Introduction

The establishment in 1929 of Nigeria’s first indigenous bank, the Industrial and Commercial Bank (icb) and its demise in 1930 (Newlyn and Rowan 1954; Hopkins 1966; Uche 2010: 473–474), ¹ and the establishment in 1990 of the Guaranty Trust Bank (initially known as “gtb” and currently as “GTBank” – used interchangeably in this essay) provide two instances of insurgent banking in different epochs. However, the contrasting fortunes of the two enterprises – the icb collapsed within a year while the GTBank became a leading indigenous bank within a decade – mask striking parallels in their emergence.

Firstly, both were insurgent pathfinders, challengers to an established order in the banking sector. The icb was confronted (and overwhelmed) by the dominance of expatriate banks, which enjoyed the support of the British colonial government and expatriate business. For its part, GTBank emerged in a prevailing business environment characterised by stifling unethical business practices. Secondly, both banks were birthed in hostile and unstable macroeconomic environments: the Great Depression (1929–1933), on the one hand, and, on the other, the economic upheaval of the 1980s–1990s, aggravated by a dubious Structural Adjustment Programme (sap) that devastated the Nigerian economy (Olukoshi 1994; Hamalai 1999; Umoren 2001). Thirdly, icb and GTBank were founded in two non-democratic contexts: autocratic British colonial rule and draconian military rule from 1983 to 1999, respectively. It was in the face of these odds that the two banks operated sixty years apart with divergent outcomes.

The literature on indigenous entrepreneurship in Nigeria ² has established the high mortality rate of indigenous trading and banking enterprises during the colonial period up till the late 1940s (Forrest 1994; Harneit-Sievers 1996; Olukoju 2002, 2014). Most of these enterprises did not survive the death of their founders. Attempts to establish joint stock companies did not fare better. Of the 27 indigenous banks established between 1929 and 1959, only National Bank, Agbonmagbe Bank and the African Continental Bank, founded in 1933, 1945 and 1947, respectively, survived. ³ This has been attributed to the following factors.

First, the market environment, dominated by expatriate banks, was hostile to the survival of embryonic indigenous competition. Second, the indigenous banks were grossly under-capitalised. Third, the available funds were mismanaged, embezzled, and insider credit and loans were afforded to unviable businesses. Fourth, the promoters of the banks lacked the requisite professional experience and, in several instances, personal integrity (Newlyn and Rowan 1954: 97–98; Ndekwu 1994: 72; Uche 2010: 467, 473–474). “The so-called ‘bankers’,” Ndekwu (1994: 72) noted, “could not distinguish between capital and income. Most of the ‘mushroom’ bankers […] were neither experienced in banking management nor did they prepare themselves for the banking business.” We shall see later how promoters and managers of GTBank surmounted the aforementioned obstacles.

Founded in 1990, GTBank, currently one of the top five banks in Nigeria, is now well established in the other English-speaking countries of West Africa: The Gambia, Sierra Leone, Ghana and Liberia. Its formation and phenomenal expansion in the vortex of military rule, the Structural Adjustment Programme (sap) and tottering financial institutions presents a new face/phase of Nigerian business that is multinational and competitive. Within a decade of its founding, GTBank recorded some remarkable accomplishments, unprecedented in the Nigerian context (Maklan and Knox 2009; Ogunbiyi 2010: 113–114). These “feats and firsts”, as the bank tagged them, include the following: the first Nigerian bank to attain an aa-Fitch rating (2005); the first enterprise to attain the iso 9001 rating; the first to be listed on the London Stock Exchange (2007); the first bank to adopt the Customer Relationship Management crm approach in its operations; the first West African bank to adopt a total banking solution via its gt Connect, a fully interactive self-service contact centre; the first Nigerian bank to record a profit before tax (pbt) of N1.01 billion (1996), N2 billion (2001) and over N10 billion (2006); and the first indigenous Nigerian bank to establish subsidiaries in other West African countries (The Gambia and Sierra Leone, 2002; Ghana, 2006; Liberia, 2009), in addition to one in London in 2008.

Based on research into the first twelve years of the bank, this paper reflects on a major problematique – the challenge of building credible and competitive financial institutions in colonial and post-independence Nigeria. GTBank’s success contrasts with the fate of many family businesses and indigenous banks during (and since) the colonial period. The paper thus provides perspectives on transformations in Nigerian capitalism. It challenges the uncritical narrative in GTBank’s official history (Ogunbiyi 2010), ⁴ and fills gaps in case studies of its development, all of which focus on the post-2002 history of the bank (Knox and Maklan 2005; Maklan and Knox 2009; Maklan, Antonetti and Knox 2014). It draws upon an extensive collection of documentary evidence – previously inaccessible private papers and minutes of meetings of GTBank’s board of directors, and newspaper reports – and interviews with the promoters and foundation staff of the bank. ⁵ The paper re-appraises the roles of the key personalities in the formation and development of the bank. It also highlights how GTBank surmounted various challenges as its stock rose dramatically on the Nigerian economic landscape. Key to its success is the managerial entrepreneurship ⁶ of its co-founders, whose duumvirate leadership model epitomised the innovativeness of their enterprise. The formation and rise of GTBank exemplify three connected aspects of entrepreneurship as identified by two authors: “what happens when entrepreneurs act: why they act; and how they act.” (Stevenson and Jarillo 1990:18).

