OLABISI ONABANJO UNIVERSITY, AGO IWOYE, NIGERIA
FACULTY OF ADMINISTRATION AND MANAGEMENT SCIENCES
DEPARTMENT OF BUSINESS ADMINISTRATION
2021 / 2022 RAIN SEMESTER EXAMINATIONS
COURSE CODE /TITLE: BUS 406 /BUSINESS POLICY AND STRATEGY II
“PRE-SEEN” PAPER. Do not bring this or any sheet to the Examination Hall.
Read this case of “RASCAL” BANK NIG. PLC for the forthcoming Examination.
BRIEF HISTORY OF “RASCAL” BANK NIG. PLC
The bank received its license from the Central Bank of Nigeria in 1989, and listed on the Nigerian Stock Exchange in 1998. In 2002,
“RASCAL” Bank was taken over by a core of new management led by Sanwoolu and Abiodun. In 2005, “RASCAL” Bank acquired
Marina Bank and Capital Bank (formerly commercial bank Crédit Lyonnais Nigeria) by merger. In 2007, “RASCAL” Bank
established a subsidiary in Banjul, The Gambia. This bank now has a head office and four branches, and the bank has pledged to open
another four branches. In 2008, “RASCAL” Bank acquired 88% of the shares of Omni finance Bank, which was established in 1996.
It also acquired 90% of Banque Privée du Congo, which South African investors had established in 2002. “RASCAL” Bank acquired
75% of the shares of Bancor SA, in Rwanda. Bancor had been established in 1995 and reorganized in 2001. In September,
“RASCAL” Bank opened a subsidiary in Freetown, Sierra Leone, and then in October, the bank opened subsidiaries in Lusaka,
Zambia and in London, United Kingdom. In 2008, Finbank (Burundi) joined the “RASCAL” Bank network, but exited the group in
2014. In 2011, “RASCAL” Bank was in talks with the Central Bank of Nigeria to acquire Intercontinental Bank plc. Intercontinental
Bank became a subsidiary of “RASCAL” Bank plc, which recapitalized the former and acquired a 75% majority interest in its stock.
The combined effect of the restoration of Net Asset Value (NAV) to zero by AMCON and N50billion capital injection by “RASCAL”
Bank plc is that Intercontinental Bank now operates as a well-capitalized bank, with shareholders funds of N50billion and Capital
Adequacy Ratio (CAR) of 24%, well above the 10% regulatory threshold. In January 2012, “RASCAL” Bank announced the
conclusion of its acquisition of the former Intercontinental Bank, creating an expanded “RASCAL” Bank, one of the largest four
commercial banks in Nigeria with over 5.7 million customers, 309 branches and over 1,600 Automated Teller Machines (ATMs). In
December 2022, “RASCAL” Bank PLC acquires Diamond Bank, the board of Emilokan Bank announces that her merger with
“RASCAL” Bank Plc expected to be completed in first half of 2023. The new naira design and recent CBN policies, especially on
withdrawal limits by customers, have put a strain on its activities.
THE INDUSTRY SECTOR OF “RASCAL” BANK NIG. PLC.
Corporate Banking
• Very large Corporates with dominant market share in Telecoms, Oil & Gas, Fast Moving Consumer Goods (FMCG) &
Commodities (Estimated Total Market size: $77billion)
• Public Sector project finance opportunities owing to infrastructure funding gap $12 bn for Sub-Sahara Africa year on year
(Nigeria $8bn)
• Multinational players in the oil & gas
• Middle-tier Corporates
• Distributors to top 3 producers of goods and services in Telecoms, Downstream Oil & Gas, FMCG
• Financial institutions driven by the ongoing reforms in Financial service industry in Africa
• Stockbroking, Asset management, Microfinance, Mortgages
• Public Sector and State Governments
Retail & Consumer Banking
• Retail/Consumer banking segment penetration is still very low in Africa, In Nigeria there are less than 1 million personal
loans against 38 million mobile phones subscribers
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• Primary target market is the employees of Corporates, SME clients etc
• SME’s in the service sector particularly Schools, Hospitality, Professional services e.g. Law firms etc.
