The Managing Director of Guaranty Trust Bank Plc, Mr. Segun Agbaje, has said the Central Bank of Nigeria (CBN) and Bankers’ Committee decision to introduce a clause in all offer letters and loan agreements, whereby a borrower undertakes that upon taking a loan, he would repay within the agreed period, will stimulate lending.
Agbaje, said this during an interview on the ‘Morning Show’ on Arise Television, yesterday.
The Bankers’ Committee on Monday introduced a clause that would be in all offer letters and loan agreements, whereby a borrower warrants that upon taking a loan, he would repay within the agreed period. However, if for any reason he defaults in repaying, with the aid of his Bank Verification Number and Tax Identification Number, the CBN would scan the banking system to seize his deposit in any bank for loan repayment.
According to the GTBank boss, the initiative is not a departure on what the credit agencies are doing presently.
“In other parts of the world, your credit management system and history are in check considering that once your credit is destroyed, you cannot access credit.
“Unfortunately, it has taken us several years to build this credit history in Nigeria, so we still have the situation where an individual can owe one bank and borrow from another bank.
“While you are building that credit history and having a proper way of doing credit check, this is a very novel way of getting around it.
“Essentially this means you cannot borrow in one bank, abandon the loan and do business in another, and I think that clause would help you,” he explained.
Commenting on the central bank’s directive that requires banks to maintain a minimum loan-to-deposit ratio (LDR) of 60 per cent by the end of September 2019, he said at the time the policy was announced, LDR was 57 per cent, “so all people have to grow by is three per cent.”
“This makes me think there is more alarm than reality; growing three percent by the end of September, for most banks they would get really close, while some would go over it, so I think it is being measured in its approach,” he added.
However, responding to a question about his bank and the competition among the big banks in the country, Agbaje said GTBank was focused on delivering superior value to shareholders.
“We are not worried about size at GTBank; it is not even one of our objectives. We look at scale because at the end of the day, what does the shareholder want? He wants us to maximise value, he wants and he is not worried about size.
“As at today, we are one of the most profitable banks in the country, we have the lowest cost-to-income ratio and we have the highest share price. These are the concerns of shareholders. So, size doesn’t matter to us; what matters is scale. We never concern ourselves with size,” he said.