The interest in GTBank is predicated on some of its unique features. Firstly, the role of friendship, shared career and professional experiences, marital ties and business partnership, as exemplified by the co-founders, Fola Adeola and Tayo Aderinokun. Cain and Hopkins’ study of the City of London and the driving force of “gentlemanly capitalism” highlighted this human factor in successful business partnerships. “By the 1890s,” they noted, “the great merchant bankers not only shared a similar educational background with aristocrats and leading professionals but also were regularly intermarrying with the landed interest.” (Cain and Hopkins 2002: 124) Secondly, the uniqueness of the corporate culture of the bank and the business strategies developed in the face of the peculiar challenges of the decade of its establishment. Thirdly, its unique duumvirate leadership model, which served it well in the first twelve years and ensured a smooth transition, has been replicated by two of its alumni in another bank.

Friendship, Trust and Business Partnership: The Establishment of Guaranty Trust Bank

As is well established in the literature, GTBank was founded by two long-standing friends, who later became its foundation Managing Director (md) and Deputy Managing Director (dmd), respectively. However, such a story line over-simplifies the process of the gestation and delivery of the bank. Oral evidence obtained from the principal actors confirmed that the idea of setting up the bank was mooted by Adeola, who shared the vision with his friend, Aderinokun. Victor Gbolade Osibodu, Akindele Akintoye and the frontline merchant and industrialist, Aliko Dangote, had, on different occasions, urged Adeola to consider forming a bank given his acknowledged expertise. Adeola and Aderinokun were joined by Osibodu and Akintoye at this early stage of envisioning the proposed bank. It was this quartet that finalised the shape of the bank. ⁷

Akintoye reminisced that he hosted a crucial meeting that resolved two critical issues – whether the proposed bank would be a merchant or a commercial bank, and what name it should bear. “Guarantee Trust”, coined by Adeola, was reframed as “Guaranty Trust” at Osibodu’s insistence, in order to depict the ethos of the proposed bank. This would also produce the acronym “gtb”, which would easily register with the banking public. However, against the expectations of Adeola and Aderinokun, the meeting decided to establish a commercial bank.

The relative ease with which these issues were resolved underscores the role of personal friendship, trust and shared background in business partnerships. Cain and Hopkins (2002: 122–123) noted that the City of London “depended as heavily upon networks of social intercourse as it did upon formal structures […] [,] an intricate world where business, social life and political intrigue all overlapped.” The GTBank experience paralleled the world of The City in the following ways.

First, the core Promoters – Adeola, Aderinokun and Bode Agusto – had been friends since attending high school at St. Gregory’s College, Obalende, Lagos. Aderinokun married Agusto’s sister, who had been Adeola’s classmate at the Methodist Boys’ High School, Lagos. Their paths later crossed in the job market. This shared background oiled the process leading to the success of the bank. Adeola aptly remarked that secondary school bonding “never extinguishes.” ⁸

A second bonding element was Adeola and Aderinokun’s common professional development in the banking sector, in which they had risen to management level. After initially following different employment paths, they re-united at the Chase Merchant Bank (renamed Continental Merchant Bank). Aderinokun later moved to Prime Merchant Bank, but he quit after six months owing to disenchantment with the running of the bank. Significantly, it was at Prime that he met Aigboje Aig-Imoukhuede, whom he later recruited into GTBank.

A thorny issue, about which we have no details, is the power-sharing agreement between Adeola and Aderinokun at the bank’s inception. But some inferences can be drawn from anecdotes and remarks made by both men during separate interviews. While Adeola laid claim to the office of Managing Director (md) as the originator of the idea, Aderinokun, who had borne the brunt of the groundwork for the take-off of the proposed bank, thought he was more deserving of it. A compromise was for both men to become Executive Directors (ed) of the bank at inception. Eventually, Adeola emerged as md, but agreed to share every other benefit equally with Aderinokun, who became Deputy Managing Director. Their remarkable partnership was pivotal to the stability and growth of the bank.

The partnership was a blend of two contrasting personalities. Adeola was the more boisterous, endowed with excellent communication and networking skills, while Aderinokun was more subdued and inclined to focus on details and tie loose ends. Their twelve years of partnership, which proved critical to the overall success of the enterprise, was described as follows: “Adeola was the public face of gtb, Aderinokun was the engine house.” (Famakinwa 2004) Such complementarity of character and disposition produced the synergy that drove the gtb machine up to 2002.

The aforementioned informal social networks and shared professional experiences laid the foundation of trust ⁹ critical to the formation of GTBank. This is made clearer in the following examination of the formation and consolidation of the bank.

Recruiting Investors and Getting a Banking Licence

The birthing of the gtb entailed raising funds, securing an operating licence from the government, recruiting staff, and acquiring office accommodation. Between February 1989 and July 1990, the core promoters held 28 meetings, according to records kept by Akin Akintoye. ¹⁰ Recruiting likely investors was a major task as the promoters were men of ideas without the financial resources to raise the huge deposit of N20 million ($us 2.5 million) required by the Central Bank of Nigeria (cbn). In keeping with the resolve to maintain high ethical standards from the start, the promoters decided to enlist only investors whose sources of income could be ascertained to be untainted. An initial list of 150 persons, mainly professionals, was screened. A final shortlist of 42 names survived the exercise and formal invitations were forwarded to the prospective investors to pay up their shares within a stated time limit.

