Technology wins! Welcome to the 21st Century way of doing business unusual. That’s how best to describe the historic feat United Bank for Africa, UBA Plc, achieved on Wednesday April 29, 2020 as it held its first ever virtual Annual General Meeting in the bank’s 71 years history of operations and first of its kind in the financial industry in Africa.
Ms. Bola Atta, Group Director, Corporate Communication, UBA Plc., said “Today, I was part of a historic moment. The United Bank for Africa (UBA) held its first ever virtual Annual General Meeting after 71 years of operations. We had been planning this meeting before the Covid-19 pandemic crept in unannounced. And initially, we had thought to postpone it. But postpone until when? Even as we pray the situation will get under control, today just confirmed to me that life will never really be the same again.”
For Atta and her team, the popular saying of British Statesman, Sir Winston Churchill, that the pessimist sees difficulties in every opportunity while the optimist sees opportunities in every difficulty, must be ringing loudly to their ears as they put on their thinking caps.
They knew it’s a new dawn and they need to make the best of every situation in which they find themselves. And they settled for the digital option albeit not too sure how the whole novel experience would pan out. She thought for a minute it might be easier than an actual physical AGM but was dead wrong. However, with determination and effective application of right technology, the special day for the bank’s 58th AGM went smoothly and successfully.
“We had so many rehearsals to ensure things would go smoothly: technical set up, sound, graphics, participants, look and feel, speeches, procedure, streaming…… so much to consider. This was after all, a first. I haven’t slept a wink today. I learnt a lot about technology in the process,” the UBA top lady said.
To move an event as big as the UBA’s AGM to a virtual platform after 71 solid years of operations is to make a big story that will remain on every lip for some good time. This is because UBA has over 270,000 shareholders. As a matter of fact, hosting a fraction as little as 10 per cent of that figure to an e-AGM would require a very good innovative thinking to execute such brilliant idea.
Like some would say: curiosity killed the cat. But those inquisitive minds were valid. Most were curious to know which digital platform was used that was able to host over 200,000 shareholders because most video conferencing platforms available to the public like Zoom, Skype, Go-to-meeting and few others can only do at most 500 people.
Ms. Atta explained it away that Zoom was the choice but with a limited number of participants. They however streamed the meeting live on YouTube to have the input of every interested shareholder and customers who weren’t able to join the privileged Zoom meeting.
There is no gainsaying that the novel COVID-19 pandemic has led to a digital transformation in today’s business. Technology, in the right direction, would drive cost optimization.
And Atta concurred. The virtual meeting, which had in attendance shareholders, management and staff members, together with representatives of relevant regulatory bodies, according to her, actually cost a lot less than an actual AGM and was better controlled.
In his opening address at the e-meeting, UBA Group Chairman, Tony O. Elumelu noted that it was indeed a very special meeting, held in extraordinary circumstances and in accordance with Guidelines issued by the Corporate Affairs Commission.
Elumelu assured shareholders, that despite the pandemic, UBA had delivered an impressive performance in its just released first quarter results and the bank has also declared dividends of N1 per every 50 kobo share and paid over N27.3 billion to its almost 300 shareholders, in the middle of the most uncertain of circumstances. But just as UBA delivers impressive returns on investment and shareholders applauded the bank’s support in fight against COVID-19, what it did with its novel Virtual AGM has been considered great and inspirational by many in the Corporate world.
The success of the e-AGM, it was rightly observed, has already created the blueprint for others’ future Virtual AGM as well as deepened their professional competencies.
But most importantly, Kudos has gone to Elumelu, the overall boss, as well as his ever resourceful team led by Kennedy Uzoka, the bank’s GMD/CEO and Atta, the Corporate Communication maven, for successfully pulling off the historic moment.
One of the bank’s shareholders said the Virtual AGM is not just creative ways but smarter ways. According to the very impressed investor, the beauty of the virtual AGM was that it saved most of them who are busy thousands of productive man hours. “It was an unprecedented experience for the shareholders who participated. We would have spent endless hours to get to the physical meeting location due to traffic time we would have encountered in a busy commercial hub like Lagos. Secondly, the virtual meeting cost far much less to host and thirdly, people were more relaxed and contributed more positively while attending to other urgent activities.”
But Victor Aboyeji, a Lagos based entrepreneur, summarised the moment better: “Virtual 58 AGM conducted today provided access for direct learning and opportunities (fintech) in Nigerian banking sector. Shareholders feedback, biz projections, sharing dividends & electing executives were major highlights, it’s so inspiring to see it go the TOE (Tony O. Elumelu) way.”
Some analysts have also agreed that this change championed by UBA would force many to now see that things can indeed be done differently. But the question remains: what will happen moving forward?
“Things can never go back to what it used to be. It is just a reality we must all accept. Business that fail to utilise the digital space to have a functional and smooth operation while working remotely, will soon go out of business,” Daniel Ani, a Digital Marketing Specialist said.
According to the young tech expert, “this period is just the best time as it doesn’t matter how hard this pandemic might have hit any business, it will only be more disastrous when the business owners decide to continue operation the same way it used to do. Businesses must go back to the boardroom and draw out the drawing table and make that decision…If you have 200 customers (for instance) without having a digital presence, then you are yet to reach all your ideal customers. We will surely get there. Even though we weren’t prepared for it, it is here already. So we must do the needful.”
In his view, Brian Okomowho, Investment Analyst with Kairos Capital Limited, said it’s so clear that the COVID-19 pandemic has ushered in a new world order of doing things.
“It’s clear that not all employees need to be at the office as many will still have to work remotely. Virtual meetings, conferences, interviews etc will take over. The flip side is the airlines will lose a lot of money for flights globally, as well as the hospitality sector. But I see a lot of opportunities for investors in other sectors. However, I hope we acclimatize to the new trends timely.”
