The board of Sterling Bank Plc announced on Monday, 26th September that the company will adopt a new name after receiving shareholder approval to transition from a core banking operation to a holding company. This will allow it to pursue opportunities to acquire controlling interests in businesses in which it currently has a significant stake.
The declaration comes one week after the bank was required by a judge to call a shareholders’ meeting as one of the final crucial steps in the corporate reorganization.
Upon delivery of the transition, the lender would adopt the name Sterling Financial Holdings Company, according to a regulatory filing posted on the website of Nigerian Exchange Limited.
Adopting a holdco structure gives Sterling Bank the leverage to expand into financial services areas other than commercial banking, which is currently prohibited under its present license and that of many lenders in Nigeria.
These industries, which include pensions, asset management, payments, and fintech, are gaining popularity among banks and offer opportunities for diversification as the rivalry for interest income, which makes up the majority of the banking sector’s revenue, heats up.
One of the first companies to use the holdco structure, Stanbic IBTC Holdings, provides proof that the strategy is effective. As the market leader in the Nigerian pension sector, its pension unit manages almost one-third of the N14.2 trillion in assets.
The transition will move on to its final phase once the Central Bank of Nigeria and other regulatory bodies have given their approval for the scheme of arrangement’s essential resolutions to be ratified.
The Alternative Bank Limited, the bank’s newest subsidiary that gained an approval-in-principle in December, was included in the statement as the recipient of “all the assets, liabilities and undertakings relating to the non-interest banking activity,” according to the statement.
When the transaction is complete, the holding company will get the 28.8 billion issued and paid-up shares of Sterling Bank in exchange for allocating the same units to shareholders.
