together will create this future (Harfield, 1998).

In other words, strategic management emanates from both the process and philosophy for  determining  and  controlling  the  organizational  relationship   in  its  dynamic environment. As a process, it attempts to define approaches and techniques aimed at assisting the management in adapting to the dynamics of today, through the use of objectives and strategies. Strategic management endeavours to achieve effective and efficient  programs  to  accomplish  the  organization’s  mission.  As  a philosophy,  it changes  how the manager  looks at  competitors,  customers,  markets and even the organization itself. Its primary objective is to stimulate management’s awareness of the strategic implication of environmental events and internal decision. Contemporary organizations  see  strategic  management  to  be  concerned  primarily  with  actions organizations  take  to  achieve  competitive  advantage  and  create  value  for  the organization and stakeholders (Porter, 1981).

Lawrence and William (1988) define strategic management as a stream of decisions and actions, which lead to the development of an effective strategy or  strategies to help achieve corporate objectives. The strategic management  process is the way in which  strategists   determine   objectives   and  make   strategic  decisions.   Strategic management’s  main  focus  is  the  achievement  of  organizational  goals  taking  into consideration the internal and external environmental factors.

Porter  (1985)  argues  that  the  essence  of  formulating  comprehensive  strategy  is relating a company to its environment. Strategic management permits the systematic management  of change.  It enables organization  to purposefully  mobilize resources towards a desired future.

Chandler  (1962)  posits  that  any  effective  successful  strategy  is  dependent   on structure, thus to achieve any effective economic performance the organization needs to alter its structure. Strategic management is congruent with the quality movement’s emphasis on continuous improvement. Indeed, the emphasis on anticipating the needs of stakeholders is a critical component of external analysis.

Shrivastava  (1986)  eulogizes  better  on  the  meaning  of  strategic  field  using  five operational  criteria,  derived  from  Giddens  (1979).  These  indicate  its  ideological nature: the factual under-determination of action norms; universalization of sectional interests;  denial  of  conflict  and  contradiction;  normative  idealization  of sectional goals; and the naturalization of the status  quo. Shrivastava concluded  that strategic management   was   undeniably   ideological,   and   that   strategic   discourse   helped legitimize  existing  power  structures  and  resource  inequalities.  Drawing  from  the above Shrivastava (1986) sought emancipation in the ‘acquisition of communicative competence  by  all subjects  that  allows  them  to  participate  in discourse  aimed  at liberation from constraints on interaction’. He also called on researchers ‘to generate less   ideologically   value-laden   and   more   universal   knowledge   about   strategic management of organizations’.

Knights and Morgan (1991) opine that corporate strategy is a set of discourses and practices which transform managers and employees  alike into subjects who  secure their sense of purpose and reality by formulating, evaluating and conducting strategy’. Managers cannot stand outside of ideology to impose their  strategies on unwitting workers. Rather, they too are entangled in discursive webs. Strategy constructs a myth of  commonality  of  organizational   purpose  by   positing   lofty  and  unattainable aspirations   (Harfield,   1998).   While   projecting   solidarity   of   purpose   and   the universality of the interests of  senior managers  and stockholders,  the discourse of strategy legitimates organizational hierarchy with differential influence and rewards. The importance attached to strategy also implies that employees who work outside of what is identified as the strategic core of an organization make a lesser contribution

and therefore  cannot be expected  to participate,  even marginally,  in decisions  for which others are responsible. It also provides a rationale for differentiating the pay and conditions of ‘core’ and ‘peripheral’ employees. The need to assert the status of an elite group of ‘strategic managers’ is perhaps particularly acute in advanced economies where manual labour is declining and traditional divisions between task execution and conception  are  loosened  up. From  the foregoing  we  can draw  our  inference  that effective successful strategy is dependent on structure, thus to achieve any effective economic  performance   the   organizations  needs  to  alter  its  structure.  Strategic management  is  congruent  with  the  quality  movement’s  emphasis  on  continuous improvement and increase performance of an organization.

