Today’s Echo Exclusive: Diamond Bank’s Fall and Lessons for Family Businesses in Nigeria

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SWITZERLAND, AUGUST 08 – Titi, a long-time customer of the now defunct Diamond bank was shocked when she discovered that her beloved bank is no more, but instead, her account will now be domiciled with Access Bank. The next time she visited the branch of the bank she used, it was Access Bank colours everywhere; the setting had changed, and so had most of the staff. She couldn’t even see Chuks (not his real name), her former account officer with whom she had developed a good rapport over the years.

“Chuks understands my banking needs and is always willing to help me when I need to get information or want a financial facility from the bank. It feels strange having to deal with a new set of people and a new system all so suddenly,” Titi told Today’s Echo with a bit of apprehension.

There are millions of loyal customers like Titi who had grown attached to the 28-year-old bank and now find it difficult to adjust to new realities under an acquisition by Access Bank. Whatever is Diamond Bank’s loss is now Access Bank’s gain. Under Albert Wigwe, the bank has arguably become Nigeria’s biggest retail bank.

CEOs of Access and Diamond Banks; Albert Wigwe and Uzoma Dozie explain their proposed merger in December 2018

According to media reports, Diamond Bank traded away its independence together with a 19 million customer-base, made up of 10 million mobile users; 7,000 digital and financial inclusion customers; 277- branch network; and 10.2 million credit/debit cards issued so far.

By November 2018, it was clear to the Diamond Bank Management that they could not hold on to the bank with the dire situation of things. The share value of the company had fallen from N7 to N1.37 within 5 years and the company had a Non-Performing Loan (NPL) ratio of 12.6 per cent, against five per cent industry benchmark, with attendant high impairment charges. Also, total liability had climbed to N1.33 Trillion compared with a total shareholders fund of N221.6 billion.

According to banking experts, the huge NPL predisposed the bank to a yearly impairment charges of more than N25 billion, which particularly left its 2018 nine-month profit after tax at less than N3billion, as loans and advances to banks and customers peaked at N749.3 billion.

Also, the bank’s shareholders’ fund at N221.6 billion is subjected to a total liability of N1.33 trillion

The New Access Bank Logo

But the story of Diamond Bank’s fall also includes the thousands of staff at the bank who suddenly find themselves under a new system and are struggling to adjust to new realities.

 Today’s Echo gathers that staff of the bank have been leaving in droves, with many of them unwilling to adapt to the Access Bank corporate policies, which is significantly different from that of Diamond Bank. According to a source inside the bank, some of the bright minds in the company have been poached by other banks, especially UBA.

“The Head of Card Services has already left to UBA and the Head of Retail Banking may soon leave,” our source, which asked not to be named, said.

Five years ago, Diamond Bank was the poster for how a successful Nigerian family business is run. Founded in 1991 by Pascal Dozie, one of Nigeria’s greatest business tycoons and boardroom maestros, Diamond Bank has waded through the storms over the years to become a respected brand. Dozie, who is also a former Chairman of MTN Nigeria and the Nigerian Stock Exchange(NSE), was once described by Forbes as the ‘Rolling Stone That’s Never At A Loss’.

How did a company with such a solid foundation fail?

According to foremost global advisory services firm, Moody’s, Diamond Bank’s weak governance structure compromised the board’s ability to determine the bank’s risk appetite, and rigorously interrogate management over strategy. As a result of this, Moody’s believes that the board did not place enough emphasis on risk management with the bank biting more than it could chew. The company had loaned out money indiscriminately to people who could not pay it back and it had loaned more money to the oil sectors than other sectors of the economy. This exposed the bank to the fluctuations in oil prices.

Moody’s succinctly puts the reason for the bank’s failure as a leadership issue. However, local analysts are looking at something more fundamental; failed succession planning. Many people who spoke to Today’s Echo on the issue believed the bank wouldn’t have fallen if its founder, Pascal Dozie was still at the helm.

Diamond Bank founder, Pascal Dozie and his son, Uzoma Dozie. Photo by: Kelechi Amadi-Obi (

Pascal Dozie served as chairman of the bank till December 31, 2006. He handed over to Emeka Onwuka who was there till 2011 when Alex Otti took over.