Direct and indirect approaches were made to prospective investors. GTBank promoters refused to conform to the norm of getting a retired military or paramilitary officer, or a notable politician to serve on the Board of Directors to facilitate the acquisition of a banking licence. Adeola, for example, attracted Adetokunbo Adesanya, a lawyer with some knowledge of banking, with whom he shared an intellectual interest in philosophy, and Ifeyinwa Nwakwesi, a medical doctor and entrepreneur, whom he had dealt with as a customer at Chase Merchant Bank. She claimed to have known from the outset that the venture was going to be successful since “all the fundamentals were there […] and Fola and Tayo knew exactly what they were going to do with the Bank.” ¹¹ Nwakwesi’s recruitment satisfied the requirements of affirmative action – gender balance and “federal character” (representation of different parts of Nigeria).

Yet, a few politicians got in. For example, Muhammed K. Jada from Adamawa State was recruited by Akin Kekere-Ekun, md of Habib Bank. Kekere-Ekun had been approached by Adeola to recruit persons of integrity within his political network from Northern Nigeria. Ironically, Jada made the final list but Kekere-Ekun did not. ¹² Mosobalaje Oyawoye, Nigeria’s first Professor of Geology, who later became the second Chairman of the Board of Directors, was also invited by proxy. Though he had served as Chairman of the Kaduna Refinery Limited and in a few other public capacities, he got in as a representative of a serving official who could not invest in such an enterprise while still in public service. ¹³ The foundation Chairman, Chief J.K. Agbaje, was the first Nigerian Executive Director of the leading bank in Nigeria, Standard Bank (later nationalised as First Bank). ¹⁴ He was recruited for the strategic purpose of facilitating the procurement of the banking licence by lending his credibility and deploying his influence as a highly respected retired banker. Adeola acknowledged at Agbaje’s retirement party, without elaboration, that he was “instrumental in obtaining a banking licence for the bank.” ¹⁵ Osibodu, like Aderinokun, was a friend of Chief Agbaje’s son, whom he persuaded to help recruit his father. ¹⁶ The process of applying for the banking licence and getting investors to pay up was coordinated by Aderinokun, then md of First Marina Trust, who corresponded with the proposed investors at each stage of the exercise. A critical stage in the process was a formal interview at the cbn on 7 December 1989. The promoters adequately prepared the bank’s representatives for the interview, emphasising its six “unique selling points.” ¹⁷

The first was the dispersion of ownership: it was not “any one man’s Bank”. Second, unlike many other new-generation banks, it had a “strong technical base”. Fourteen of its 41 promoters were serving or retired senior bankers. Third, its operations would be technology driven to raise bank services in Nigeria to international standards. Fourth, the subscribers were “men and women of proven integrity and high professional standards.” Among them were legal and medical practitioners, entrepreneurs and bankers. Fifth, the proposed bank would assist in meeting government’s objectives, especially promoting small and medium scale enterprises. Finally, the bank’s branch expansion programme would cover Kano, Rivers, Anambra, Imo, and Oyo States. ¹⁸

In March 1990, the promoters were requested to pay the sum of N20 million, the proposed bank’s equity capital with the Central Bank of Nigeria (cbn), so that the Honourable Minister of Finance and Economic Development could present the application for consideration by the Federal Executive Council. Prospective investors paid between N500,000 and N1 million apiece, depending on their means. At the end of the day, those who paid N500,000 were allotted 2.5 per cent shares, while those who contributed N1 million got 5 per cent, the highest possible allotment.

Musing on initial investors’ commitment of large sums of money to a 35-year old banker, Adeola recalled his apprehension much later, when considering what might have been if the venture had failed. He likened his situation to that of a survivor of a fatal accident who, realising his near-death experience, started shivering with fear. He acknowledged that it was the fear of failure that drove his team to success. ¹⁹

In the final analysis, the sum of N20 million required for the incorporation and licensing of the Bank was paid up by the investors. Chief Agbaje also played a pivotal role in steering the application through the cbn. He brought enormous prestige and credibility to the gtb team, and opened doors at the cbn.

However, Adeola and Aderinokun, still in their mid-30s, were saddled with processing documents from door to door at the cbn. ²⁰ They had an unassailable edge in their well thought out, convincing and “superior business plan.” The charismatic Adeola was a notable asset, described by his co-founder as “a very good persuader, […] a good orator who could convince anybody.”

The ability of the promoters to follow due process rather than resort to short-cuts impressed the cbn officials and the State Security Service (sss), who screened all applicants for banking licences. The promoters took the unprecedented step of producing all investors for screening. “The sss,” Aderinokun recalled, “had never seen something like that.” This was unlike the practice of seeking to save investors the rigour of screening by inducing the officers in charge to do the screening by proxy. After scaling the cbn hurdle, the application went for approval by the Minister of Finance. The process was drawn out and arduous, but the promoters harnessed their social capital instead of bribing officials. Aderinokun recalled a visit to the Permanent Secretary of the Ministry of Finance when Adeola, a fellow Muslim, upon hearing of their host’s bereavement, spontaneously recited some Quranic verses in prayers for the deceased. Such empathy elicited the goodwill of officials involved in the licensing process. One of the Bank’s investors and a future Director facilitated approval by the Minister, who was the godfather to one of her children. ²¹ In all, everyone contributed to the success of the application.