Stoney (1998) discovers that in the strategic management  model, responsibility for corporate level decision-making rests within a core of strategic functions discharged from the day-to-day responsibilities of operational activities, these being devolved to the lowest possible  level of control.  Undistracted  by  operational  matters  and line responsibility, the elite (key functionaries) often the ‘executive board’, is left free to concentrate on strategic thinking and  decision-making.  Each banking organization’s experience with strategic management is unique, reflecting the organization’s distinct culture, environment, resources, structure, management style, and other organizational features.  However,  experience  abound  that working with leaders  and managers  in various  organizations  indicates  that  similar  questions  and  concerns  develop  as organizations  implement  strategic  management.  Meyer  (1991)  further  opines  that strategic management can be distinguished from other organizational sciences by its emphasis on identifying, explaining, and predicting the determinants of organizational performance. The field’s central research question is ‘‘why do some firms outperform others?’’  Unlike  efforts  to  explain  organizational  outcomes  conducted  in  other disciplines,  strategic  management  research  has  long  recognized  that  phenomena originating from several levels of analysis play a role in determining organizational effectiveness. To maximize the chances of good performance, a firm needs to occupy a prosperous strategic group within a lucrative industry, for example the commercial banks in Nigeria. In these loci this study stands to investigate the impacts of strategic management as a tool for the attainment of organizational performance  in Nigerian commercial banks.

1.2       Statement of Problem

The  acute  phase  of  the  global  financial  crisis  is  past  and  economic  recovery  is underway, but recovery remains fragile and is unexpectedly worrisome, as the growth impact of financial and monetary measures wane. The debt levels remain high, there is little growth in mature economies and ventures into stronger financial relationship remain politically and  socially problematic.  Organizations  are seeking  growth  but much of the fine-tuning has been completed, through the technology revolution and the   recent   focus   on   cost   reduction   proposed   by   CBN   in   their   policies. Notwithstanding,  executives and managers are under relentless pressure to perform, because the competition is intense. Organizations want to increase revenue, improve productivity,  attain  their  goals,  operate  more  efficiently  and  effectively,  be  good corporate citizens, have happy, motivated employees, retain satisfied both profitable customers and mostly, find that elusive sustainable competitive advantage.

In other words, the whole essence of establishing financial institution is corroding or defeated if that organization is not arranged and managed in such a way that it will attain its set goals. The excessive wading of imbalance structure and damage control the  approaches  most  adopted  by  majority  of  Nigerian  financial  institutions  are responsible   for   several   failures,   and   colossal   losses   witnessed   among   the organizations.  However, some close insight from the success of most multinational companies like Citi Ban reveal the  importance  of strategic management  embedded with strong direction and vision. A vision not pursued will become a mere dream and will lead to stagnation, non-attainment of organizational goals and distress. Also the height of corruption, mismanagement, insider’s abuse and soft loan without security or non-collateralized loans amounted to collapse of many banks. These porosity and poor  strategic  insight  pushed  the  CBN  to  introduce  consolidation,  merger  and acquisition as a remedy. While none of these challenges is new, what is new is the escalating  pressure  to  get  the  right  direction,  track  and  speed  in  an  increasingly complex volatile and mutually dependent world.

A strategic management plan is imperative to an organization pursuing its objectives. The problem is that many organizations operate on a five-year strategic plan broken into  annual  budgets,  quarterly forecasts,  and  monthly  reports,  and  which  is often disconnected from real events. To take advantage of new opportunities and mitigate

risks within the competitive environment, banks executives must review the strategic management  plan  on a continuous  basis  and  stand  firm  to  face  their  challenges. Despite the entire unsafe environment sprouting here and there in Nigerian financial institution,  the  management  has  failed  to  employ  more  energy  in  environmental analysis to identify what is wrong, as well as  decisions and actions to be taken to ameliorate the challenge.  For strategic management to result in superior performance, all the steps in the process need to be effectively managed. A brilliant strategy may put a company on the competitive map and increase its performance. Unfortunately, most  companies  struggle  with  implementation  and  therefore  fail  in  performance enhancement

