Analysts have predicted that more commercial banks will soon convert to a holding company structure as they seek to diversify their revenue and remain competitive in the financial market.
A holdco is a company set up for the purpose of making and managing equity investment in two or more companies, being its subsidiaries, engaged in the provision of financial services, one of which must be a bank. According to him, with the way the CBN regulation is going, the income banks get based on their traditional banking licence is getting limited.“Even the lending business, we have a lot of microfinance banks getting into it. The tight monetary policy regime such as the loan-to-deposit ratio and others, restrict the kind of businesses that they can do. “Even the merchant banks, the kind of businesses they can do are restricted.
“For example, based on the experience that GTBank had in their electronic banking business, they realised that there are lots of opportunities in the switching business; even in assets management, which is one of the reasons the bank is going for the holdCo structure. “The CBN regulation is a lot and so they are trying to get other businesses that can help them weather the storm. They have the option and some of them have taken it. They can also decide not to do again in the future.”