• High net worth clients particularly owner/managers of our corporate clients
• Users of our electronic banking products & services (non-account holders)
VISSION STAEMENT
To be the world's most respected African bank.
MISSION STATEMENT
Setting standards for sustainable business practices that unleash the talents of our employees to deliver superior value to our
customers and provide innovative solutions for the markets and communities we serve.
THE GOALS (OBJECTIVES AND VALUES)
• To go beyond the ordinary;
• to deliver the perceived impossible, in the Quest for Excellence
Our core values:
• Leadership, Excellence, Empowered employees, Passion for customers, Professionalism, and Innovation
BUSINESS STRATEGIES
Over the next 5 years, “RASCAL” Bank aspires to be the Number One in Nigeria, with a strong global franchise and a universal
payment gateway, solidified by a robust capital base and best-practice governance structures. This is in addition to its vision to be the
world’s most respected African Bank. The strategy is built on seven (7) elements:
1. “RASCAL” Bank aims to dominate the rising middle-income segment by offering seamless Omni channel experience and
unparalleled customer service, including leveraging the franchise to offer unique cross-border products and accounts. In addition, the
upper middle-class segment will provide a core banking base and generate attractive per-client-revenue. The Bank will also
implement branch optimization and expansion into unpenetrated regions.
2. Our intent is also to drive the consolidation of our leadership in domestic wholesale banking, with the belief that a focus on
corporate clients is an expedient and cost-efficient strategy in the short to medium term. Through its team of relationship managers,
“RASCAL” Bank believes that it has the requisite skills as well as the product expertise to address the specific needs of this distinct
customer segment.
3. Digital Led: “RASCAL” Bank believes that it can become a leading digital banking brand and that digital banking is a key driver
of innovation in today's financial services industry. The bank recognizes that establishing a strong digital culture across all
experiences for customers and employees will enhance “RASCAL” to the targeted markets and segments. Digital channels are
attractive to the retail segment, as such, the Bank will leverage the opportunity using its targeted, self-service digital portfolio and
robust data analytics capabilities and models to drive business using case studies.
4. Customer Focused: We recognize that our customers are at the heart of our business model, and in addition to delivering excellent
customer service; we should enable customers to achieve financial inclusion and assist them with understanding our products and
services. The Group will redirect its business to focus on long-term relationships, adding value and giving individuals the power of
banking by working with companies, growing their business and empowering their employees, suppliers and distributors. The Bank
will also ensure that its organizational structure, staffing and support model and teams evolve to reflect its focus on the customer.
5. Analytics driven insights and robust risk management: The Group aims to remain the industry leader in Risk Management,
prioritizing credit, market, operational and compliance risk to support its goal and digitising key processes within the risk value chain.
6. Global Collaboration: “RASCAL” Bank will pursue a deliberate and structured international expansion that will focus on the
business’ overall strategic objectives as well as strong collaborations. We will establish global Centres of Excellence (COE) including
a digital factory, analytics and commodities COE and a training centre in key operational regions.
7. Universal Payments Gateway: The Bank seeks to build the best- in- class payments gateway and position itself as a payment leader.
Our international businesses will be hinged on a universal payments gateway powered by technology and a strong network of
relationships across operating countries, with an ecosystem of local and international partnerships that will service global payments
and remittances. Our goal is to play a significant role in bridging the gap between cross-border and domestic transfers across all
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business segments and payments flows in current and potential countries of operations.
COMPOSITION OF THR BOARD OF DIRECTORS/MANAGEMENT
This is composed of Non-Executive directors, independent directors, managing directors and executive directors.
Strength
Creating One of Africa’s Leading Retail Banks - Launch of the New “RASCAL” Bank Brand:
Today we have publicly launched the new “RASCAL” Bank, one company, with 28,000 staff across 600 branches and 29 million
customers worldwide. This follows legal completion of the merger on 19 March and the launch of our new brand today. The enlarged
“RASCAL” Bank will have a formidable commercial and retail banking business, providing significant opportunities to customers,
staff, shareholders and other stakeholders. Our new logo fuses Emilokan Bank and “RASCAL” Bank’s brands together, and we have
launched a new brand promise – access. more than banking - which symbolizes our shared philosophy.