Despite the fact that strategic planning has brought far reaching revolution which has tremendously  transformed  most business  landscape,  it is  still  plagued  with  some constraints  in the  Nigerian  banking  industries.  Some  of  these  constraints include wrong application of strategic planning by Nigerian Deposit money banks, unethical attitude and conduct of bank managers and board of  directors, poor organizational structure  and  non conformity  to  the  rules  and  standards  by the  workers  towards actualization of the strategic goals. This precarious situation drives the urgency for the implementation  of  strategic  management  in  our  commercial  banking  industry  to maximize   performance.   Strategic   management   is   important   for  organizational performance.

1.3       Objectives of the Study

The broad objective of this study is to investigate Strategic Management as a tool for the  attainment  of  Organizational  Performance  in  Nigerian  Deposit  Banks.  The specific objectives sought to:

1.       Ascertain the extent to which value chain affects profitability  Deposit money

Banks

2.       Determine  the  extent  strategic  change  affect  market  share  Deposit  money

Banks in Nigerian.

3.       Examine the extent strategic leadership affects customer satisfaction Deposit money banks’ Nigerian.

4.       Determine the key challenges of adopting strategic management in Nigerian

Deposit money banks’.

1.4       Research Questions

The following formulated questions will serve as guide to the researcher:

1.       To what extent does value chain affect profitability of Deposit money Banks in Nigerian?

2.       To what extent does strategic change affect productivity of Deposit  money

Banks in Nigerian?

3.        To  what  extent  does  strategic  leadership  affect  customer  satisfaction  in

Deposit money Banks Nigerian?

4.        What are the key challenges of adopting strategic management  in  Nigerian

Deposit money Banks?

1.5       Research Hypotheses

The hypotheses formulated below will guide the study:

i.     Value chain to a great extent affects the profitability of Deposit money Banks in Nigerian

ii.      Strategic change to a great extent positively affects productivity of  Deposit

money Banks Nigeria.

iii.      Strategic leadership to a great extent significantly affects customer satisfaction in Deposit money Banks Nigerian.

iv.      Economic  and Poor structures  are the key challenges  of adopting  strategic management in Nigerian Deposit money Banks.

1.6       Significance of the Study

This study will be of immense significance to the Nigerian public, management and employees of the banks,

Nigerian Public: Banking industry contributes a great deal in the development of the Nigerian society. This is true because it plays a very importance role in our society in terms of its numerous financial assistance renders to the society at large. The study will be of great important  looking  at the role of the banking  industry in steering economic development and growth of nation.

Executives or Board and Employee

This study will help executives  or board to understand  the importance  of  strategic management on performance of commercial bank. This will help them in highlighting

areas  that  need  to  be  improved  and  make  strategic  decisions  that  will  enhance performance. The study will also help management and employees of the commercial banks to know the best mechanism of implementing strategies and devices for fixing their feedback

Policy makers (government and regulators)

Policy makers  (government  and regulators);  this study will help policy makers  to identify whether there is any improvement  in the performance  of commercial  bank and  financial  industries,    this  can directly  be attributed  to  strategic  management. Therefore the study will help policy makers to ensure high performance.

Investors

Investors; this study will help investors understand various management strategy and measures  that  the  government  investors  has  taken  to  ensure  their  performance improves.  And  also,  this  study will  inform  investors  as  they  make  decisions  of investing in commercial banks.

Future researchers

The study will also be useful to future researchers as sources of secondary data for their research and academic enquiry.

1.7       Scope of the Study

The  study  focuses  on  strategic  management   as  a  tool  for  the  attainment   of organizational performance in Nigerian Deposit money Banks. The banks selected in Enugu state are: First Bank of Nigeria plc, United Bank of Africa plc and Guaranty Trust Bank plc all located in Enugu metropolis. These banks  were  chosen because they met with the 25billion capital based, there are quoted in Nigeria stock exchange market and have similar mode of operation. The  study covers the period of 2007-

2012.

