Adeduntan's Need for New Glasses: Confronting the Legacy Question

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Thursday, September 23, 2021 06:00 AM / by Proshare Research/ Header Image Credit: EcoGraphics


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FBN's new course must be clear-eyed and represent a significant break from the past. The bank has bobbed around like a beer bottle with no direction in the past two decades. The recent events with the removal of the old board of the Holdco and bank could provide the leeway required for the bank's managers to draw a line in the sand for sustainable growth and competitive advantage.

 

Adeduntan must set bold, hairy, and audacious goals over the next few months (speculations exist about a possible brief extension). Indeed, despite the warm feelings that the bank's operating ratios give, if FBN is not to crumble like a poorly arranged stack of cards, it must be prepared for some radical governance changes and a critical rethinking of its corporate strategy. The board and management of the corporate giant are pressed for time to act fast. Analysts note that even in a short spell, the bank's administration could still create the foundations for a regenerated financial market leader. 

 

A survey of analysts would indicate that the three most significant achievements of Adeduntan over the last five years would include the following:

  • Improving the bank's risk asset quality.
  • Writing down the size of the bank's insider-related delinquent loan assets; and
  • Expanding the bank's agency banking activities.

 

These achievements fall within what can be considered red ocean moves to improve bank performance, but as good as this seems, the true gem in the strategic crown would be the pursuit of blue ocean opportunities.

 

In their book 'Blue Ocean Strategy,' W. Chan Kim and Renee Mauborgne explain that organizations that seek corporate sustainability cannot afford to concentrate on trade-offs between cost and customer value propositions. They must break off the link value and cost and push the company to a point where it achieves increased customer value and reduced operating costs, thereby shifting the value/cost frontier outwards. The goal was to make competition irrelevant (see illustration 7 below).


 

Illustration 7: FBNH and The Pursuit of Blue Financial Oceans

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Adeduntan and his team have wrestled the bank's cost-to-income (CIR) down over the last five years (although it remains the highest for FUGAZE banks listed on the NGX). However, to guarantee corporate sustainability, the FBN boss must go beyond generic strategic goals; he must either reimagine the service delivery box or do away with the box entirely. To swim in a blue competitive ocean, First Bank must learn how to deliver data-backed competitive services. A blue ocean corporate shift for FBN will not come by accident but will require a cold and hard commitment to business reinvention. At the heart of the corporate reset of the bank would be Big Data and its clever use. 



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Downloadable Versions of 100 Days After CBN's Board Removal: First Bank's Shaky House of Cards Report (PDF)

1.      Executive Summary: 100 Days After CBN's Board Removal: First Bank's Shaky House of Cards -  September 19, 2021

2.     Full Report: 100 Days After CBN's Board Removal: First Bank's Shaky House of Cards  -  September 19, 2021


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Related Articles/References

1.    Of First Bank and Bad Debtors; A System's Throbbing Headache - Apr 30, 2021 - Proshare Editorial

2.  CBN Removes Boards of First Bank of Nigeria, FBN Holdings; Appoints New Chairmen - Apr 29, 2021 - Proshare News

3.   Analyzing the H1 2017 Performance of FBNHoldings Plc - A Comprehensive Report/Review on the Company - Oct 23, 2017, Proshare Research

4.   FBNHoldings Plc Q1'2017 Performance Assessment Report Updated - Sep 25, 2017, Proshare Research

5.   Bank NPLs (23) - The Case for a New Approach - Jun 07, 2020 - Debtors Africa

6.  W. Chan Kim and Renee Mauborgne (2004) "Blue Ocean Strategy" 

7.  Board Governance: A Thin Line Between Oversight and Operations - Sep 28, 2020 - IoD Centre for Corporate Governance

8. Leadership, Change and Corporate Transformation - The Nigerian Experience  Nov 07, 2017, Olufemi AWOYEMI - Proshare

9.   CEO Remuneration 2021 Report: From COVID to Collaboration - Aug 01, 2021, Proshare Research

10. Memo to the Market - The NSE, Oscar Onyema Foundation and Corporate Governance - Aug 20, 2018, Olufemi Awoyemi, Proshare

11.   FBN Holdings Plc - IR Page on Proshare Markets - Proshare Research

12.  Annual Accounts - IR Page in Proshare - Proshare Research

13.  Bernard Longe wins suit against First Bank Plc, Supreme Court decides today - Mar 05, 2010, Proshare



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Related News from the Report

1.      First Bank Board Removal: When Boards Blur Vision - Sep 22, 2021

2.     First Bank and Institutional Learning - A Sense of History - Sep 21, 2021

3.     100 Days After CBN's Board Removal: First Bank's Shaky House of Cards - Sep 19, 2021


Proshare Nigeria Pvt. Ltd.


 Proshare Nigeria Pvt. Ltd.

 

 Proshare Nigeria Pvt. Ltd.

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