New Standard Chartered boss Bill Winters says bank must bolster finances

Bill Winters says bank has made mistakes in the past and will 'review all aspects of capital strength'

Standard Chartered's new chief executive has said the bank must bolster its finances after years of disappointing performance in which the company "made mistakes".

Bill Winters, on his first day in charge of the bank, said the bank would be "reviewing all aspects of our capital strength" in the coming months. 

8.5MW Peninsula Independent Power Project Finance by Heritage Bank.

The management of Heritage Bank has announced that the recently completed Peninsula Independent Power Project (PIPP) financed by the bank, and will be commissioned in March.

The project is in fulfilment of the bank’s commitment in the provision of a strong backbone for capital intensive projects in the state.

 

RBS, £3.5bn Loss for 2014- Reports

UK state-owned bank RBS has reported a loss of £3.5bn for 2014, down from a £9bn loss the previous year.

The results were hit by a £4bn writedown on the sale of its US business, Citizens.

The bank's chief executive Ross McEwan confirmed he would not receive a bonus this year.

But RBS will still pay out bonuses from a pool of £421m, which is some 21% smaller than in 2013.

Royal Bank of Scotland Group

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Mr McEwan defended the size of the bonus pool.

Speaking on the Today programme he described it as "fair pay" and said it was necessary to pay bonuses to attract people to carry out "fairly technical jobs."

The bank is 79%-owned by the British taxpayer after a government-led rescue in 2008.

Chancellor of the Exchequer George Osborne has written a letter to the new chairman of the bank, Howard Davies, saying he expected the bank not to give bonuses to senior executives.

He wrote: "I would also expect that, as in the past, no executive directors or members of the executive committee will receive bonuses, despite improved profitability."

"Given the extraordinary support it has enjoyed in the past from taxpayers, I know you recognise that RBS must remain a backmarker on pay and continue to show responsibility and restraint."

 

Shrinking bank RBS is in the midst of a major reorganisation.
The bank said it had reduced costs by some £1.1bn and will cut another £800m this year.
It is cutting back its corporate and institutional banking network from 38 countries at the end of last year to 13.
It will end investment banking in the Middle East and Africa and "significantly" reduce its presence in Asia and the US, concentrating instead on the UK and western Europe.
RBS said it was building a bank that was "stronger, simpler and better for both customers and shareholders".
Mr McEwan said: "What's really important is that given the success of the last year we want to go further and faster in reforming this bank."
Today's results show that after one-off costs are stripped out operating profits were £3.5bn last year, the highest since 2010.
Richard Hunter, Head of Equities at Hargreaves Lansdown Stockbrokers said: "There is little doubt that RBS is making progress
"Even so, with the finished product still some way off and no dividend to encourage investment in the meantime, the general consensus of the shares as a sell is likely to remain intact for now."
Fines and compensation RBS has put aside £2.2bn to cover "litigation and conducts costs".
 

Ecobank Transnational raises $200m loan

Ecobank Transnational Inc, the parent company of pan-African banking group Ecobank, has signed a $200 million one-year syndicated loan, the bank announced on Wednesday.

Deutsche Bank acted as initial mandated lead arranger, bookrunner and facility agent for the loan, which raised $230 million in syndication.

The facility pays an interest margin of 475 basis points over Libor and will be used for general corporate purposes, one banker close to the deal said.

In November, Ecobank Nigeria signed a $150 million, one-year loan coordinated by Standard Chartered Bank.

ETI is rated B by Fitch Ratings.

Sterling Bank introduces shopping dash for account holders

Children operating ‘I Can Save’ accounts with Sterling Bank plc are in for a full time of fun as the bank flags off the Shopping Dash programme in four states in the country. The four states are Lagos, Rivers, Enugu, and Abuja. The bank is running the programme in partnership with top shopping malls in the country.

 

The programme affords lucky children the opportunity to do a one-minute shopping dash and pick items of their choice at shopping malls selected for the programme.

The programme is meant to reward existing I Can Save accounts holders, an account for children and those willing to open the account during the programme at the stated locations. It is strictly for children between the ages of four and eight.

The bank in a statement says that the build up to the programme is already creating a lot of excitement and enthusiasm as many children accompanied by their parents now visit the offices of the bank to open the account nationwide.