The combination of Diamond Bank’s strong retail customer franchise and leading digital platform with “RASCAL” Bank’s corporate
banking capabilities, proven risk management and capital management expertise has created a diversified Nigerian financial
institution with strong value creation potential.
Weakness
“RASCAL” Bank’s Q3 2022 results which have just been published show that PBT of N20.9bn was down -17% y/y due to growth in
operating expenses and, to a lesser extent, loan loss provisions outpacing revenues. PAT of N31bn, however, posted solid growth of
31% y/y, thanks to translation gains (foreign subsidiaries) and fair value gains on AFS. Of the revenue lines, non-interest income
growth continues to outpace funding income, the former growing by 10% y/y (though clearly slowing down vs Q2) vs the latter’s
1.3% y/y. Sequentially, PBT was flat: marked q/q declines in loan loss provisions and opex masked a -17.5% q/q decline in revenues.
Compared with our estimates, although PBT missed slightly, by 5%, PAT was strongly ahead, by 76%, because we did not forecast
any gains on the OCI line. Both revenue lines and opex surprised negatively by single digits but these were completely offset by the
loan loss provisions coming in well below our expectations.
Opportunities
Income from derivative asset to continue:
Derivative income accounted for an average of 38.7% and 14.3% of non-interest income and gross earnings respectively over the past
2 years. Management disclosed that they intend to take advantage of the opportunities in the derivative market to drive non-interest
income. Prior to June 2022, the FX derivative market only offered Swaps and Forwards as hedging instruments.
Following the devaluation, the CBN introduced Futures and Non-deliverable forwards (NDF) which according to management has
increased opportunities to further support its income from derivatives going forward. The bank recently swapped US$50 million and
US$100 million with JP Morgan and South Africa's ABSA at N400 and N329 respectively. Recent events in the currency market
have exposed a need for foreign and local investors to hedge their FX exposures and as such we believe this income stream is set to
stay. Given that the market remains in its nascent stages in comparison to advanced economies, certain inefficiencies may exist that
will present lucrative income opportunities for traders.
Short term business outlook: We expect income from derivatives transaction to continue to support gross revenue in H1'17. However,
we expect the growth rate to slowdown as the bank has closed out most of its US$2 billion swap transactions and the new deal with JP
Morgan and ABSA only accounts for US$150 million.
We expect e-banking income contribution to non-interest income to improve as the bank's retail channel migration strategy continues
to yield result in H1'17. With the bank's balance sheet fully squared, a further devaluation of the naira will not have a significant
impact on profitability for the period.
Threat
Customers in a banking hall
At a recent workshop on retail banking, participants, notably, banking executives, shared knowledge and identified a growing threat to
their operations, reports Olaseni Durojaiye. The inaugural Nigerian Retail Banking Workshop has identified the rise in the market
share of unorthodox money lending companies as a challenge to the growth of retail banking in the country even as participants
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identified opportunities in made in Nigeria goods for the growth of retail banking in the country. Retail banking, also known as
consumer banking, is the typical mass-market banking in which individual customers use local branches of larger commercial banks
for their banking needs. Services offered include savings and checking accounts, mortgages, personal loans, debit/credit cards and
certificates of deposit.
The workshop, which held in Lagos recently, proved to be a successful interactive session as bank executives shared knowledge on
retail banking, common problems as well opportunities that are inherent in the huge population of Nigerians. The workshop also
identified agent banking as a strategy to further deepen financial inclusion in the country.
However, a major talking point at the session was the gradual incursion into an aspect of retail banking by money lending business
concerns. Described as “disruptive financial service providers,” nimble and flexible in their operations, participants identified the
preference among banks for a loan seeker’s employer rather than his personality as one of the reasons behind the noticeable rise in
their market share.
