Sterling Bank Moves to Raise $150m Fresh Capital

Sterling Bank had disclosed plans to raise between $100million and $150millon in Tier 2 capital this year to fund its expansion plans.

The bank also said it may resort to legal action to recover all its debts from debtors.

Chief Financial Officer (CFO)/Executive Director of the bank, Mr. Abubakar Suleiman, disclosed this at a recent interactive session with journalists in Lagos.

He said the bank would soon embark on the next phase of its growth strategy in line with its expansion targets unveiled in 2013.

The CFO said at the moment, the bank has 1.5 million customers and has been able to achieve over three per cent market share from 1 per cent a few years ago.

According to him, from 84 branches in 2006, the lender’s branch network would hit the 200 mark by the end of this year.

The bank, he further stated would increase it’s ATMs to 1000 by the end of this year.

The CFO stated that the bank has an ambitious target to be among the top five lenders in the industry not in terms of balance sheet size but in the areas of quality service delivery and compliance to regulations.

To achieve this, he said the bank plans to deploy a new core banking application to significantly boost the quality of its operations and service delivery.

He noted that whereas some banks with much bigger balance sheets were not meeting customers’ expectations in key areas, Sterling Bank has embarked on expansion programmes, which will see it become a bigger financial institution that will outperform its peers.

He said: “We have consistently outperformed our peer group and we will outperform the next group. We want to be there when it comes to service delivery, in terms of compliance to regulations and how we are perceived as good corporate citizens.”

He pointed out that regulatory headwinds, especially the hike in Cash Reserve Requirements (CRR) on public sector deposits had impacted banks’ profitability and restricted their lending capacity to finance economic growth.

According to him, the amount of bank deposits that the CBN had sterilized as a result of the 75 per cent CRR on public sector deposits and 20 percent CRR on private sector deposit was “unprecedented” and had constrained banks’ capacity to lend.

Suleiman said the deposits with the CBN were nonearning, pointing out that this has impacted banks’ bottom line and prevented lenders from funding businesses.

Despite the tough operating environment, Sterling Bank, he said, has remained committed to meeting its expansion targets.

The CFO allayed fears that the bank might not be able to achieve its capital raising targets this year due to regulatory headwinds. He noted

that it was the same skepticisms expressed in 2013 when the bank announced that it plans to raise additional capital via equity issues.

“They raised doubts in 2013; they raised doubts in 2014. But what happened? We were successful in our capital raising. Their doubts are welcome; it will spur us to work harder and ensure that we achieve our target. But we are confident we will do it. But of course, until it is done, you cannot say you have succeeded. But we know that we will do it”, he declared.

On the bank’s determination to recover its debts, Suleiman confirmed that the bank has received the CBN’s circular to deposit money banks on debt recovery.

According to him, the bank will not hesitate to drag debtors who have failed to repay their loans to court.

He said all the bank needs to do is to give the debtors the 90 days grace to comply , failing which, legal action would be instituted against them.

Pointing out that those who borrow money from the banking sector, indirectly borrow from the Nigerian people, the CFO said it was wrong for people to borrow depositors’ money and would not pay back.

He said, resorting to legal action would cost the bank so much money but at the end of the day, the bank will get justice.