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FINANCIAL INCLUSION: BANKERS’ COMMITTEE, SECURITY AGENCIES TO STAVE OFF INSECURITY IN BORNO - KURU

By NBF News
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Ahmed Kuru,  the managing director of Enterprise Bank, spoke with  journalists in Lagos about the progress the Asset Management Corporation of Nigeria (AMCON)-owned bank has made. He also spoke about developments in the industry, Blessing Anaro reports.

What specific figures can you give us to show that you have improved the fortunes of the bank in the last one year?

We have grown our deposit by 27 per cent. As you know, the industry's average growth rate is 15 per cent but we have grown ours by 27 per cent between last year and now.

On loan book, the industry growth rate is 16 per cent; we have grown ours by 200 per cent. In the area of total asset, the industry growth rate is 15 per cent; we have grown that of Enterprise Bank by 26 per cent. On Return on Investment (ROI), which is also important, the industry rate is seven per cent; we have achieved about 20 per cent. By any standard anywhere in the world, if your ROI is 20 per cent, it shows that you are not destroying value. In the previous year, the bank was in a loss situation, now we have reported profitability in billions. I do not want to mention figures because the auditors and the Central Bank of Nigeria (CBN) officials are currently checking our books. But I can tell you that in the next couple of weeks we will.

The CBN intervened in some banks because they were adjudged insolvent and appointed some managers (your predecessors), that were later sacked for nonperformance. But the same CBN went ahead to pay those managers huge sums of money only to appoint a new set of managers. Why pay these sacked managers that did not perform well?

Every management has a different mandate. When the previous management came on board, after the CBN's special examination of 2009, the banks were almost collapsing. So the CBN sent those managers to stabilise the situation and find core investors for the ailing financial institutions. So their mandate was simple; stabilise the situation and find core investors.

At the end, they succeeded in stabilising the banks. Five out of the 10 institutions succeeded in finding core investors. The apex bank only intervened and appointed new management for the only three that could not meet the CBN deadline with another responsibility to complete the cycle. But we were appointed to come and run these institutions as commercial entities. When we came on board, we were not challenged by issues of negative assets or inadequate capital. By the time we came, all those issues had been addressed by the Asset Management Corporation of Nigeria (AMCON). We were given the institutions and mandated to run them commercially and competitively and I think that that is what we have done and are still doing and we are on the right track.

These three banks are strong enough today to compete favourably with all other operators in the industry. Anybody that was appointed was based on contract. So, they were ultimately compensated at the end. I will not define the amount paid to them as huge, but I think they were adequately compensated based on their assignment.

The last pronouncement by AMCON was that the three nationalised banks would be sold by next year, would this announcement have any kind of setback on your current operations?

AMCON made a statement that the banks would be sold either next year or this year or anytime they like. For us the statement is not affecting us. What is important to us is to run the institution commercially, profitably and put all the structures on ground to ensure that business continues according to the mandate given to us.

This is because whoever steps in to buy the bank is not coming to buy just structures. He is coming to buy the value that is in the structures, the quality of the customers that the bank has, the balance sheet, quality of staff and infrastructure among others. Those are the things that a buyer will want to see. To run the bank profitably, these are the areas we are concentrating on and our projections are in three and five- year plans.

What does your logo signify?
The bank's logo is a metaphor for the innovative, enterpreneurial spririt of Enterprise that is the foundation upon which the values of the bank are built. The colours of the logo present a combination of focus, sharpness and brilliance. The bank's aspiration to brilliance is reflected by the choice of yellow: bold and outstanding in the banking sector. In contrast, the black offers the stable trusted element required from a financial services institution such as Enterprise Bank.

Looking at the decision of the Bankers' Committee to pioneer and kick off the Financial Inclusion (FI) initiative in Borno State, would any chief executive send a staff to Borno State, considering the current security situation in that place?

The issue of insecurity is not peculiar to Borno State. If you go to New York, the security risk is very high. These days in New York, there are certain streets you cannot walk at night. Yes, the issue of security in Borno is a problem but I can say that you do not just employ people and send them to a volatile area just because you want to prove a point. Every organisation has the responsibility to protect its workers.

However, part of the structure we want to leverage, besides the bank branches that are currently in those locations are the post offices which we have in almost all the 774 local government areas in Nigeria. How does this work? Post offices are manned by local people that speak the local dialect. So in the Financial Inclusion initiative, local people will be recruited for the project.  There are people that hail from those volatile areas. You do not need to carry people from other locations to a different place. So, what we need to do is to build capacity and train them. You need to be conscious of the lives of those people that are going to manage it and try as much as you can to ensure that you eliminate any kind of danger that may befall people you are bringing from outside. If we are able to succeed in doing something in a state that has so many issues, then it becomes easier for us to replicate those things in other locations.

The security issue has been taken into consideration. It is always at the top of the agenda and that is why the federal and state governments, the Bankers' Committee and security agencies are involved to ensure that no life is lost in the process. Some of us strongly believe that it will work and we pray it works because some of these security challenges also have linkages with economic empowerment and economic activities like youth restiveness and so on. We believe that the banking industry has the capacity to do something that will benefit the society.

You mentioned that you have put structures in place; I want to believe that one of the major challenges that led to the collapse of the former bank was the challenge of structure. Can you be specific on what you have done so far?

What has happened is that when the CBN intervened, they realised that most of these banks got affected because of lack of good corporate governance structure. At Enterprise Bank, the first thing we did was to initiate a very strong corporate governance structure. And we insisted that there must be strong policies to this regard.  Again the level of regulation has gone up.

In our bank as small as we are, we have a 16-member Board. We have five executive directors in addition to the managing director. We have 10 non-executive directors. The least amongst them was a former executive director in a bank. We brought credible people and put them on the Board so that the corporate governance structure will be strong to avoid any abuse of process.

So, everybody on the Board is an independent character. They are professionals. The chairman of the Board is the former managing director of Diamond Bank. He is a professional and disciplined banker. CBN has ensured that what happened in the past will not happen again. It is usually the abuse of process that allows banks to engage in unethical practices. Now proper and due process is followed in whatever is done.

In the first meeting we had with you in December 2011, you said you wanted to be a medium-sized bank. Now, considering all the achievements you have highlighted, are you still a medium sized bank?

We are still a medium-sized bank. If you look at the  unverified figures that I gave you in absolute terms, you will see that if I grow by 20 per cent of N200 billion or N40 billion, and another bank, for example, grows by one per cent of say N5.0 trillion, in terms of size, I am still a medium-sized bank and I want to be a medium-sized bank.

Like I said in December 2011, we are not here for any size game or size.