A bank that adopts a sustainable, long-term approach to doing business will be a safer financial institution, providing reassurance to consumers and corporates.


Banking is an integral function in society, providing financing to businesses, facilitating transactions, and supporting global supply chains. Given this role – and indeed the systemic importance of banks, trust in the way they conduct business is crucial.

The financial crisis exposed a number of banks as having deficient lending practices; shortcomings in risk management, compliance and governance; and inappropriate incentivisation structures. Several major banks failed or were bailed out through taxpayer funds at enormous cost to savers and companies, many of whom struggled to obtain financing thereafter.

Regulatory and market-led reforms have sought to allay the risks of this ever happening again, with a renewed focus on balance sheet strength, liquidity and sensible risk management through rules such as Basel III and Dodd-Frank. Top-ranking bank executives have been assigned greater accountability for wrongdoing, with the UK pushing through with its far-reaching Senior Managers & Certification Regime (SMCR).

Meanwhile, remuneration packages have been restructured to ensure employees focus more on long-term performance. This has been effected via rules such as the EU’s Capital Requirements Directive IV (CRD IV). “Regulation, however, cannot be the only stimulus behind changing banks’ behaviour. It also has to be led by the banks themselves in changing how they work with clients and suppliers, and this can only be achieved by internal reform,” says Paul Cardoen, Chief Executive Officer at FBN Bank UK.1


Extended enterprise: Digging deep into supply chains

Banks have the ability not just to redefine their own behaviour, but the attitudes and standards of their clients and across their multi-layered supply chains. Supply chains are a crucial cog in today’s markets, and have expanded dramatically over the course of the last few decades as once introverted economies increasingly permit foreign investment and through liberalised trading agreements.

Supply chains benefit developed economies as it lets them access inexpensive labour and products, thereby taming domestic inflation. It also creates trading opportunities for developed markets with growing emerging economies.

Equally, African markets have enjoyed an increase in foreign direct investment (FDI) flows and job creation, alleviating poverty and improving general wellbeing in areas such as healthcare, labour standards, environmental protection and welfare. That said, shortfalls can arise in poorly managed supply chains.

Supply chains in African markets such as those where FBN Bank UK has a physical presence can be notoriously complex, and not always in coalition with internationally accepted standards or rules. A paper by the World Economic Forum cites unethical working conditions and child labour violations as being some of the biggest risks in unsatisfactory supply chain set-ups.2

It is here where banks can make a real and meaningful difference and provide a boost towards implementing best practices and improving compliance. At a basic level, banks need to map out their suppliers and ascertain which providers and markets are high risk in terms of potential breaches in areas such as human trafficking or the perpetuation of slavery. For example, of the 45.8 million people believed to be in slavery, 58% are in five countries.3

“FBN Holdings Plc is a signatory to the UN Global Compact initiative and has committed itself to the Nigeria Sustainable Banking Principles, and it is dedicated to respecting human rights across all of its business operations and activities. In addition, FBN Bank UK has implemented systems and processes demanded of it by the UK’s Modern Slavery Act, a law enacted to force commercial organisations including financial institutions to eradicate slavery, including across their supply chains. All of these positions are fully endorsed by our board,” says Cardoen.

FBN Bank UK is amending employee, supplier and governance codes to ensure that these values are imparted on all of the third parties, which they work with. “Companies with mature supply chains have greater transparency, deeper integration across departments, strong collaboration with partners and solid governance structures. These characteristics of a mature supply chain all facilitate the implementation of sustainability programmes and help companies manage the complexities involved,” reads the World Economic Forum paper.4

Susana White, Chief Compliance Officer at FBN Bank UK, says the firm monitors its supply chains thoroughly. “FBN Bank UK takes a best-in-class approach towards responsible supply chain management. We perform significant due diligence on providers; remedy any potentially adverse human rights issues if found; and set up engrained systems and processes to eliminate the risk of such violations occurring. It is essential that any monitoring of supply chains is not a one-off event, but a continuous and vigorous process,” she adds.


Clients too

Adhering to similarly high standards is critical in client relationships too. Financing, for example, is essential for corporates globally to operate their businesses. Admittedly, some sectors are higher risk than others in terms of potential human rights abuses, and these may include infrastructure, energy, construction, mining, agribusiness as well as the garment industry. Many of these sectors may not directly be partaking in rights’ abuses, but indirectly through other companies in their own supply chains. It is therefore the obligation of banks to ensure that such risks are minimised.

