CBN Governor, Sanusi Lamido Sanusi
Despite ongoing evaluation of the three bridged banks by financial advisers appointed by the Assets Management Corporation of Nigeria (AMCON), the intensity of the competition in the banking industry has made it inevitable for the bridged banks to put their houses in order and jostle for more sphere of influence in the industry, reports Festus Akanbi
One sector of the economy, which bookmakers said would shape the course of events in the New Year, is banking. Apart from a cocktail of new policies billed for take off in the New Year, financial sector watchers said 2013 would witness the continuation and in some cases, conclusion of a number of unfinished businesses transmitted from 2012. One of such is the ongoing process towards the sale of the three bridged banks, namely Mainstreet Bank Limited, Keystone Bank Limited and Enterprise Bank Limited. These are the banks created out of the three former rescued banks, which were bridged as a result of their failure to secure new investors up to the expiration of 2011 deadline specified by the Central Bank of Nigeria (CBN). The legacy banks for these new banks were Afribank Plc, Bank PHB Plc and Spring Bank Plc respectively.
Although Asset Management Corporation of Nigeria (AMCON) Managing Director Mustafa Chike-Obi had announced the 2014 date for the final resolution of all issues pertaining to the three banks, watchers of the unfolding events said a lot of activities would still take place in the affected banks this year.
Today, the three institutio
ns are undergoing a process of evaluation and AMCON is due to receive an interim reports on the banks by February 15. The report is expected to throw light on the methodology and optimum value of the three banks.
Explaining the process expected to lead to the eventual sale of the banks, Chike-obi had said. “There is a process for the sale; we will get advisers. The advisers will go and look at those banks and tell us what the banks look like, especially their financial health, what they are worth and what they think we should do.” He had disclosed that the first report would be due in February 15. He, however, explained that it is not a report to sell the banks; rather it’s a report on methodology and optimum value, specifically what they worth. He added that the submitted report would be taken to the board to consider and rectify. After the board’s consideration, the board will come out with their position, which of course will be shared with the Ministry of Finance and CBN.
In order to prepare for the evaluation process, the three institutions have embarked on a number of processes, which analysts said would determine the type of value to be placed on them by prospective investors that may show interest in them.
One of the steps taken by the management of Enterprise Bank was to rebuild stakeholders’ confidence in the bank by engaging both staff and customers. According to the management, the bank is now stabilised, gradually growing and has returned to the path of profitability. The management also decided to rebrand the bank while effort is also being put in place to improve the ambience of the bank by the reconstruction and restructuring of service delivery channels to make them more attractive, appealing and comfortable to the bank’s customers.
A statement from the bank said it had successfully improved its speed by upgrading its IT system, which has engendered an improved service delivery. To show for this, Enterprise Bank claimed to be among the top 15 banks in ATM and POS deployment and effective utilisation in the country. The bank has also sharpened and increased its product offering. “Some of the products have been retooled while some new ones have been introduced after series of researches to determine what customers want. This includes the establishment of fully manned agribusiness and SME desks as well as the strengthening of our internet banking service,” a statement by the bank said.
The bank has since returned to monthly profit-making as a result.
One of the major issues tackled by the board and management of the bank was that of corporate governance. Consequently, a cocktail of robust and best in class operating policies that provide governance around risk management, information technology, credit, operations, controls and audit, treasury, products and e-solutions were put in place. In order to significantly improve the risk environment in the bank, two special units were set up and these were to take care of all the inherent risks in the bank’s businesses.
These, according to the head of banking operations of the bank, Mr. Chukwuma Nweke, include Market Risk Unit, which manages the treasury and products risk, and the Information Technology (IT) Risk Unit, which takes care of information technology systems risks. These units were not in existence pre-August 2011.
To show for this modest input, Mainstreet Bank said its NPL ratio had dropped from about 70% to about 2%; fraud and other loan losses have reduced significantly by more than 95% while a significant growth in the bank’s treasury business and revenue with well diversified portfolio have been recorded.
Interestingly, the bank, which was making a daily loss of N2 billion at inception in 2011, moved to the threshold of about N1.2 billion profit monthly as at 2012.
Maintaining that the bank’s IT Systems are being revamped, Nweke explained, “We have moved away from significant system downtime like the 72 hours system holidays at month ends to zero down times. This has improved service delivery to our customers. Our e-channel platforms uptimes are significantly improved and higher.
“We have identified gaps in our current IT platforms/systems and are currently repositioning the bank to be able to compete in the e-business space.
To achieve this, the bank is implementing a new core banking application – FINACLE v10. This is a world class brand and is currently in 14 sites in Nigeria. It is an application being used by some of the biggest banks in Nigeria.” The bank is also revamping its network of infrastructure to ensure 99.9% uptime.
Another ongoing effort is the remodeling of the bank’s branches, which is being done in phases starting with Lagos to enhance the bank’s branch ambience and customer-friendliness.
Describing its employees as its greatest assets, the bank is said to have refreshed its workforce by doing away with some staff who met its exit criteria, while new blood has been injected into the system. As a mark of its readiness for the CBN’s cashless policy, the management said it would soon roll of additional ATMs and POS terminals, develop more innovative e-banking products and channels. It targets N15 billion group profits at the end of 2012 and to be among the top four banks in Nigeria in the next 10 years.
The bank explained that the mandate given to the present management was to stabilise the bank and bring it to profitability. This, according to a statement from the bank meant that it had to restore both customer confidence in the new brand and improve staff morale at the same time.
In order to gain share of voice in the industry and top of mind awareness for the Keystone Bank Brand, the board approved a corporate campaign with the theme ‘Never Say Never’. It was a call on both customers and staff to be resilient and to achieve new horizons.
Recently, the bank reviewed its corporate structure, a hybrid between regional and functional components. Management approved divisional heads, regional and branch managers for market facing directorates to be energised to deliver excellent customer experience. “We believe that this structure will enable us harness the opportunities in the market. Our service indicators have improved considerably, while the governance and control environment is benchmarked with best practices,” the statement said.
The bank explained it has made appreciable progress as one of the top 10 banks in the country on PoS deployment. “We can also report that a greater number of the bank’s over 200 hundred business offices are fitted with Automated Teller Machines, ATMs,” it added.
To show for the effort of the bank’s management, the Federal Inland Revenue Services (FIRS) has appointed the financial institution as a collector of a number of taxes. With this development, all branches of Enterprise Bank nationwide will henceforth collect revenues on behalf of FIRS. These include capital gains tax, company income tax, education tax, FIRS PAYE, personal income tax, pre-occupational levy, stamp duties, and value added tax, withholding tax and the National Information Technology Development Agency Levy (NITDA).