But the process was far from smooth. “How we acquired the banking licence,” Adeola recalled, “is itself [the subject of] a book. […] There were processes, there were human beings that we met. […] There were people we visited at 1.00am [who had given us] […] an 8.00p.m. appointment,” which they had not kept. Such “big men” would then appear and simply dismiss the young bankers with the expression (in Yoruba): “Ile ti su … se wa tun wa l’ola?” (meaning: “It’s late, hope you’ll call again tomorrow”?). Getting a banking licence at the time, he stated, “is something to write for a play for people to see.” The young promoters learnt the virtue of patience, which served them well in later life. ²²

Finally, on 5 July 1990, the banking licence was issued to the promoters of gtb, completing a process that began in May 1989. Next, approval was obtained for membership of the Board of Directors and Management Team from the cbn and the Ministry of Finance and Economic Development. ²³ The seven persons that served on the inaugural Board of Directors were selected on the basis of certain criteria: professional integrity; banking or business experience; commitment to the ideals of a well-managed organisation; equitable representation of shareholders’ interests; and representation of the different parts of the country. The inaugural Board comprised J.K. Agbaje, Muhammed Jada, Mosobalaje Oyawoye, Victor Osibodu, Ifeyinwa Nwakwesi, Fola Adeola (md), and Tayo Aderinokun (Deputy md). ²⁴ Finally, on 2 August 1990, the gtb promoters were formally notified in writing that they had been issued licence No 000058, dated 1 August 1990, signed by the Minister of Finance. ²⁵

The licence secured, shares were allotted on the basis of one million naira for 5 per cent equity and half a million naira for half that percentage. They were classified into two: Class A shares were ordinary shares owned by those that may be called “pure investors”, while Class B entitled their owners (“the core or professional investors”) to determine who became md and Deputy md of the bank. ²⁶ This classification was to protect the fledgling bank from falling into the hands of those who might misuse their control to the detriment of the organisation.

Creating gtb Culture: The Recruitment and Training of Staff

Concurrent with the process of obtaining a banking licence, plans were being made for the formal launch of GTBank. This involved three tasks: recruitment and training of competent staff; securing a suitable location for the bank; and articulating the governing ethos of the bank. ²⁷

Given the age bracket of the two key promoters, only persons within and below their age bracket (mid-30s) were recruited. Young persons were expected to grow with the organisation. Head-hunting, rather than job advertisements, was undertaken. Banks where Adeola and Aderinokun had worked were fertile hunting grounds. All prospective staff underwent the sifting process leading to recruitment.

Only university graduates were engaged. It was felt that while there could be outstanding products of polytechnics, only a few such institutions were of suitable quality. ²⁸ All fresh employees underwent four months of rigorous training. Graduates of all disciplines were given a chance to pass through the mill. Thus, Chika Mbonu and Titi Osuntoki were graduates of civil engineering (though the former had also qualified as an accountant), Kafilat Araoye had a first degree in History and a Master’s in Personnel Management; Tokunbo Talabi majored in Physical Therapy before obtaining an mba; Aigboje Aig-Imoukhuede and Jide Ogundare were lawyers; Femi Pedro, a professional banker, had studied Economics; while Mosun Olusoga, Herbert Wigwe, Segun Agbaje and Dolapo Ogunmekan were qualified accountants. As Professor Oyawoye noted, gtb was willing to engage anyone with a “brain that could be trained.” ²⁹ The training was conducted by senior staff and external consultants, and anchored by Bode Agusto. The training was both generic and specific. The former gave everyone a broad knowledge of the industry while the latter gave individuals a grounding in specific tasks or skills.

First, GTBank emerged in a milieu of widespread corruption and unethical practices in the Nigerian economy and society at large, and the banking industry in particular. Adeola stated that he learnt from the way that sharp business practices caused the downfall of his previous employer. “I saw a bank destroyed by unethical practices,” Adeola recalled, “and if I didn’t learn how to run a bank, I came out of Continental knowing fully how not to run a bank. I guess the choice that would be left is how to run one and on which model.” ³³ Hence, the emphasis on ethics derived from that sad experience. Second, the bank resolved to evolve its peculiar culture different from the norm in the industry. Specifically, it enshrined a culture of informality in a formal work environment. Staff of all ranks were to relate with one another on first name terms, a revolutionary step given the dominant culture of deference to age in the larger society. Informality removed barriers to the kind of interaction necessary for the work at hand. It also fostered the mentoring of younger or junior employees. ³⁴ The practice has been entrenched in the bank and copied by virtually all other Nigerian banks.

Adeola and Aderinokun were pivotal to the success of these foundation-laying efforts. In a departure from the rigid formality of older organisations, they did not reserve any special car park or elevator for themselves. Their personal example of punctuality and hard work made it impossible for their subordinates to do otherwise. Talabi recalled that Aderinokun always arrived before anyone else and did a considerable amount of work even before formal office hours. ³⁵ Such was the impact of exemplary leadership that staff saw themselves as “disciples” of “Fola and Tayo” as the md and Deputy md were addressed. Bello explained that “they were able to carry everyone along. It was more like they had this idea, you bought into it, and at the end of the day, it was […] like the disciples were the ones who became more convinced about it.” ³⁶ Pedro stated that Adeola was “the most visionary person” he had ever met, who was able to translate his dreams into reality. ³⁷