1.8       Limitations of the Study

Attitude of the Respondents

The unwillingness of some of the management to divulge strategic information in the name  of confidentiality  was  limitation  to  the  study and  some  of the  respondents showed negative attitude towards the study because there was no  financial benefit

attached while some refused to supply the necessary information probably due to their ignorance of the main purpose of this study.

Non availability of research materials

Being a new area of research in Nigeria, the researcher had the scarcity of research materials  which  invariably  slowed  down  the  pace  work.  This   limitation  was minimized by subscribing for research materials through online journals.

1.9       Operational Definition of Terms

The key terms for this study were based on the contextual definition:

Corporate  Strategy:    corporate  strategy  as a strategy  based  on the  experiences, assumptions and beliefs of management overtime and which may eventually permeate the whole organization.

Strategic  Leadership:  Strategic  leadership  is about  transforming  an  organization through its vision and values, culture and climate, and structure and systems as well as through its strategy.

Strategic  Decision  Making:  According  to strategic  decision making  is seen  as  a crucial part of the process by which organization adapt to their environments. Strategic   Change :A restructuring of an organization’s business or marketing plan that is typically performed in order to achieve an important objective

Strategic Management: strategic management as a stream of decisions and actions, which leads to the development of an effective strategy or strategies to help achieve corporate  objectives.  In another  words,  it is concerned  primarily  with the actions organizations take to achieve competitive advantage and create value for organization and stakeholders.

Customer  Satisfaction:  Customer  Satisfaction  is  an  emotional  response  to  the experiences   provided   by  and   associated   with   particular   products   or   services purchased,  retail outlets, or even molar patterns of behavior such as  shopping and buyer behavior, as well as the overall marketplace

1.10     Profile of the Banks under Study

1.        First Bank of Nigeria Plc

First Bank of Nigeria PLC is a Nigeria-based bank that offers a range of financial. First Bank of Nigeria is a Nigerian bank and financial services firm. It is the country’s third  biggest bank. First Bank traces its ancestry back to the first  major financial institution  founded  in  Nigeria;  hence  the  name.  The  current  chairman  is  Prince Ajibola Afonja. The bank is the largest retail lender in the nation, while most banks gather funds from consumers and loan it out to large corporations and multinationals, First Bank has created a small market for some  of its retail clients. At the end of September  2011,  the  bank  had  assets   totaling  approximately   US$18.6   billion (NGN:2.9  trillion).  The  bank’s  profit  after  tax,  for  the  nine  months  ending  30

September  2011  was  approximately  US$270.2  million  (NGN:42.2  billion).    First Bank of Nigeria maintains a subsidiary in the United Kingdom, FBN  Bank  (UK), which has a branch in Paris. The bank also has representative offices in South Africa and China. In October 2011, the bank acquired Banque International de Credit (BIC), a leading bank in the Democratic Republic of Congo (DRC).

The company was named the best bank in Nigeria by Global Finance magazine  in September   2006.   The   firm’s   auditors   are   PricewaterhouseCoopers   (Chartered Accountants).  The firm has solid  short and long term  ratings  from  Fitch and the Global Credit  Rating Company  partly due to its low exposure  to non-performing loans.  The  firm’s  compliance  with  financial  laws  has  also  strengthened  with  the Economic Financial Crimes Commission giving it a strong rating.

PreIndependence History

The Bank traces its history back to 1894 and the Bank of British West Africa. The bank  originally  served  the  British  shipping  and  trading  agencies  in  Nigeria.  The founder, Alfred Lewis Jones, was a shipping magnate who originally had a monopoly on importing silver currency into West Africa through his Elder Dempster shipping company. According to its founder, without a bank, economies were reduced to using barter and a wide variety of mediums of exchange,  leading to unsound practices. A bank  could  provide  a  secure  home  for  deposits  and  also  a  uniform  medium  of exchange.  The  bank  primarily  financed  foreign  trade,  but  did  little  lending  to indigenous Nigerians, who had little to offer as collateral for loans.