The Shopping Dash will kick off in Lagos at Shoprite, Adeniran Ogunsanya Shopping Centre, Surulere on December 6, 2014, followed by an exciting show at Shoprite, Polo Park Amusement Centre, Abakaliki Road, Enugu, and Shoprite, Ikeja City Mall, Alausa, both on December 13, 2014.

On December 14, 2014, the train will move to SPAR, Guru Plaza, Aminu Kano Crescent, Wuse 11, Abuja. This will be followed by SPAR Port Harcourt Mall, Azikiwe Road, (next to Government House) on December 20, 2014. The programme will climax in Lagos on December 21, 2014, at the SPAR, Park ‘n’ Shop Shopping Centre, behind NICON Town and Total Filling Station, Ikate Elegushi Layout, Lekki Expressway, Lekki, Lagos.

To participate in the programme, parents/guardians of children with ‘I Can Save’ accounts should contact their nearest branch for a voucher that would grant them access to the shopping dash or call Sterling Bank’s customer care.

The bank in the statement says: “This is the first of its kind for children. We have had shopping sprees for parents and adults, but not one specifically tailored for children. We believe that we should create excitement and fun for the children this time around.”

To ensure that the children are well taken care of and protected, the bank says that the services of child minders who will be following the children around to ensure they are very safe have been engaged. “We will ensure that medical personnel are in place as well. On the fun side, our children will have balloons and other giveaways to ensure that they leave the mall with smiles on their faces,” it says.

To take care of children who wish to be part of this wonderful experience, the bank assures that provision would be made for parents to open accounts for their children at the venue.

We Have Delivered Our Mandate For Enterprise Bank – Ahmed Kuru

Ahmed Kuru is the managing director, Enterprise Bank Limited. In this interview, he highlights his achievements at the bank during his three-year tenure. NSE ANTHONY-UKO captured it for LEADERSHIP

The Asset Management Corporation of Nigeria (AMCON) recently announced the preferred and reserved bidders for Enterprise Bank Limited, bringing an end to the bridge status of the bank. How do you feel?

I am glad that the process has come this far and we now know who the winners, in terms of the preferred and reserve bidders, are. This is a clear indication that the end of this bridge phase of the bank is imminent.

At the same time I am also satisfied with the outcome because it means that we, the board and management of the bank, have been able to deliver on the assignment given to us by the AMCON within the shortest possible time. That assignment was to reposition the bank and make it a going concern such that it will be attractive to investors. Right from the beginning when we came on board, we knew our assignment was for a short period of time. As you know, our tenure was to last for two years and Enterprise Bank was born on August 11, 2011. What this means is that we ought to have signed out on August 2013.

However, the announcement of Heritage Bank Limited as the preferred bidder has brought that journey to a beautiful end. I am happy that the entire process went according to how the AMCON planned it.

What are the challenges you encountered during the sale process?

It will not be totally correct to say there were no challenges during the entire process. Yes, there were initial difficulties, but because they were anticipated we were able to successfully manage them in such a manner that our business was, more or less, not affected.

Essentially, the challenges had to do with the reaction of the general public, customers and staff when the divestment process was announced. From the very beginning, the AMCON made it very clear that the bank, by its bridge nature, will be sold to interested investors at a certain point. When the exercise was to begin, it announced and every step and processes involved – the appointment of financial and legal advisers, the call for Expression of Interests (EOIs) by bidders down to the announcement of the results were clarified.

The reaction from customers was different immediately the divestment exercise was announced. A little number of them wanted to withdraw their patronage till they were sure that all was well while signing on new transactions met with a bit of resistance. However, we deployed a number of marketing communication strategies that succeeded in reassuring customers that the divestment exercise will not affect their transactions. 

One of such was the organisation of customer forums where we fielded questions from the customers, explained and reassured them that the exercise was, indeed, meant to serve them better. There were other customer engagement strategies, including regular media briefings, targeted at different levels of the bank’s stakeholders. We also intensively engaged our customers on a one-on-one basis at various levels. Our staff were equally and adequately primed through internal communication, town hall meetings and other bonding initiative platforms to remain calm; focused and dedicated to their work in order to convey the right attitude in their interface with our esteemed customers.

All said, these combined strategies made every bit of the activities during the exercise open for the awareness of every stakeholder and prompt. It has not been easy. Like I said earlier, the industry is hostile to any form of uncertainty and the elongated nature of the process has not helped matters. But we thank God and our staff for all the support.

You always said that one of the principal objectives of your administration is to deliver a sound and healthy bank to the new owners/investors at the end of your tenure. Where are you on that promise?

