Zenith Bank restructures into a Holding Company
By Oghale Mafuru
Leading financial service provider, Zenith Bank has been approved by the Central Bank of Nigeria, CBN, to operate as a financial holding company which will enable it to have a banking subsidiary along with other subsidiaries in the financial services sector.
This announcement was contained in a statement signed by the Company Secretary, Michael Otu, who revealed that the CBN approved Mr. Jim Ovia as the Chairman of Zenith Holdco Plc and to also continue as the Chairman of Zenith Bank until the commencement of Zenith Holdco.
The Statement reads: “This is to inform the Nigerian Exchange Limited NGX, shareholders and the general public the CBN has granted Approval-In Principle for Zenith Bank PLC to operate a non-operating Financial Holding Company structure. Furthermore, the CBN approved Mr. Jim Ovia as the Chairman of Zenith Holdco Plc(in-formation) and for Mr. Jim Ovia to also continue as the Chairman of Zenith Bank Plc until the commencement of Zenith Holdco Plc”.
Speaking on the implication of the new structure, an official from the Capital Market who spoke on anonymity explained that the holdco structure means that Zenith Bank now has the bandwidth to branch out into other financial services outside its core banking operations as the holdco mode allows the parent company to hold a controlling stake in all the subsidiaries under its purview without interference in their everyday running.
He said: “It also frees each of the companies in the group from the liability or debt settlement obligation of another company in the event that the latter becomes insolvent.
“Transiting to a holding company structure will enable Zenith Bank to generate more revenue from other non-core banking business, expand its operation, remain competitive in the ever-changing business environment and deliver more value to shareholders” he added.
Recall that the CBN recently issued a circular to all commercial banks where it announced a revision of the tenure limit for executive management and non-executive directors of banks and financial institutions.
In the statement dated February 24, the regulatory agency stated that “the review is part of measures aimed at strengthening governance practices in the banking industry.
It reads:” “The tenure of executive directors (ED), deputy managing directors (DMD) and managing directors (MDs) shall be in accordance with the terms of their engagement approved by the board of directors of banks, subject to a maximum tenure of ten (10) years,” the central bank said in the circular, dated 24 February.
“Where an executive who is a DMD becomes the MD/CEO of a bank or any other DMB before the end of his/her maximum tenure, the cumulative tenure of such executive shall not exceed twelve (12) years.
“However, for an executive (ED) who becomes a DMD of a bank or any other DMB, his/her cumulative tenure as ED and DMD shall not exceed 10 years.”
Weeks after,Zenith Bank’s Deputy Managing Director, Dr. Adaora Umeoji retired.
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