Post-Independence History

In 1957,  Bank  of  British  West Africa  changed  its name  to  Bank of  West  Africa (BWA). After Nigeria’s independence in 1960, the bank began to extend more credit to indigenous  Nigerians.  At the same time, citizens began to trust  British banks since there was an ‘independent’  financial control mechanism  and  more citizens began to patronize the new Bank of West Africa.

In 1965, Standard Bank acquired Bank of West Africa and changed its acquisition’s name to Standard  Bank of West Africa. In 1969, Standard  Bank  of West Africa incorporated its Nigerian operations under the name Standard  Bank of Nigeria. In

1971, Standard Bank of Nigeria listed its shares on the Nigerian Stock Exchange and placed 13% of its share capital with Nigerian investors. After the end of the Nigerian civil war, Nigeria’s military government sought to increase local control of the retail- banking  sector.  In response,  now  Standard  Chartered  Bank  reduced  its stake  in Standard Bank Nigeria to 38%. Once it had lost majority control, Standard Chartered wished to signal that it was no longer responsible for the bank and the bank changed its name to First Bank of Nigeria in 1979. By then, the bank had re-organized and had more Nigerian directors than ever.

In 1982  First  Bank  opened  a branch  in  London,  that  in  2002  it converted  to  a subsidiary, FBN Bank (UK). Its most recent international expansion was the opening in 2004 of a representative office in Johannesburg, South Africa. In 2005 it acquired MBC International Bank Ltd. and FBN (Merchant Bankers) Ltd. Paribas and a group of Nigerian investors had founded MBC in 1982 as a merchant bank; it had become a commercial bank in 2002. In June 2009,  Stephen Olabisi Onasanya was appointed Group Managing Director (CEO),  replacing Sanusi Lamido Sanusi, who had been appointed         governor         of         the   Central   Bank   of   Nigeria

2. United Bank for Africa Plc

United Bank for Africa Plc (UBA) is a public limited liability company incorporated in Nigeria.UBA is a large financial services provider in Nigeria with subsidiaries in

20 sub-Saharan countries, with representative offices in France, the United Kingdom and the United States of America. It offers universal banking services to more than 7 million customers across 750 branches. Formed by the merger of the commercially

focused UBA and the retail focused Standard Trust Bank in 2005, the Bank purports to have a clear ambition to be the dominant and leading financial services provider in Africa. Listed on the Nigerian Stock Exchange in 1970, UBA  claims to be rapidly evolving into a pan-African full service financial institution. The Group adopted the holding company model in July 2011.As of December 2011, the valuation of UBA Group’s  total assets  was approximately  US$12.3  billion  (NGN:1.94  trillion),  with shareholders’ equity of about US$1.07 billion (NGN:170 billion).

UBA’s  history  dates  back  to  1949  when  the  British  and  French  Bank  Limited (“BFB”)  commenced  business  in Nigeria.  Following  Nigeria’s  independence  from Britain, UBA was incorporated  in 1961 to take over the business of BFB. Today’s United Bank for Africa Plc (UBA) is the product of the merger of Nigeria’s third and fifth largest banks, namely the old UBA and the former Standard Trust Bank Plc, and a subsequent acquisition of the erstwhile Continental Trust Bank Limited (CTB).

Ownership

The stock of UBA and its subsidiaries (the UBA Group), is listed on the  Nigerian Stock Exchange, where it is publicly traded under the symbol: UBA.  The detailed shareholding in the stock of the company is not publicly known at this time.

