Ahead of the September 24, 2012 date for the extra-ordinary general meeting of First Bank of Nigeria Plc, analysts and shareholders, at the weekend, said the move, besides being in line with best practices, would generate more value and returns to investors.
Adebayo Adeleke, an investor and scribe of the Independent Shareholders Association of Nigeria, said his group is happy that the FirstBank Holdco arrangement is devoid of complexities that have been known to result in fractional shares in other cases.
Adeleke said: “We are excited about the development.
“We are going to get value because everything we have would be transferred to the holding company.
“There will be no manipulation as a result of reconstruction that usually leads to fractional shares.”
Adeleke is happy with the arrangement where all existing shares of First Bank are transferred entirely to the Holdco in the name of the beneficial owners, following which the same number of units and percentage would be held in the new entity.
Also, each of the companies would be seen as they are, rather than as a bunch, just as it would ensure that the value that has been built in these 11 companies by First Bank shareholders over the years would not be lost.
For Femi Awoyemi, CEO of Proshare Nigeria, an economic and investment portal, the Holdco structure will also give shareholders an opportunity to extract more value from their investment under the new arrangement.
“The shareholders have an opportunity to make more money from both the Bank and other subsidiaries in the Holdco. That makes more sense,” Awoyemi stressed.
Experts say the HoldCo arrangement, for an institution like FirstBank, will enhance the fortunes of the financial institution since FirstBank had always operated well-structured merchant and investment outfits before the advent of universal banking, having several subsidiaries that are leaders in their various fields.
Speaking earlier on the plan, Bisi Onasanya, the Group Managing Director of First Bank, said the Holdco structure will enhance the bank’s competitiveness, besides streamlining and coordinating various operations across non-bank financial services.
This, Onasanya assured the shareholders, will enable the group exploit opportunities for synergies between subsidiaries, while aligning the ownership and operation of the subsidiaries and businesses with current Central Bank of Nigeria regulatory requirements.
The regulation issued in 2010, requires banks to separate their commercial banking business from other financial services businesses, while outlawing the universal banking framework.
Under the new structure, shareholders of First Bank will be migrated to FBN Holdings as at the terminal date by way of a share-for-share exchange between the shareholders of First Bank and FBN Holdings.
Also, First Bank’s stakes in each of the Holdco subsidiaries and associated companies will be transferred to FBN Holdings, while First Bank’s shareholdings in each of the Investment Banking & Asset Management (IBAM) subsidiaries will be transferred to FBN Capital Limited.
FBN Capital will in turn be owned by FBN Holdings, an arrangement that will not alter the current beneficial shareholding structure of the FBN Group.
The 11 subsidiaries operate in various segments of the financial services industry ranging from pension custodian, asset management, investment banking, insurance and microfinance banking entities.
First Bank also holds investments in companies with international presence in the United Kingdom and France through its subsidiary FBN Bank (UK) Limited, in addition to representative offices in South Africa, China and Abu Dhabi, making it one of the most diversified financial services groups in Nigeria.
Shareholders of First Bank are expected to approve the proposal to transfer the shares to the new structure, after which an application would be submitted to delist First Bank shares from the Nigerian Stock Exchange, and listing of FBN Holding shares next month.
The overall strategy of this, the GMD said, is to create an operating model that will profitably grow the bank’s presence in the market for commercial banking and non-banking financial services in order to achieve the aspiration to be the dominant financial services group in Sub-Saharan Africa.
“The HoldCo will result in the creation of a corporate centre with responsibility for setting strategic direction, providing group-wide oversight and ensuring the leveraging of synergies across the group through the constitution of a governing board and committees at the group level to optimally align corporate governance and management roles,” the FirstBank boss concluded.