Uzoma Dozie, the founder’s son took over in 2014. In 2017, the bank sold its subsidiaries in the United Kingdom and West Africa, saying it wanted to focus on the retail banking opportunities available in Nigeria.

It is ultimately a tragedy that Uzoma, 49, became the undertaker that oversaw the demise of the once vibrant business his father built.

Nevertheless, some believe the tragedy is not Uzoma’s fault.

According to one of our sources, a consultant with extensive experience doing business with companies in the banking sector, the rot started with Alex Otti, under whom a lot of the bank’s bad loans were given out.

“Alex Otti gave a lot of loans out to key players in the oil and gas sector, in a bid to satisfy his friends in government. Unfortunately, many of those loans became bad loans,” the source said.

According to the ICT expert who has followed Diamond Bank’s story, Uzoma Dozie was not ready for leadership but the company board fostered it on him anyway.

“Uzoma was heading the exclusive banking division of the bank and they made him the CEO with little leadership experience.”

There are also reports that Uzoma had little power to make decisions while in charge. One of the reasons for this is that the Dozie family had ceased to be the major shareholder in the bank. Carlyle Sub-Saharan Africa Fund (CSSAF) DBN Holdings, with 17.75 percent stake is the biggest shareholder and they reportedly didn’t support most of Uzoma’s decisions.

Diamond Bank’s former CEO and Nigerian politician; Alex Otti

Nevertheless, the fall of diamond bank underscores the failure of succession planning in family-run Nigerian businesses. Succession planning is the process for identifying and developing new leaders who can replace old leaders when they leave, retire or die. Succession planning increases the availability of experienced and capable employees that are prepared to assume these roles as they become available.

When a family-owned business is transitions from one leadership to another, it either going to experience a dangerous decline or a resurgence. Either way, the business cannot remain the same. Yet there are businesses that have endured several leadership shifts without significant damage to their brands.

Across the world, family owned businesses have thrived for decades, even centuries without their brands fading long after their founders are dead. Examples of such brands include Johnson, L’Oreal, and Walmart.

But analysts wonder why there is no indigenous family-owned company that has lasted more than 50 years in Nigeria.

Internationally renowned consulting firm KPMG recommends 4 important steps on the path to a successful succession planning. These are realistic goals, documentation of the succession plan in its entirety, clearly stated governance process and detailed financial implications of the succession.

According to an investment expert who spoke to Today’s Echo, one or more of these 4 vital factors are often missing whenever Nigerian companies are changing leadership. This is because of the Nigerian business landscape is not keen on transparency and successors don’t often have the same ideology as the founder.

“In a Nigerian economy where transparency opens you up to a lot of unwanted scrutiny, business leaders want to put themselves and their family members in charge, even when they are not qualified or ready,” the source told Today’s Echo.

Valentine Obi, CEO of Emval Nigeria Limited told Today’s Echo that the biggest problem with family businesses in Nigeria is lack of intentionality, the ability to plan ahead. This is reflected in the poor governance practice which usually hurts the business at the point of transitioning.

“From my perspective, it caused by a lack of intentionality. We lack focus in family businesses because they never really planned ahead, everything then informs the kinds of decisions they make.”

Wigwe(Access Bank CEO), explaining the terms of acquisition to Uzoma Dozie

Obi, who runs a 36 years old family business that is transitioning into its second generation, said family businesses need to create an efficient and feasible governance structure for both the business and the family. Right from the beginning, everyone needs to know and understand their roles in running the business. Lastly, Obi describes three critical stakeholders in the running of a Nigerian family business, namely; Employees, Family, and Owner, and a realistic governance structure needs to cater for all three stakeholders.

The fall of Diamond Bank is a lesson for all family businesses in Nigeria and hopefully they can learn from it.

Nevertheless, in the end, the biggest losers in the Diamond Bank tragedy will not be the Dozie family but the bank’s millions of customers who had fallen in love with its unique style of retail banking and its thousands of staff who have to adapt rapidly under sudden change that may seriously impact their life.

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