One significant outcome of the interaction of the staff was a high degree of bonding among them. It was relatively easy to get along informally and to work long hours without complaint. In any case, as they all shared the vision of creating a unique organisation, the motivation was quite high. Yet, discipline was maintained within the ranks. As Adeola stated, though he was on first name terms with everyone else, no subordinate abused the informality. ³⁸ Everyone did their work and was prepared to make the extra effort. To be sure, for most of them, the pay was good; a notable exception was Dolapo Ogunmekan, who had to take up the gtb job in spite of the lower remuneration it offered. ³⁹ This indicates that it was more than the pay packet that galvanised the staff. Their commitment to work was often tested and the relationship was not without strains since workers were driven to achieve targets. As Ogundare asserted, targets at gtb had always been “cast in stone.” ⁴⁰ Hence, Adeola did not spare anyone in spite of the camaraderie. Mosun Olusoga recalled instances when she received hard knocks from the md and naturally passed the treatment down the ladder. ⁴¹ In sum, the staff had varied experiences of long working hours, hard work, an informal work atmosphere, relative autonomy as each person knew what to do, minimal supervision, mutual trust, and the tendency to look out for the others.

One major experience of all staff, which became the norm, was the idea of job rotation. As soon as the mandatory period of training was over, staff were assigned their duties and reposted to other assignments within two years. This ensured that GTBank was not held to ransom if an “expert” suddenly became incapacitated. Moreover, the founders expected everyone to know a little of everything. Reflecting on this practice, Agbaje, who later succeeded Aderinokun as md, pointed out that banking “is not a rocket science and it is a little simpler than what people think it to be. The easiest way to learn banking is by doing it.” ⁴² This was illustrated by, among others, Aig-Imoukhuede, who was first posted to the Consumer Banking Group, where four others reported to him, before being moved to the Treasury. In due course, in spite of his background in Law, he occupied the vital positions of Treasurer and Financial Controller of the Bank. ⁴³ Araoye pointed out that heads of units were not moved until they had trained substitutes who will take over from them. This made for mentoring, an essential part of the gtb work ethic. ⁴⁴

Given the commitment of the founding fathers of the gtb to building a unique organisation, a deliberate attempt was made to fashion a “gtb Culture”. The core components of this culture may be identified as integrity, diligence and excellent service delivery, encapsulated in the concept of Total Quality Management (tqm). Although tqm was not invented by the bank, it was entrenched as one of its core principles. It entailed, in Adeola’s words, “getting it right the first time.” He also said: “If you do it well, you will do well.” ⁴⁵ This was to be a way of life within and beyond the organisation: it included how staff answered their phone calls, how they behaved in traffic, and how they wrote their letters. In short, the idea was to create role models for society. Asked how he would characterise the gtb work ethic, Aderinokun summed it up as follows: “It is a mixture of many cultures. Sometimes we work like the Chinese, like soldiers for long hours; sometimes we work like Americans, very driven by profits; sometimes like English people, trying to do things properly. What has emerged here is a mixture of global cultures.” ⁴⁶

The evolving gtb culture, forged in the crucible of the training programmes and the work environment, was formally codified in the Bank’s Vision and Mission Statement. The Vision, after much tinkering, was expressed thus: “We are a team driven to deliver the utmost in customer services. We are synonymous with building excellence and superior financial performance in Nigeria; and creating role models for society.” The bank’s Mission Statement was equally striking: “We are a first-class financial services provider possessing the urge to win at all times, consistently adding value to all stakeholders.” These high ideals underpinned GTBank’s operations and provided a benchmark against which its performance could be measured.

Coping with Challenges and Setbacks: The Resilience of GTBank, 1990–2002

As already indicated above, GTBank recorded several “feats and firsts”, the outcome of a combination of leadership, strategy, workforce competitiveness, resilience and adaptability of its internal processes, and prudent management. A key indicator of the bank’s success is the profile of its financial operations and returns. Tables 1 and 2 contain details of its operations in the first ten years, 1991–2000. Table 1 shows that, after sustaining a loss of some N2.5 million in its first year of operation (actually seven months), the bank subsequently recorded a steady increase in its profit after taxation and earnings per share. The peak performance of 1994 was followed by a drop in 1995, which reflected a general decline in economic activities in the country.

Developments during the next quinquennium, 1996–2000, are indicated in Table 2. During this period, profit after tax and earnings per share steadily increased, with the exception of two successive trough years of 1998 and 1999, after which the bank’s profitability shot up significantly.

However, as demonstrated in the following passages, the true test of GTBank’s success was its ability to overcome challenges and turbulence in the national political economy on its way to achieving its celebrated successes. The major challenges are detailed below.

GTBank faced its greatest challenges during the period between 1993 and 1995, when Nigeria experienced severe political turbulence arising from the annulled presidential elections of 12 June 1993 and the Abacha dictatorship. Many banks and financial houses collapsed, and the economy shrank in the face of international sanctions and the pariah status of the country in the comity of nations. GTBank’s management adopted a cautious approach coupled with innovativeness and flexibility in addressing the challenges. For example, it increased its current account holdings in the cbn from N33m in 1993 to N1.4 billion in 1994 instead of investing in Treasury Bills, which attracted a higher interest. This was because Treasury Bills were no longer accepted as part of a bank’s liquid assets for bidding for foreign exchange. ⁴⁷ Second, it shifted focus from financial institutions to other industries. For example, it diversified into the aviation sector and became dominant in it within two years. ⁴⁸

Managing major transitions between 1995 and 2002 was another indicator of the bank’s resilience. First, the voluntary resignation of the inaugural Chairman of the Board of Directors, Chief J.K. Agbaje, months before his 80th birthday in July 1995, which could have led to a rancorous succession battle, was followed by the smooth accession of Professor Oyawoye in June 1995. Second, the sudden abdication of Adeola, the foundation md, in 2002, followed a few months later, by the exit of two Executive Directors, Aig-Imoukhuede and Wigwe. Third, the mutation from niche banking to retail banking in the face of the harsh realities of the mid-1990s. Finally, the major restructuring, entailing a massive downsizing of the workforce, in 1998.

