Sterling Bank Plc is set to be renamed after shareholders’ gave approval to convert from a core banking business to a holding company.
The move, its board said on Monday, positions it for the opportunity to gain controlling stake in companies where it currently holds substantial interest, especially its Islamic banking operation which it started months ago.
The decision comes one week after the bank was required by a court 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 competition 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 bank will transfer all the assets, liabilities and undertakings related to the non-interest banking business to The Alternative Bank Limited,” the statement said in reference to its newest subsidiary that received an approval-in-principle in December.
The holding company will receive the 28.8 billion issued and paid-up shares of Sterling Bank in exchange for the allocation of the same units to shareholders after the transaction is complete.
