Author Topic: FCMB to introduce innovative MasterCard, attributes ratings to managerial skill  (Read 2697 times)

Offline funshy

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FCMB to introduce innovative MasterCard, attributes ratings to managerial skill

Director-General of the Nigerian Maritime
Administration and Safety Agency (Nimasa), Dr. Ade
Dosunmu (left), in a warm hand shake with the
Executive Director, Consumer and Retail Banking,
Afribank, Mr. Chinedu Onyia, at the formal
inauguration of the Regional Maritime Rescue
Coordination Centre (Rmcc), in Lagos, recently.First City Monument Bank Plc (FCMB) is set to introduce into the Nigerian market a new brand of MasterCard credit cards with enhanced features aimed at improving customer satisfaction during financial transactions.

FCMB?s Chief Operating Officer (COO), Anurag Saxena, told newsmen recently in Lagos that the card product, which is at the pilot stage, would provide better owner identification and enhanced features that make shopping most convenient for users. The card, he said, would come with the photograph of the holder on it.

The FCMB MasterCard, which currently comes in two variants of Classic and Gold, will not be cash collateralised. The classic and gold variants will have $300 and $500 respectively as the minimum amounts on them, while the third variant (Platinum) will come later into the market.

Other card products from the bank?s stable include corporate cash cards for business executives, pre-paid cards such as Zenon and Ascon cash cards for customers buying diesel and fuel from Zenon and Ascon Oil respectively, and the regular automated teller machines (ATM) cards.

The corporate cash cards are designed for business executives to enable them pay for lunch, dinner and other business related transactions at choice restaurants and shopping malls in Nigeria.

Anurag revealed that the bank has conceived a massive roll out of its various cards products in the 2008 financial year, adding that the roll out will be complemented with various reward schemes for customers who embrace cards as a means of cash withdrawals and payments.

The COO said FCMB went into the development of the various card products to make financial transactions easy for customers and non- customers alike. The variants of FCMB cards take care of the lower, middle and upper classes of the society.

Speaking on FCMB?s electronic channels, the bank?s Head of E-Business, Richard Esin, said the bank?s internet banking also provides additional channels to facilitate bills payment, fund transfers, accounts enquiries, salary upload and other related transactions by its customers in any part of the world. He disclosed that FCMB recently went into partnership with Chams to enable it render services to Chams clients and vice versa.

Likewise, Mr Ladi Balogun has attributed recent ?B+/B? long term and short term counterparty credit ratings given to the bank by international rating agency, Standard & Poor?s (S&P), to the good managerial skill of the bank?s management team.

?The experience of our management team and our solid grasp were key factors towards being awarded the B+/B ratings. We are pleased by the recognition S&P have placed on the capabilities of our management team and believe that as we execute upon our strategy and consolidate our market position, there is every likelihood the rating will strengthen. The bold step of embarking on a rating in the middle of a global credit crunch shows our commitment to transparency and desire to continue to attract debt capital to fund our rapid growth,?Ladi said.

FCMB is one of the fastest growing universal banks in the country. Speaking from London, Balogun commented that ?we feel the rating is a fair assessment of the bank in an emerging market like Nigeria that has successfully transformed from a merchant bank to universal bank.? With total assets and contingents of N309 billion as at financial year end 30 April 2007 (US$2.45 billion at N126.10 to US$1), the bank is positioned as a mid-size bank in Nigeria.

?We are the first in our peer group to obtain an international credit rating from Standard and Poor's and we are pleased with the outcome, more so, because of the high rating assigned,? he added.

The Standard & Poor?s rating is just one notch below Nigeria?s long term sovereign rating of BB- and is the same Ghana's sovereign rating. Standard & Poor?s is the world?s foremost provider of independent credit ratings. Their credit ratings provide investors with the independent benchmarks they need in order to make investment and pricing decisions.

In its report on FCMB, S&P list four major strengths that contributed towards the rating. These include robust capital levels, strong investment banking niche, good profitability, and focused strategy.

The report states that ?to date, the bank has adequate liquidity and is well capitalised, which provides a cushion against the (credit) risk for investors.? Kenny Aliu, head of Structured Finance, who led the rating exercise commented,?When covering a bank in an emerging economy like Nigeria, S&P look out for operational risk and credit risk. We are highly liquid and well capitalised as demonstrated by our successful Public Offer last year, this helps mitigate credit risk.?

Last year, FCMB raised over N94 billion through an equity placement (roughly equivalent to US$805 million at N117.67 to US$1). The report goes on to point out that the bank?s credit risk concerns are mitigated by its modest loan leverage (gross loans to adjusted assets measured 56per cent as at 31 October, 2007), the short tenor of the loan book (just 20per cent of risk assets have a tenor above 1 year) and the high level of collateralisation (91per cent of total risk assets are secured).

According to the report, as at October 31, 2007 the bank achieved a return before tax assets of about 5per cent, making it one of the most profitable institutions in the country.

With an investment banking business built up over the last thirty years, FCMB?s ratio of fee generated income to total income is 52per cent, the highest by a wide margin in the Nigerian banking industry.

In addition, the bank uses its investment banking services to differentiate its corporate banking relationship, elevating them to a more strategic level and capturing a greater ?share of wallet.?

The report commended FCMB?s strategy to focus on high growth high margin segments of investment, transaction and consumer banking, given the high growth and fast evolving economic environment in Nigeria. Execution risk with the strategy is minimised by a relentless focus on attracting, retaining and developing effective and experienced human capital with a combination of the best of home grown and internationally experienced talent and transaction banking.


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