Personnel changes on the board were managed without overt friction, an indication of a gentlemen’s agreement or an unwritten succession plan. However, there were speculations about the sudden retirement of Adeola as md. The official position, stated in the bank’s annual report for 2002, declared that “the Board would have wished that Mr. Adeola delay his retirement,” but he was “very clear in his mind that it is time to leave.” ⁴⁹ This implied a voluntary exit, against the preference of the bank. However, a newspaper speculated that there was more to the development than was presented to the public:

First, that the exit of Aig-Imoukhuede and Wigwe spurred Adeola’s decision, though no direct relationship was established between the two events. Second, that Aderinokun and Agbaje had delivered an ultimatum, a day after the resignation of the two Executive Directors, that they too would leave if Adeola did not end his long tenure as md. Indeed, it was alleged that his twelve-year tenure was twice what had been agreed at the outset. Third, Adeola’s devotion to his Fate Foundation was considered inimical to his responsibilities as md of GTBank. Finally, it was speculated that his political ambitions regarding the 2003 Nigerian general elections hastened his abdication (Mayowa 2002: 16). Neither Adeola, nor Aderinokun commented on these speculations and this suggests that the official line was a reflection of an unwritten agreement between them.

Unlike the exit of Agbaje and Adeola, the departure of Aig-Imoukhuede and Wigwe was a crushing blow below GTBank’s belt. It bred resentment for three reasons – a reorganisation was being concluded with the two men as lynchpins of the unfolding structure; both men set up shop only a few metres away on the same street (Oyin Jolayemi) as md and Deputy md of Access Bank, which they had taken over; and their move was not disclosed but was uncovered by a third party, upon which GTBank compelled them to resign. This was a double blow – the loss of highly placed, experienced and expensively trained staff, and the emergence of a major competitor in the same market powered by alumni with sensitive insider information. It is to the credit of GTBank that personal relations were repaired in due course and mutual co-existence has subsisted.

An early challenge that the bank surmounted was the automation of its operations. From the start, it advertised the extensive use of technology in its operations as one of its competitive advantages. That, indeed, gave it an edge, but also posed a serious challenge when its eagerness to automate and stay ahead of competition was exploited in the abortive adoption of a banking software known as BA4SQL. The full meaning of this name is not stated in the company’s records. The saga began with a presentation to a major strategic session of the Board of Directors in February 1996 and a paper on it was approved by the Board in March 1996. ⁵⁰ Details of the proposal cannot be provided here, but the software appeared to be a revolutionary breakthrough in banking operations at the time. In addition, as an investor in the development of the software, GTBank would also earn a percentage of the profit from its worldwide sales. In the final analysis, the project turned out to be a hoax, which was discovered when a team from Nigeria visited the offices of BankAct, the software developer, only to discover that it required a further eighteen months to deliver the product. GTBank was forced to abandon the project with a substantial loss of investment and with lessons learnt. ⁵¹ An alternative was found in the Oracle-based basis (Banking Automation System for Integrated Services), which subsequently served it well.

A major test for GTBank was the adversity of the 1997/98 financial year. For example, the profit before tax of N856.2 million in the last quarter of 1997/98 was 17 per cent less than for the corresponding period in 1997. It was the only year in which the bank could neither pay bonus to its staff, nor increase staff salaries. ⁵² The “extremely harsh” business environment produced the disequilibrium in the operations and financial returns of the bank, which, the md conceded, “jolted [management] back to reality” from the euphoria of previous years’ successes. One manifestation of this adversity was the disappointing returns from branch expansion. Specifically, the Abuja branch of the bank had been opened at high cost with much fanfare and high expectations in anticipation of a windfall arising from the transfer of public sector accounts from the cbn to commercial banks. But, the anticipated business from government parastatals did not materialise. The same fate had befallen the Aba branch, which failed to yield returns commensurate with the investment in establishing it. ⁵³ The adversity of 1997/98 tested the resolve of the bank in various ways, a few of which are considered below.

A major restructuring took place GTBank in 1998, a consequence of a hard-headed appraisal of its performance, and the prevailing circumstances in the industry and the wider political economy. Diligent investigations revealed that the bank had 87 management staff, twice as many as those of its competitors. The huge number was retained out of loyalty to dedicated staff and to prevent loss to competition of staff that the bank had invested much in training. Aderinokun admitted that, in addition to the financial burden of a bloated workforce, it was discovered that five people were doing the work of one person and they were getting in each others’ way. ⁵⁴ But, getting rid of otherwise loyal and diligent staff tested the resolve of management. A three-person senior management committee was mandated to propose criteria for disengaging half of the 87 management staff. Their individual proposals were found to be remarkably similar and the criteria were cryptically described as “best-fit, competence, capacity and flexibility.” ⁵⁵ The affected staff were notified individually and handsomely compensated, and Adeola and Aderinokun reportedly assisted several of them in getting suitable jobs elsewhere. ⁵⁶ Nonetheless, this caused some lingering resentment, as revealed in the controversy surrounding the sale of Magnum Trust Bank.