Corporate profile

Since its historical emergence from the merger of former Standard Trust Bank and UBA Plc, the UBA Group has positioned itself to be Nigeria’s dominant bank and a leading  player  on the African  continent.  In 2000,  Europe’s  frontline Finance  and Economy magazine, Euromoney named UBA the Best Domestic Bank in Nigeria, in recognition  of the  bank’s  exponential  growth  in  the past couple  of  years and the comparatively higher inflow of investment from global finance players. In 2007, Pan- African Newsmagazine  awarded UBA the Emerging Global Bank Award indicative of the international bank which has most positively influenced the African continent.

UBA has consistently positioned  itself as the bank to beat in Nigeria’s  financially strong banking industry. It has grown its total assets by over 345 percent in the last five years, up from NGN 198.68 billion ($1.656  billion) in  2002 to NGN 884.14 billion ($7.368 billion) in 2006. More recently, at the end of the 2008 financial year, it recorded gross earnings of NGN 169.6 billion, profit before tax and exceptional items

of NGN 56.8 billion, profit after tax of NGN 40.8 billion and total assets of NGN 2.2 trillion. UBA has the largest distribution network in Nigeria with over 6.5  million customers  in  personal,  commercial  and  corporate  market  segments.   As  of  30

September 2008, it had over 650 business offices, 296 deployed POS and 1332 ATMs and pioneered cheque acceptance ATMs in Nigeria. Its over 14,000 staff globally are also referred to as “lions and lionesses”. Regionally, the Group has a presence in 18

African countries and in all major financial centers. The bank currently operates in Nigeria,  Ghana,  Ivory  Coast,  Cameroon,  Sierra  Leone,  Liberia,  Uganda,  Benin, Burkina Faso and Senegal, and has unfolded plans to expand its banking operations to

15 additional countries in Africa come 2009. Records indicate that UBA is the only sub-Saharan bank with dual presence in the U.S. and the UK with a US  regulated branch presence in New York since 1984, UBA Capital (Europe) in London which was established as a UK regulated investment banking operation in January 2008 and a representative office in Paris, France.

Organization

UBA  Group’s  operating  structure  is  organized  around  seven  Strategic  Business Units(SBUs)  and  four  Strategic  Support  Units(SSUs),  informed  by  the  need  to reinforce   its  leadership   in  service  delivery,   relationship   management   and  the execution  of its strategy.  In addition,  the  GMD/CEO  is  supported  by the  Group Executive  Office  consisting  of the Strategy Office,  the Corporate  Transformation Office, the Chief of Staff and Advisers to the GMD/CEO.

Subsidiaries in Nigeria

UBA PLC (the Bank): The flagship operation of the Group consisting of UBA PLC Nigeria-North and UBA PLC Nigeria-South.

UBA  Capital  Africa:  This  is  the  investment  banking  arm  covering  the  African market.  The principal  activities  include  Debt & Equity Capital  Markets; Sales  & Trading; Corporate Finance and Research.

UBA Trustees Limited: Nigeria’s premier trustee company, established in 1964, with aggregate value of transactions in excess of NGN500 billion. UBA Trustees Limited (“UBAT”) is an off shoot of UBA Asset Management Limited (“UAML”), formally UBA Capital & Trust Limited (‘UCAT”), a wholly owned subsidiary of United Bank for Africa Plc (“UBA”). UAML commenced business over 4 decades ago as UBAT

before its subsequent change of name and eventual reorganization which led to the re- incorporation  of  the  new  UBA  Trustees  Limited.  Over  the  years,   UBAT   has established its dominance as a Corporate Trustee in the Nigerian Money & Capital Markets.

UBA Global Investor Services: UBA Global Investor Services is a division of UBA Plc providing core and value added domestic custody services to Global Custodians and Institutional Investors in respect of investments in securities across Africa. Their services include:

1.       UBA  Pensions  Custodian  Limited  –  UBA  Pensions  Custodian  Limited

(UBA Pensions) was incorporated in September 2005 in line with the Pension Reform Act 2004, and is a wholly owned subsidiary of UBA Plc with paid-up share capital of NGN:2 billion. One of the licensed pension funds custodians, it aims to provide a custodial haven for the savings of Nigerian workers, with a rapidly growing portfolio of assets in custody in excess of NGN 150 billion.

