NOVA Merchant Bank chief, Oduoza explains prospects of sub-sector in Nigeria
Chief promoter and Chairman of NOVA Merchant Bank Limited, Dr. Phillips Oduoza has given explanations on why merchant banking sector of the economy is beginning to grow in operations and productivity.
In an interview, the former Group Managing Director and Chief Executive Officer of United Ban for Africa (UBA) Plc., recalled that “In 2013, the demarcation between commercial and merchant banking was brought back following the review of the Universal Banking license. So, you now have merchant banks and commercial banks with different areas of focus and permissible businesses. Merchant Banks are very important because they support the economic development of the nation through the provision of long-term funding”.
He decried that “Unfortunately for us in Nigeria, the banking model has not been fully tapped into. The most common form of banking is retail banking with its attendant branches and legion of retail customers. We have opted for Merchant Banking in its strict sense. NOVA brings the total number of merchant banks in Nigeria to five, which I believe is still very little for Nigeria. There is opportunity for more, considering the key role merchant banks play”.
According to Oduoza, “Merchant banks focus on wholesale and investment banking where you have advisory services, wealth management, asset management, debt capital markets and equities. These services are still very rudimentary in Nigeria. If you look at the major international financial institutions involved in investment banking, they are doing very well. Today, we do not have any of these banking institutions in Nigeria. This is the space NOVA would occupy not only in Nigeria but other countries in Africa”.
“Bear in mind that ours is the first green field licence for a merchant bank. We didn’t convert from being a representative office or from being a discount house. So, from day one, we have been licenced to operate as a merchant bank. What have we done? We have equipped ourselves with talented people and cutting-edge technologies to enable us deliver as a merchant bank.
The chairman of NOVA Merchant Bank Limited added further that his management had “Structured our products around merchant banking and are not converting any legacy product or service. We have carved a niche for ourselves and we believe strongly we can deliver in this area and that is our promise to customers”.
“It is also important to say that NOVA is adequately capitalised for the roles it has set for itself. As you know, for a new bank, there is a minimum capital that is required before the central bank will approve the banking licence. I want to state that NOVA is capitalised well above the minimum capital requirement for a merchant bank and it is fresh and unencumbered capital,” Oduoza revealed.
