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What CGRS certification would do for Fidelity Bank

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Just like every other company that passed the Corporate Governance Rating System (CGRS) test, Fidelity Bank Plc is optimistic that it would leverage on the development to further strengthen the corporate governance process in the bank.

Though the bank has over the years taken corporate governance issues seriously, Fidelity Bank noted that the award would further boost investors’ confidence and attract more businesses for the bank.The CGRS certificate was recently given to Directors of fidelity Bank that successfully completed the Fiduciary Awareness Certification Test (FACT). Fidelity Bank and its Directors were among the 35 companies and 437 directors that made over the 70 per cent threshold for CGRS process.

Some of the bank’s directors that were honoured with FACT which is a key component of the CGRS are: Mr. Adeyeye Adepegba, Mohammed Balarabe, Robert Nnana-Kalu and Mr. Alex Ojukwu; Mr. Nnamdi Okonkwo, the bank’s Managing Director; Mr. Kayode Olowoniyi; Mrs. Nneka Onyeali-Ikpe; Mr. Nnaeto Orazulike; Mrs. Chijioke Ugochukwu and Umar Yahaya.

The Nigerian Stock Exchange (NSE) NSE in conjunction with the Convention on Business Integrity (CBi) launched the foremost Corporate Governance Rating System (CGRS) in Nigeria in 2014. The CGRS launch event attracted over 500 corporate sector participants joined by government and civil society delegates from Nigeria and across the globe while it was designed to rate companies listed on the floor of the exchange based on their corporate governance and anti-corruption culture, thereby improving the overall perception of and trust in Nigeria’s capital markets and business practices.

Chief Executive Officer of NSE, Mr. Oscar Onyema, had at the lunch said “with this Corporate Governance Rating System, it is anticipated that there would be an improvement in the overall perception of capital markets and business practices. “It is expected that companies will enjoy tangible business advantages from risk-oriented and/or ethically sensitive business partners and investors,” he said.

Speaking at the sideline of the award presentation held at the Civic Centre in Lagos, Chairman of Fidelity Bank, Mr. Ernest Ebi, maintained that the certification would strengthen the corporate governance process in the bank.Expressing satisfaction with the bank’s CGRS certification award, Ebi said it was a significant achievement that would boost investors’ confidence in the bank. “All our board members actually went through the process and that would strengthen the corporate governance process in the bank, so I am very pleased about it,” he said. According to him, Fidelity Bank would leverage on the gains of the certification to strengthen business opportunities to ensure maximum returns to its stakeholders.

“The beautiful thing about this certification is that it boosts investors’ confidence in the bank, because when they know that you have been through this process; there is a lot to gain. Going through the test it brings out a lot of issues about corporate governance, investor relations, among others. So, for 11 directors to go through this process, it is going to be a great morale booster for us and will encourage a lot of investors to look to our direction.

“One of the things this does for you is that you don’t sit back and wait for investors to come to talk to you, you are always proactively engaging them, letting them know developments in your company or your bank. So that way at any point in time, they are well informed, it will help you engage investors, letting them know anytime there is development in the market you call them, let them know what is going on, so they are well informed on the developments, it is very encouraging,” he said.Speaking further, he noted that the bank would maximize all available business opportunities by engaging investors for desired growth and development.

“We are doing very well, as you know corporate governance is something that we take very seriously in our bank, it is paramount on the minds of everybody particularly for me as the chairman of the bank, that’s one thing that keeps me awake, others are capital, risk management and corporate governance, though not in any order but these three things as a chairman, managing director or as a board, must be upper most in your mind, once you get them all together, you are good to go.“We are long distance runner, we not a sprinter; it is only sprinters that like to compromise. The business environment is dynamic, we are long distance runner, and I believe strongly that we are going somewhere,” he maintained.

The Chief Executive Officer (CEO) of NSE, Oscar Onyema, while speaking at the event , recalled that only eight companies volunteered and submitted themselves for evaluation since CGRS was launched in November 2014.“These companies were found worthy to bear the CGRS mark of recognition after going through the stringent CGRS processes. This is a testament that our listed companies and their directors are embracing the CGRS certification process which is aimed at promoting ethical business practices, transparency and fair competition in listed corporate. Indeed, good corporate governance should result in improved profitability.

“As world trade increases, so does the number of countries which attract investment and trade rise rapidly. The level of a company’s compliance to the tenets of corporate governance will determine the attractiveness of such a company to international investors. This could increase or decrease the level of Foreign Direct Investment (FDI) and Foreign Portfolio Investment (FPI) into a country through its well-run companies as international investors are averse to companies with low levels of corporate governance practices and reputational risks. A company that is regarded as having good corporate governance typically has access to a variety of financing options. Moreover, it is well established that companies with good corporate governance generally receive higher market valuations than those that are regarded as poorly governed.

“We all know that sound corporate governance practices in a nation will lead to higher performance in it’s the economy towards the achievement of higher performance, provide more sources for capital investment and by increasing the creditability of shareholders. In line with our commitment of making our listed companies attractive and creating value for investors, we have created and today launched the NSE Corporate Governance (CG) Index which tracks the performance of all CGRS qualified related companies on the NSE. It will showcase companies with good corporate governance.

“Corporate Governance Index has become a global best practice as more countries and markets have embraced the culture of establishing Corporate Governance Indices. In a 2013 comparative analysis for the World Bank and IFC PGS Advisors, three principal motives were identified as drivers for stock exchanges’ launch of corporate governance indices: To raise the national corporate governance “ceiling” by supplementing the existing national corporate governance framework of law, regulation and code. To give companies the opportunity to differentiate them by showing good CG practices. To gain access to funds committed to good CG practices and sustainability,” he said.

Speaking further, Ebi stated that helping companies to distinguish themselves with a label of governance excellence is a key reason for creating a corporate governance Index. “It allows for the build-up of positive reputation that benefits companies, the stock exchange and the market-place as a whole. Companies on the Index can expect to increase their access to capital, particularly from foreign investors.

He noted that the CGRS Certification is also a prerequisite for companies to migrate or list on the Premium Board of the exchange, adding that the Premium Board features companies that adhere to international best practices on corporate governance and satisfy the exchange’s highest standards of capitalization and liquidity. “Companies aspiring to be listed on the Premium Board of the NSE must attain a minimum market capitalization of N200billion as at the date of application, a minimum score of 70per cent on CGRS, and maintain a minimum free float of 20per cent of their issued share capital or a free float value equal to or above N40 billion, as well as meet other standard listing criteria,” he said.

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