There are several ways to achieve this. Just as with supply chains, banks must conduct similar risk assessments and due diligence on clients.

Terms and conditions with the client must clearly state that the bank does not endorse any malpractice around human rights abuses. Equally, ongoing training should be given to both bank employees and their clients to ensure breaches can be averted. Commercial association with an entity which falls foul of best practices or even the law can be a reputational hammer blow or may warrant intervention from regulators. This can be devastating for a financial institution. As such, addressing shortfalls with clients should not be shied upon, and it can be done through several means.

Remedying a red flag at a client is not always a binary case of simply choosing or refusing to work with them. “On one occasion, we found it better to sit down with the client, and we guided them towards best practices, through better education and engagement. If a bank can articulate comprehensively to a client when, where and why they are in breach of accepted standards or norms, it can result in material change being effected, which can only be a positive development. If a bank or financial institution disregards a client wholly because of a perceived issue or potential breach, then that problem may never be remedied,” says Cardoen.



As organisations transform their operations, they should also seek to contribute more to society as a means by which to improve their public reputation. This could be through taking a position and engaging on a particular societal concern.

“FBN Bank UK scrutinises its business practices to ensure that our activities contribute positively to the communities we operate in. Our regulators, counterparties and clients can trust us to take a proactive approach to the soundness of all the financing we do. Good financial outcomes and good community outcomes should come hand in hand in all that we do,” adds Cardoen.


Internal culture

If a bank wants to enact meaningful external change and obtain public trust, it needs to ensure that its own internal operating model matches. Having C-level support for cultural change is important as it sets the overall tone at an organisation. “Banks ultimately need to redouble their efforts to ensure employees put consumers and stakeholders first, and divorce themselves from focusing exclusively on short-term quarterly results or beating the competition. This can be achieved through relentless internal, top-down communications and regular, effective training exercises,” says Cardoen

Opacity in how business is conducted has to be expunged at banks in order to help create stronger customer relationships. The last decade has also seen a number of banks teeter on the brink of insolvency, so it is crucial to provide stakeholders with assurance that returns are reliable and predictable. In other words, banks need to diversify their product offerings and revenue streams, and operate within the confines of an articulate risk framework and strategy, reinforced by strong policies, protocols and governance.

FBN Bank UK has already made significant changes to its internal processes in order to fulfil these obligations. For example, it implements a remuneration system that favours long-term and carefully risk-managed performance, and this is binding across all markets. Such policies help put the customers’ interests and safety first, above all else. In markets where volatility and risk can be heightened, a remuneration structure that crystallises long-term thinking and performance is key.

All of these schemes complement FBN Bank’s UK ‘ACT (agile, connected, trusted) strategic initiative’, designed to enhance the customer experience through a more streamlined service. “Financial institutions need to ramp up their efforts beyond simply adopting common or basic standards or frameworks around risk and compliance, but going over and above what is expected, and introducing best practices and policies, as well as meaningful, positive strategic reform, such as initiatives like ACT,” comments Cardoen.



Building up customer trust takes years of hard work, but it can be lost in a heartbeat as banks discovered after the crisis. White states: “Reforms – such as those adopted by FBN Bank UK and its new management team – will set the industry leaders apart from much of the competition, and this is especially true for organisations operating in markets considered to be a higher risk from a regulatory and business perspective.”

By following these principles, banks will be able to serve their client base with absolute distinction, and regain that lost trust. “We believe that the combination of persistent client focus, integrity and risk assurance are the building blocks of a great sustainable business,” says Cardoen.


1 FBN Bank UK is the international banking arm and correspondent of First Bank of Nigeria Limited (FBNL), the largest and most trusted Nigerian bank. FBNL is 100% owned by FBN Holdings Plc, a publically listed entity on the Lagos Stock Exchange.

2 World Economic Forum (January 2015) – Beyond Supply Chains: Empowering Responsible Value Chains.

3 Global Slavery Index (2016) – Global Findings. The five countries are; India, China, Pakistan, Bangladesh, Uzbekistan.

4 World Economic Forum (January 2015) – Beyond Supply Chains: Empowering Responsible Value Chains.