A constant threat to GTBank during the period considered in this essay was the peculiar business environment, euphemistically referred to as “the Nigerian factor”. From the start, Citibank, described as “the most profitable bank with an ethical profile,” ⁵⁷ was seen as the model and the bank to beat. Indeed, beating Citibank was one of the strategic imperatives of “Project Era+”, GTBank’s overall strategy unveiled in December 1998. When it did beat Citibank in 1999, the feat was formally celebrated in the bank. ⁵⁸ The choice of Citibank was, in retrospect, a curious one, given the damning reports of its involvement in large-scale money laundering (including drug money) and other unethical practices. ⁵⁹ It is possible that Citibank had not become tainted by sharp practices to the knowledge of its GTBank admirers up to 1999 or that its Nigerian branch was not involved in the global sharp practices of the head office and some branches. But this seems far-fetched given the interwoven nature of banking and the pervasiveness of corporate culture in a banking enterprise.

To be sure, sharp practices or unethical behaviour in government and business (bribery, brokerage, false declarations and influence peddling) are global phenomena, but for an enterprise dedicated to ethical business practices, GTBank faced a double jeopardy in the sharp practices by rent-seeking officials and unethical competition by industry rivals. First, it refused to meet the expectations of corrupt officials, and this cost it public sector accounts. Second, it resisted the temptation to indulge in round-tripping in foreign exchange transactions, which was the open secret behind the huge profits posted by its rivals. That the bank was not averse to legitimate foreign exchange business is indicated by a newspaper report that the bank’s outstanding financial returns in the second quarter of 1999/2000 – gross earnings of N2.5 billion compared to N1.5 billion in the corresponding period of the previous year – were “largely accounted for […] [by] the significant increase in commission earned on foreign exchange transactions.” ⁶⁰

The temptation to join others in unwholesome practices was strong in the face of the crises that faced the wider economy and the banking sector in the 1990s. While acknowledging that “unscrupulous competitors” were profiting from the business environment, the Board and management constantly re-affirmed GTBank’s commitment to high ethical standards. ⁶¹ The bank reportedly survived by resorting to aggressive salesmanship, which persuaded a number of bureaucrats to patronise it for enlightened self-interest. Officials under pressure to deliver results partnered the bank knowing that it would deliver without default. ⁶² GTBank also circumvented the corrupt system by courting and obtaining the accounts of organisations and contractors who had benefited from the system. This was an indirect way of getting a fraction of public sector accounts. ⁶³

Another major challenge that confronted GTBank was the choice it had to make between remaining a niche bank, catering to an upscale clientele with limited prospects in the long run, or shifting to retail banking that required massive branch expansion. This was a direct challenge to the founding vision of the bank that set out to be an ethically sound niche bank of choice. The first formal move in this direction was a major policy decision taken by the Board of Directors at its meeting on 3 February 1996, endorsing a management initiative in a detailed report by the md, Adeola. It was decided to go into retail banking (individuals and small businesses) from which it would generate the liquidity to sustain its operations at the higher levels of banking: Upper (multinationals and blue-chip companies, that is, established, profit-making companies whose stocks and shares are the most traded and sought-after on the stock exchange) and Middle (small- and medium-sized firms).

This was what prompted the bank to acquire Magnum Trust Bank (“Magnum”), and later to embark on both branch expansion in Nigeria and offshore expansion in West Africa. Within eighteen months of the acquisition of Magnum, the branches of the latter increased from one to eleven. ⁶⁴ But, in response to the changing circumstances in the industry, GTBank finally divested 51 per cent of its holding in Magnum at a considerable profit in 1999. The sale, however, pitted it against one of its shareholders, who claimed that shareholders were not privy to the transaction. The ensuing litigation was protracted, in spite of efforts at resolution, allegedly because the litigant was aggrieved over the downsizing exercise of 1998. ⁶⁵ Finally, in 2001/2002, GTBank sold in two phases its remaining stake in Magnum, which was developing into a competitive rival, at a huge profit. ⁶⁶

That said, while the period from 1996 to 2000 was one of cautious branch expansion, the subsequent period witnessed a major shift to massive branch expansion, which, in addition to stretching the financial and managerial resources of the bank, was bound to dilute its corporate culture as many people would be injected into the workforce too quickly. As a merger or an acquisition was not preferred, branch expansion, a decisive departure from niche bank orthodoxy, was an unavoidable policy shift from the first quarter of the 2000/2001 financial year. ⁶⁷ Accordingly, the Board approved thirteen new branches across the country. ⁶⁸ Ten additional branches were also approved in June 2001 subject to approval by the cbn. ⁶⁹ The bank’s annual report for 2001 listed the Benin, Enugu, Jos, Asaba, Uyo, Akure, Yenagoa, Ilorin and Maiduguri branches as being “now in operation.” ⁷⁰

Finally, in March 2002, Adeola unveiled the vision of a 50-branch bank in five years. The aim was to have a branch of GTBank in each of the 36 state capitals and in the major administrative centres. Lagos would still be an important hub as the city alone accounts for 60–70 per cent of the bank’s direct and indirect income. ⁷¹ In 2002, new branches opened at Abeokuta, Calabar, and Owerri, and second branches commenced operations at Ikeja (Lagos), Abuja, and Port Harcourt. ⁷² Offshore expansion to the English-speaking countries of West Africa was a trail-blazing achievement of GTBank. The process was slow and tedious, but the opening of the first offshore branch in Banjul, The Gambia in 2002, was the precursor of others in Sierra Leone, Liberia and, after much official stonewalling, Ghana. It is instructive that the co-founding leaders of the bank played a decisive role in these successful transnational forays. The Gambia was dubbed “Fola’s project” while Aderinokun, who had run into somebody that facilitated it, “did Sierra Leone.” ⁷³