There are other who also predicted that there are going to be an immerse growth and breakthroughs arising from the present situations and businesses would have the opportunity to learn more, know more and be more.
By and large, with the success of its e-AGM, UBA has set yet another standard. The bank has dropped a new playbook —remote working, remote meetings.
“The future as it relates to COVID- we will continuously drive our business to the point where customers will no longer meet us physically. Banking will remain but how we do it will keep changing. We’ll take banking to how, when and where our customers want it,” said Uzoka, the Bank GMD/CEO.
Indeed, virtual is the new normal. Business is actually going to be more virtual Post-COVID and the eggheads at the Africa’s global bank is leading the charge by telling the rest that we actually there now
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How Access Bank got Japaul to pay up N37 billion loan that had gone bad
In 2018 when Access Bank took over Diamond Bank, in what is the largest merger in Nigeria’s banking history, they knew it was not a match made in heaven like their PR agencies will make you believe.
In merging with Diamond Bank and taking over their juicy assets, they had also taken over the lemons that had for years bedeviled the bank who had pioneered mobile banking applications well ahead of its time.
When Access Bank merged with Diamond Bank, the latter had total loans and advances of N787.8 billion out of which N219.9 billion in loans were impaired. Oil and gas-related loans made up a significant chunk of the loans and were estimated at about N302.6 billion, most of them distressed.
Included in the oil and gas loans was a $66.4 million in loans owed to the bank by Japaul Oil and Maritime, as they were referred to at the time. The loans had gone bad accumulating unpaid interest of about $11.2 million. By the time Access Bank took over the loans, Japaul agreed to a restructuring rolling over both the principal and interest.
This is typical of most Nigerian companies burdened with debts they cannot pay. To avoid being run over by the bank, the debtors will negotiate a restructuring, extending the loans by one to three years and if lucky, reducing the interest rates. In return, the bank books new fees (which are often paid in advance of the restructuring) and then gets to avoid huge provisioning mandated by the central bank.
It is often a ‘win-win’ situation that essentially kicks the can down the road until, like in the case of Diamond Bank, the chicken comes home to roost. But Access Bank is not new to slugging it out with debtors, particularly those who do not pay up. Upon takeover in 2019, Herbert Wigwe, the CEO of Access Bank announced that his bank was going to go after Diamond Bank debtors. In an interview in 2019 he maintained that “we recovered N2.2 billion bad debt in the year under review. Access Bank will intensify effort to ensure that it recovers the debt owed to Diamond Bank. We will go out for Diamond Bank’ debtors and if they are not ready to redeem their debt we will publish their names in the newspapers.”
In 2019, Access Bank swooped on Japaul Plc seeking repayment of their Diamond Bank loans which was now about N37 billion. The bank took over Japaul’s trading assets and integral to the going concern status of the company. Before now, Japaul made money rendering marine services, dredging, mining and construction mostly for the oil and gas companies.
But business has been bad for years now leading the company into net accumulated losses of over N50 billion as of 2018. For the 5 years leading to 2018, the company posted back to back losses with revenues going from N5.3 billion in 2015 to about N85.8 million in 2019. External loans had also ballooned from about N18.8 billion to about N38.8 billion. Its share price had also fallen to about 20 kobo per share by the end of 2019. It was nearing bankruptcy and something had to give.
They began a court battle with Access Bank over the loans and the threat of a liquidation eventually settling for a deal. Sources inform Nairametrics that Access Bank is one of the most aggressive banks in the business when it comes to playing dirty with debtors. Unlike Diamond Bank, Access Bank is ready to battle in the courts and is ready to deploy any legal means necessary to recover their loans even if their actions are viewed as uncanny.
Recently, the bank obtained a Mareva injunction sealing the offices and taking over the assets of Seplat due to a related party loan owed by the latter’s Chairman, ABC Orjiakor. Just like Japaul, the loans owed by ABC Orjiakor were also obtained from Diamond Bank. According to sources, when Access Bank swoops in for their loan recoveries, they deploy all tactics in the books to ensure all or most parts of the loans are recovered from chronic debtors.
Eventually, Access Bank and Japaul agreed to settle the matter outside the court. In exchange for repaying the N38 billion loan, Access Bank settled for a repayment of N30.9 billion. The deal involves Access Bank taking over two of Japaul’ s Dredgers (12& 13) for N5 billion and a Barge (Beau Geste) for N25.9 billion. Japaul also gave up its land in exchange for working capital of N1.5 billion from the bank.
In return, Japaul gets to clean up its balance sheet erasing what is left of its debt, booking a profit of about N40 billion and wiping off its negative equity of N35.5 billion. However, in one fell swoop. From negative equity of N35.5 billion, the company’s net assets are now N4.69 billion. A win-win for everyone.
We are not exactly sure what Access Bank plans to do with dredgers and barges it took over from Japaul. Interestingly, in the deal, Japaul also gets to lease back the two dredgers for a period of 6 years from Access Bank for a sum of N1 billion paid annually from 2021 – 2026. Japaul got a one-year moratorium on repayment expiring in December 2020.
Japaul has since changed its name to Japaul Gold and Ventures citing the dwindling oil and gas sector for its reasons. The company believes gold mining and technology are the future and is seeking to raise N25 billion in equity to pursue this course. Its share price has ostensibly risen by 150% since the turn of the new year, the best performing on the stock exchange.
For Access Bank, aggressively going after bad loans have paid off immensely. In 2019 the bank recovered N38.9 billion in bad loans barely a year after taking over Diamond Bank. In the first 9 months of 2019, a total of N24.7 billion was captured in bad debts recovered. It is a strategy that is working and there is no betting against Access Bank doubling down on aggressive recovery this year.
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