2.       UBA Asset Management Limited – UBA Asset Management Ltd (UAML),

incorporated in 1964, is a wholly owned subsidiary of United Bank for Africa Plc (UBA). It is licensed by the Securities and Exchange Commission (SEC) to  act  as Investment  Advisers,  Portfolio  and  Asset  Managers.  UBA  Asset Management  Limited  offers  specialized  services   in  the  areas  of  wealth generation and investment management. Products and services include Mutual Funds, Guaranteed  Return  Investment, Discretionary Portfolio Management, Employee   Savings   Plan,   Personal   Portfolio   Plan,   Sinking   Funds,   and Management  of  Special Funds.  With over  NGN  30 billion  in funds under management, UBA Asset Management is Manager and Administrator to four mutual funds and Wealth Manager to the High net worth.

3.        UBA  Capital  Infrastructure  &  Principal  Investments  –  This  specialist business unit provides infrastructure development and funding solutions across Africa. This includes strategic alliances, private public  partnerships,  project finance and principle investments and corporate finance advisory services to infrastructure projects.

4.       UBA Stockbrokers Limited– The secondary market trading arm of the Group that deals in equities and other fixed income securities in the capital market. With a balance sheet size in excess of One Trillion  Naira  ($8B), over six

million  active  customer  accounts,  operating  out  of  the  2  most   vibrant economies in the sub-region – Nigeria and Ghana. UBA Stockbrokers Limited has over seven hundred retail distribution outlets as well as presence in New York and Cayman Island.

5.        UBA Registrars Limited – With over 30 years’ experience in Share Register administration services in Nigeria, UBA Registrars Limited emerged from the former UBA Global Markets Limited then engaged in  the business of share registration,  stock broking and issuing house. It  was  incorporated  in March

2006 as a wholly owned subsidiary of UBA Plc.

6.       UBA Metropolitan Life Insurance Company Limited– Formally launched in April 2008 as a joint venture between UBA and  Metropolitan  Holdings Limited (“Metropolitan”) of South Africa, UBA Metropolitan Life operates in Nigeria with over 100 years Experience in Life Insurance business, Access to over 40 resident full time Actuaries, Strong African Brand, Risk Management expertise,    High    Corporate    governance    standards,    Large    Distribution Network(over 600 branches) and knowledge of the local Nigerian Market.

7.       Consumer  Banking – Consumer  Banking provides  customized  products  &

services for individuals and organizations. The services offered include:

i.     Account Services: Savings and Checking (local & domiciliary)

ii.      Cards: Debit, Credit and Prepaid iii.      Local & Foreign Money Transfer iv.      Consumer Credit

v.      E-Banking  Services  (Internet,  SMS  banking  solutions  as  well  as

Corporate e-payments)

Corporate Governance

UBA Plc claims to be committed to high standards of corporate governance. Strong corporate governance practices are allegedly the foundation of the  Bank’s  risk and control  frameworks  and  supposedly  ensure  a  decision  making  process  that  will enhance  and  protect  the  interests  of  all  stakeholders.  During  the  year  ended  30

September  2008,  UBA  complied  with  the  provisions  of  the  Group’s  Code  of

Corporate Governance which is published on the company website.

Key Governance Developments

1.        Continuous compliance with the principles laid out in the following codes of corporate governance:

a)  Code of Corporate Governance for Banks Post Consolidation,

b)  Securities   and   Exchange   Commission   (“SEC”)   Code   of   Corporate

Governance for Nigeria; and

c)  UBA Group’s Code of Corporate Governance.

2.       Internal  monthly  review  of  compliance  with  best  practices  in  corporate governance.

3.       Institutionalized evaluation of corporate governance practices of the Board by external consultants.

4.       Continuous director and employee training programmes on best practices  in corporate governance.

5.       Tracking  and implementation  of best practices  in corporate  governance.  6.

Adoption  of International  Financial  Reporting  Standards  (IFRS),  advanced approaches   of  Basel   II  Prudential   Standards,   Committee   of   Standards Organization (COSO) compliance; and plans to implement the South African King III corporate governance  code, which will be  implemented  during the course of the 2009 financial year.