Slow Response to Loss of Market Share:
A key concern shared by many of the participants is the slow response of banks to market share loss by disruptive financial service
providers. Even though there was no data to back the claim, the gathering agreed that the loan merchants may have taken as much as
15 per cent of the market share of the commercial banks and traced their ability to do so to factors that include: lower interest rate and
flexibility as they are given to less documentation and the speed. Besides, participants also agreed that they record low default rate
even though their low portfolios are far less to that of conventional banks.
CBN Policies before and after 2023 election
In a bid to deliver a free, fair and credible 2023 election, one in which cash politics was outlawed using a cash redesign policy
despite confrontations from unyielding powerful political actors and Nigerians due to poor implementation,, the banks have
been seriously affected negatively.
RIVALS (Competitors)
United Bank for Africa (UBA), Guaranty Trust Bank (GTB), First Bank of Nigeria (FBN), Zenith Bank, Eco Bank, Wema Bank,
Union Bank, Sterling Bank, Heritage Bank, Polaris Bank, Access Bank , First City Monument Bank (FCMB) and Unity Bank.
Others are core fintech online platforms like Opay and PalmPay.
CUSTOMERS
• Micro-finance Banks, Incorporations, Traders, and General Public
The Customers’ Ombudsman of “RASCAL” Bank mediates fair settlement between the bank and its customers for complaints that
have remained unresolved for 90 days and above. The Ombuds’ Process is an Alternate Dispute Resolution yet informal medium
wherein an aggrieved customer of the bank may lodge complaints/grievances over the telephone, email, letters, physical visit to the
Ombuds’ Office and within the shortest time possible, the Customers Ombudsman will collate data/information from both parties and
informally engage parties towards an amicable resolution of the complaint.
The Ombuds process strives for a win: win resolution to ensure that the smooth customer/banker relationship is not disrupted by any
complaint. This is an innovative “RASCAL” Bank Plc complaint resolution process, the first of its kind by any Nigerian Bank further
assuring our customers that we care and any complaints they may have regarding our financial services will be amicably resolved to
the satisfaction of our customers. Customers’ Ombudsman Contact details are available on our website.
SUPPLIERS
Supply Chain Finance
Invoice discounting
The Invoice Discounting Credit Program (“IDCP”) provides working capital financing in respect of contracts performed or services
rendered by customers who are vendors of selected private & public sector principals.
Forfaiting
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Forfaiting is available for our clients who want to meet their medium/long term trade financing requirements and involves the
discounting of future payment obligations on a non-recourse basis.
Payables Financing
This product is designed to provide organizations with a solution for payment to suppliers and vendors for completed contracts as
evidenced by accepted invoices.
Factoring
Factoring can be used to meet the short term financing requirements of our clients through the sale of receivables/accepted invoices
for a discounted amount without recourse.
Contract Finance
Developed to encourage the development of small and medium sized enterprises in the country through the provision of competitively
priced loans.
VALUE CHAIN MANAGEMENT
Value Chain Management Group was conceived out of the vision of providing a one stop shop for all our Corporate and their entire
business chain. It is an initiative to ensure a competitive framework to capture the various business opportunities around major
Institutional Banking clientele: the Manufacturing Companies, their major Distributors/Dealers/Trade Partners, Sub-Dealers,
Suppliers, Employees, Government and Business Owners.
