Family-owned businesses or what people refer to as Family Limited Partnerships is as old as the business world. It has been there from time immemorial and it will continue for many years to come.
In Nigeria, this prevailing organizational culture where business owners are ready to sink or swim, provided their children are at the helm, is not new.
As a matter of fact, banking provides a veritable example of how family partnerships are changing for the worse, the fortunes of banks and its shareholders in a very significant way. A good example is the fate that befell Diamond when it was swallowed by Access Bank.
Currently, FCMB is in the eye of the storm in this regard for many reasons. To many observers in the banking sector, Ladi Balogun, son of the owner of the bank is not making any difference with his good education, competence, long years of training, international exposure and a great family name in a field where his father remains a major player.
A finance expert who pleaded anonymity told this magazine that even under the control of a non family member, a lot could still be achieved, including the protection of the family’s interest. He argued that in this knowledge driven economy, “you don’t need to plant your son in your organization to achieve your objectives. We are now in an open world where you can actually drive your ambitions and thoughts, using people who are not related to you. For many people, the bottom line is the overall success for the company and this can be achieved by a competent and motivated workforce”, he said.
However, there is a belief in many quarters that the pervasive influence of a family on a coporate institution can really hurt badly. They argued that this control which affects decision making and the day to day activities is another kind of nepotism. The result is that it makes a company or any business concern for that matter, to under perform sometimes. So, the question of whether family influence is a blessing or a curse, is a straight answer. There are more losses than gains in this experiment especially in developing economies where traditions and standards are still evolving.
In Nigeria, instances of of businesses inspired and managed by families abound. In the banking industry, some rich and big families like the Ibrus, the Adedoyins, the Dozies, the Baloguns and others once totally dominated the sector. Today, the stories of these families that once held sway in the industry a few years ago are changing radically and the reasons are not far to seek.
The point is that there is a limit to what crown princes or family managers can do with regard to re-engineering, re-positioning and sustaining a bank from generation to generation.
FCMB, one of Nigeria’s major banks provides a good example of how not to run a financial institution by proxy. The bank’s recent history is a case study in misapplication and inefficient management.
For instance, between 2007 and 2017, Ladi Balogun, son of Sobumi Balogun, owner of FCMB, served as the bank’s MD/CEO. But after completing his ten years tenure as stipulated by the Central Bank of Nigeria, CBN, his father created a holding structure that conferred on Ladi, the status of Chief Executive Officer overseeing everything within the holding company. So, Ladi was technically in charge of all the companies doing different but similar businesses within the conglomerate, including FCMB.
As it turned out, the Ladi who had served out his tenure, remained in charge while other divisional heads under the holding structure, acted as mere figure heads without powers. And many people within and outside the bank knew where real powers were.
Yet the younger Balogun could not deliver despite his impressive CV, his vast experience and exposure. Sadly, his performance is not only unimpressive but also at variance going by the facts and figures available to this magazine. So, under the leadership of Ladi, the bank has performed below the expectations of investors as a public liability. FCMB under this regime has also failed to create value and be competitive for investors.
Therefore, the much anticipated success in the areas of profitability, shareholders’ returns and capital gain have remained a mirage. Sadly, a critical analysis of the bank’s health and wellbeing show unimpressive picture that is troubling.
Clearly, FCMB remains unambitious and continues to oscillate, moving back and forth indiscriminately. The only time it sparkled a bit was in 2014 when it merged with FINBANK and posted it’s highest profit of N22billion.
For this bank, a progressive journey into the future is daunting if it refuses to change its style and build consensus. The bank must become more open and less narrow minded because share holders are beginning to ask questions about the overall management and the prevailing structure which appears to favour the Baloguns more than the other shareholders. Going forward, they must give shareholders better dividends
