Guaranty Trust Bank: Your trusted partner in Nigeria.

he Nigerian banking sector is one of the most dynamic and competitive industries in the country. Today, there are more than 80 banks operating in Nigeria, but the market remains dominated by a small number of large institutions. These organizations control approximately 90% of total assets and deposits. However, a period of consolidation is anticipated that will reduce the number of players, and make the sector more competitive.

Other niche financial service organizations are also active. There are close to 1,000 community banks established to encourage and mobilize rural savings, and over 70 primary mortgage institutions licensed to engage in retail mortgage finance.

The structure and regulatory environment of the banking sector has altered dramatically in the last two decades, but certain key issues, including the reform of the central bank, still remain.

A formidable challenge for the financial services authorities lies in fully restoring confidence in the banking system. While some institutions stand out as a measure of excellence, others remain weak and under-capitalized.

TAYO ADERINOKUN Managing Director of Guaranty Trust Bank plc

One of the country’s mid-tier leaders is Guaranty Trust Bank. It is eager to assert itself further in the local banking sector, after rapid growth following its launch in 1990. Tayo Aderinokun, the bank’s Managing Director, says Guaranty Trust quickly established itself in three core areas: professionalism, technology and customer service. These three strengths helped the company move into the elite of the Nigerian banking sector.

“Today, we are one of the most profitable organizations in the country,” he says. “In our first couple of years we experienced tremendous growth.”

Guaranty Trust has 35 branches spread throughout the country, mostly in the major commercial and administrative centers. These include eight in Lagos, offering a wide range of retail and corporate services. It also has one of the highest independent credit ratings in Nigeria, which is a measure of external confidence in the organization.

Mr. Aderinokun sees a period of consolidation ahead. He estimates that about half the banks in the country have less than $50 million in assets, which makes it difficult to compete for business with major corporations.

Guaranty Trust currently has approximately $100 million in assets, while the largest banks, such as First Bank of Nigeria and Union Bank Nigeria, hold more than double this figure.

He believes that size will be important to future success. Nigerian banks must strengthen if they are to compete with foreign banks, especially South African players. They will need to be adequately capitalized, well-managed, and offer a good quality service at a competitive cost in order to gain market share.

“We want to be big, we want to be recognized,” he says. “We believe we have something to offer in the area of banking technology. As young as we are, we think we have systems and processes that can be exported. It has worked here, and we think it can work in other places too. For us, size is important. If we have the opportunity to merge with a bank of our size, we will consider it seriously.”

One of the country’s older banks, Société Générale Bank (Nigeria) Limited (SGBN) – not linked to the French bank of the same name – also aims to make its mark overseas. The bank started as a joint venture between British and French businessmen in 1977, but is now managed by Nigerians. It has 44 branches
covering roughly two-thirds of the country’s states.

Bukola Saraki, SGBN’s Executive Vice-Chairman, says the arrival of Nigerian banks abroad illustrates the level of product depth and service quality that
the industry holds. “I think today the banking sector is probably one of the industries in Nigeria that has standards as high as anywhere else in the world,”
he says.

SGBN has thrived in the last few decades amid the huge transformation of the financial sector by embracing change. It has a commitment to new technology and is a pioneer in areas such as automated teller machines.

Dr. Saraki agrees that one of the main challenges facing local banks is under-capitalization, which limits their ability to provide working capital to large companies. Although SGBN may not be able to provide service to the multinationals present in Nigeria, it can provide effective support to the distributors and suppliers who work with the big firms.

Dr. Saraki hopes to see more links with international banks in the future. This means sending out the right signals to potential investors in the U.S. and elsewhere. “We need to get the message across in America that we have a responsible society to whom investors can safely be a partner,” he adds.