COMPETITION ANALYSIS
“RASCAL” Bank Plc (“Access” or “the bank”) ranks among the top-tier banks in Nigeria, with an improved market share of 9.2% in
terms of total assets at FYE15 (FYE14: 7.7%). Shareholders’ funds grew by 32.6% to N367.8bn at 31 December 2015, bolstered by
strong internal capital generation, and a Tier 1 capital injection through a successful Rights Issue during F15. The total amount of
capital raised (net of costs) amounted to N40.0bn. After the equity raising, the total risk weighted capital adequacy ratio (“CAR”)
increased to 19.5% from 18.2% at FYE14. Although the bank’s liquidity position improved as a result of the capital injection and
improved earnings during the period, a significant liquidity gap of N880.5bn amounting to 2.4 times capital is noted in the ‘less than
three months’ bucket, based on asset and liability contractual maturity matching. It is furthermore noted that liquidity mismatch is a
structural issue in the Nigerian banking sector. On a behavioural basis, most deposits are expected to be rolled over at maturity. The
bank’s regulatory liquidity ratio averaged 37.3% in F15, against 30% regulatory minimum. Following a decline in the gross
non-performing loan (“NPL”) ratio to 2.2% at FYE14, the NPL ratio declined further to 1.7% at FYE15 given management’s
continuous exposure monitoring. Hence, the bank’s NPL ratio ranked as one of the lowest among peers. Total restructured loans stood
at an improved N27.5bn at FYE15 (FYE14: N48.5bn), or 1.9% of gross loans. Specific provision coverage of the impaired loans also
improved to 43.0% at FYE15 (FYE14: 31.6%). Profitability remained strong during F15, reflecting an improved N75.0bn in pre-tax
profit (representing a 44.2% increase over that of F14), largely supported by a significant increase in non-interest income (which grew
89.6%). As operating expenses grew largely in line with income (at 39.2%) in F15, the cost ratio remained flat at 62.0%. As a result,
return on average equity and assets (“ROaE” and “ROaA”) rose to 20.7% and 2.8% in F15, from 16.7% and 2.2% in F14 respectively.
Performance in 1Q F16 reflects an improved position against that of same period in F15 and in line with management projections,
despite continued challenging operating conditions.
ORGANISATIONAL STRUCTURE
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RESOURCE AND CAPABILITIES
Tangible
• Finance, Branches across the nation
Intangible
• Retail banking, Agent banking, Loan, Insurance, CSR etc
Human Resource Management
• Salaries, Remuneration, Leave, motivation
WHAT MAKES “RASCAL” BANK UNIQUE AND DIFFERENT FROM OTHERS
Despite the economic headwinds that have been slowing down most financial institutions in the country, the “RASCAL” Bank Plc has
had a very successful outing in the out gone year. The Bank which entered the nation’s banking landscape about 26 years ago with the
ambition of becoming a solid brand that would command respect in many sectors, has since grown from that humble beginning into
banking giant with reputation admirable reputation that transcends the local market. Thus today, the bank offers a full-service
commercial banking, operating through a network of about 305 branches and service outlets located in major centres across Nigeria,
Sub Saharan Africa and the United Kingdom. The great work that has gone into building the bank into a formidable banking brand,
beyond just a cool logo or well-placed advertisement, but in terms of the cutting-edge strategy and precision-driven is not lost on
industry watchers and has been fetching recognitions in various forms. For those who have watched the progress recorded by the
Bank thus far, strategic branding has made the difference. Little wonder that few weeks ago, the innovation and creative ingenuity of
its handlers paid off as it was named ‘Bank of the Year’ at the 17th annual Bank of the Year Awards black-tie dinner in London. To
analysts, the feat was not by accident, considering various positioning tools deplored by the bank’s promoters in the last 10 years. The
award, which validates other nine international honors earned by the Bank over the past ten months for operational excellence,
responsible business practices and technology-backed innovation, is unarguably one of the most coveted awards in the banking sector
globally. Over the years, “RASCAL” Bank has established a reputation as one of the most formidable financial institutions in Nigeria.
This is unconnected with its impressive growth trajectory and contributions to the development of the Nigerian economy through
empowerment initiatives and practical SME schemes. As an acclaimed innovative industry pioneer, the Bank has remained the
choice of international financial organisations and multilateral agencies seeking partnership in Nigeria. The Banker Awards is an
annual event of The Banker Magazine, a publication of the highly influential Financial Times of London; arguably the world’s leading
monthly journal of records for the global banking industry, with expertise in monitoring and publishing developments in the African
banking industry and beyond for more than 90 years. It is a mark of the award’s reputation that it was held in London, arguably the
financial capital of the world.
Thank you