Corporate Governance framework

Presently UBA has a 20-member Board led by a Chairman who is a  non-executive Director.  There  are  eight  executive  Directors  on the  Board,  including  the  Group Managing Director (“GMD”), Philips Oduoza, and 11 non-executive Directors. The Board has appointed two of the Directors as Independent Directors, subject to CBN approval. It is the responsibility of the  Board to provide strategic direction for the Bank. It reviews and approves the major strategies, financial and other objectives and plans of the Bank. It also  approves the budget of the Bank. The Board ensures that adequate  systems  of  internal  controls,  risk  management,  financial  reporting  and compliance are in place as well as ensuring the processes for evaluating the adequacy of  these  systems  on an ongoing  basis.  Other  functions  of  the  Board  include  the following:

i.       to select  directors,  review  succession  planning  and  determine  management

compensation;

ii.       to  ensure  that  the  Bank  operates  ethically  and  in  compliance  with  all applicable laws and regulations;

iii.       to advise management on significant issues facing the Bank;

iv.       to  approve  the  disposal  and  acquisition  of  assets  of  the  Bank  and   its subsidiaries, where necessary; and

v.       to approve extra budgetary investments and capital projects.

Performance Measurement

The  performance  of  the  Board  and  Directors  individually  is  evaluated  by  an independent consultant.

Professional Development

In  accordance  with  best  practice  in  corporate  governance,   the  Directors   may undertake independent professional advice at the expense of the Bank, on technical issues which require professional advice.

Reporting Standards Adopted

UBA announced in June 2009 that as a “key enabler of business management  and development”, it had adopted the International Financial Reporting Standards (IFRS), Basel  II  Prudential  Standards  and  Committee  of Standards  Organization  (COSO) compliance. This is in spite of the 2012 deadline for Basel II implementation set by the Central Bank of Nigeria. UBA is one of Nigeria’s four biggest lenders.

UBA Foundation

As one of West Africa’s largest and most profitable banks, there is a need for a social contract between the bank, the community and its people. United Bank  for Africa became the first bank in Nigeria to institute a foundation, UBA Foundation. Funded with 1% of PBT, UBA Foundation is committed to the socio-economic betterment of the communities in which the bank operates, focusing on development in the areas of Environment,  Education,  Economic  Empowerment and Special projects (“EEES”)

3.        Guaranty Trust Bank Plc

Registered   on  January  17,  1990  by  Central  Bank  of  Nigeria,  GTB  Plc   was incorporated in July 1990, as a private limited liability company wholly owned by

Nigeria individuals and institutions. The approval as Commercial Bank followed  in August 1990 and operations were started in February 1991.

In September 1996: IPO on NSE Licensed as a universal bank in 2002 and GTB Plc certificate after ISO 9001: 2000 in 2006. On July 26, 2007 the bank was, as very first sub-Saharan  bank and  first  Nigeria  joint  stock  company,  listed  on  London  Stock Exchange and Deutsche Borse. The IPO raised US $750,000.00. GTB Plc is a partner of Morgan Stanley and BNP Paribas. The long-term debts of Guaranty Trust Bank Plc are rated BB- by standard & poor’s and AA-by Fitch Ratings, which are the highest ratings for a Nigeria bank.

As  one  of  the  New  generation  banks,  they  introduced  online  banking  and  SMS banking and as very first mobile branches. On March 12, 2008, GTB was  given a banking licence for the United Kingdom by the Financial Service Authority. GTB is a partner  of EKO Atlantic  City a new made Island  (820  ha)  in the Atlantic  ocean, adjacent to Victoria Island Lagos. It will be the home of new Financial District. The building of Eko Atlantic City started in 2009 and is expected to be finished in 2016.



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