GTBank and Regulatory Bodies

The admirable record of performance of the bank faced the test of regulation with mixed results. On the one hand, some of its practices were applauded by the cbn in its oversight reports. The cbn commended GTBank’s innovation of rendering quarterly returns on risk assets to its Board, which conscientiously reviewed all facilities presented to it. A cbn inspector commented in 1995 that it was “probably the only bank” that ensured such due diligence. ⁷⁴ In 2002, cbn reported that the bank’s “funds management was judicious,” having surpassed the benchmark 40 per cent liquidity ratio. ⁷⁵ It also noted that Director-related credits advanced by the bank constituted only 1.25 per cent of total disbursed credit, and those facilities were ascertained to be performing. Moreover, no Director-related account was involved in the write-off totalling N335,919,626. ⁷⁶ cbn also reported that the bank “did not deal in ineligible transactions since the transfer of foreign exchange was documented and disclosed to the appropriate regulatory authorities.” ⁷⁷

Nonetheless, infractions by the bank were detailed in various cbn reports. The most frequent concerned fraud by staff and deficient internal control systems. In 1997, for example, the cbn highlighted lack of requisite autonomy and authority by branch managers, fraud, insider related accounts, overinvestment in Magnum and the challenges of branch expansion, exemplified by the poor performance of the Aba branch. ⁷⁸ The report for 1999 spotted negative liquidity and an inadequate Debt Recovery Unit. ⁷⁹ In 2002, the cbn reported that the md’s span of control was “too large” because as many as six units reported to him. ⁸⁰

The bank’s internal control system, said to be “weak in some respects,” was identified as a major cause of the incidence of fraud. ⁸¹ The following reasons were adduced for this. First, there was collusion between some staff and outsiders. Second, there were cases of impersonation and conversion. Third, the high proportion of non-permanent staff, and deployment of contract staff and industrial interns in such sensitive areas as cashiery and note-counting created room for fraud. The wide disparity between the salary of permanent staff and the contract staff made the latter vulnerable to corruption, especially when some of them wanted to live and dress like the former. ⁸² During the Annual General Meeting (agm), shareholders deplored the bank’s violations of cbn guidelines and the consequent fines imposed by the regulatory body (Agbana 2003; Onwuka 2003).

The adverse reports on the operational performance of the bank were addressed through remedial action and payment of fines. GTBank thus exhibited some of the operational deficiencies rampant in the industry. It appears that the bank circumvented regulations that seemed to unduly hamper its operations. The management statutorily explained its action in its reports to the Board and the agm.

Conclusion

The challenge of building enduring institutions in the public sector and private organisations has been a recurring theme in the post-independence history of Africa. This paper contributes to our understanding of institution building in the modern banking sector of Nigeria through a microhistory of a new generation indigenous Nigerian bank that emerged in the uncertain conditions of sap, military rule and the politico-economic turbulence of the 1990s. The uniqueness of the case study derives from its exemplification of two conjoined dynamics: the tenets of “gentlemanly capitalism” – personal friendship, trust and partnership – and entrepreneurial management – the high ethical and professional standards that underpinned the formation, corporate culture and business operations of the bank, the versatility of the management and workforce, and the professionalism of the Board of Directors. In terms of managerial integrity, the fortunes of GTBank under Adeola and Aderinokun, constrast sharply with those of the icb and most other pioneer indigenous banks of the late 1920s–late 1940s (Hopkins 1966; Uche 2010).

That said, the role of personal friendship, school-boy ties and mutual trust in the success story of GTBank between 1990 and 2002 should not be overstated. First, monocausal explanation, which this implies, is ahistorical. Second, like other human relationships, tension and resentment subsist even if below the surface. In the case of the Adeola-Aderinokun duumvirate, the inevitable tensions were well managed. Thus, at his valedictory board meeting, Adeola paid glowing tributes to his partner and deputy of twelve years. He stated that they were “friends before becoming partners, and that to date, no third party had ever intervened to resolve a dispute between them.” Aderinokun returned the compliment by asserting that he could serve as deputy to Adeola for so long because of the latter’s personality. Adeola had given him “the right environment within which he could express himself” and had “at no time […] treated [him] […] as an underling.” ⁸³ Aderinokun disclosed that there was “nothing we did without effective consultation from either of us. Our roles were complementary.” ⁸⁴ That the paradigm of a successful business duumvirate by Adeola and Aderinokun can be replicated is exemplified by the success story of the duo of Aig-Imoukhuede and Wigwe, alumni of GTBank. Not only have the latter raised Access Bank from near-collapse to near-parity with GTBank, they too have also

undertaken a change of the guard at the level of the md, a position now occupied by Wigwe after his friend’s tenure expired. It remains to be seen how GTBank (and Access Bank) would fare after the exit of the founding duumvirate, and whether those experiments can be replicated. This underscores the need for more microhistories of the internal workings – personalities, politics and policies – of indigenous financial institutions in Nigeria and other developing economies.