We did a lot of serious work when we came on board which I believe will endure any brand that is playing in a difficult economy like ours. The situation we met on ground was very bad, which was why the AMCON intervened in the first place. The first thing we did was to initiate a very strong corporate governance structure. The bank had a 16-member board of directors, made up of five executive directors in addition to the managing director and 10 non-executive directors.

We operated with very credible people at this level whose experience spanned banking, insurance, academia and public administration. The combination ensured the institution of a very strong corporate governance structure to avoid any abuse of process which for me was the strength of the institution. We insisted that there must be strong operational policies. In all we did, we made sure proper due process was followed.

The bank was not profitable at the time we assumed duties. Today, we have returned the bank to sustainable profitability. After the initial 5-month loss recorded in 2011, the bank has been making profit annually since 2012. We were able to grow the balance sheet by about 36 per cent over the years. Even with the introduction of the policy of 75 per cent Credit Reserve Ratio (CRR) for public funds by the Central Bank which led to the relinquishing of such funds from our system, we still have been able to grow deposits by over 30 per cent since we took over. Our asset quality has improved greatly, leading to the significant reduction of non-performing loans (NPLs).

The bank has been rebranded and is more recognisable in the league of banks. We have been able to give the institution a new corporate look and feel. Our branches and other touch points wear new look that cannot but be noticed by the man on the street. All our customers’ touch points and service platforms have been upgraded for better service delivery. We made huge investments in upgrading our channels and technology to meet the demands of modern day banking. We have continued to ensure that our customers enjoy convenient and stress free banking as our staff have been retooled and reoriented to better align with the vision and values of the bank.

We recognise that our staff are the most important asset that we have and we have invested in their up-skilling and cultural renewal to enable them competently deliver the service objectives of the bank. Their welfare has also been of importance to us to the that extent we have ensured that their total welfare package is competitive. Unlike what it was before now, the bank now attracts very good staff from the industry.

So as to your question with regards to whether we came close to the promise we made to hand over a sound financial institution to the new owners, I will say yes, we did. We have not destroyed value; as a matter of fact, we are leaving the bank with our heads held quite high.

After three years at the driver’s seat as the managing director/chief executive officer of the bank, are there things you would have done differently in the same circumstances?

Looking back retrospectively, I tell you that we were calculative with every decision we took for the overall good of the bank. We came on board as change managers but under a different arrangement. The whole essence of the intervention/investment in the first instance was to safeguard staff employment, guarantee depositor funds and ensure business continuity.

It was a tricky balancing act. We started with a highly demoralised workforce who had seen five managements within a space of six to seven years. It was like a 15-year “start-up” business. We were retooling and at the same time competing. It was like joining a race with your hands tied to your back. We had to deal with the unconventional way by beginning to untie our hands, all in keeping faith with the government contract with the public. We are pleased that we delivered on the government promise of preserving value.

Also to change the direction of the bank and at the same time deal with the issue of re-branding the bank in an industry that is hostile to mediocrity was a big challenge. One of the areas one should pay attention to in our industry is the cost structure. Again, unfortunately, we had to deal with the need to invest in technology, human capital and rebranding in a situation where you are not making money.

Another tricky balancing act was on how to watch your cost to income ratio. Therefore, we hit the ground running, excessively pushing our people, and the fact that we were in the market did not help matters.

With the successful conclusion of the sale process of Enterprise Bank, what would you say is the direct impact on the banking industry and the economy vis-as-vis the situation that led to the intervention of the Nigeria Deposit Insurance Corporation (NDIC) and the eventual takeover of the bank by AMCON?

A number of positive impacts come to mind, particularly, when viewed against the circumstances that gave birth to the institution and two others like it in 2011. You would recall that these banks were in terrible state and would have been liquidated as a result of serious erosion of their shareholders’ funds. Liquidation would have led to loss of huge customer deposit and heavy job losses, which would also have impacted the economy negatively. But then, the Federal Government allowed the establishment of an institution like AMCON, which bought up all the toxic assets that weakened those banks and reflated them with fresh capital while providing them with new boards and management with a charge to run them profitably. As such, the successful conclusion of the divestment exercise is a reassurance that Nigeria and Nigerians are capable of providing solutions to our economic challenges if allowed a level playing field. So many families have been saved the pains of suffering the loss of their sources of livelihood. Interestingly the institution is sold to an ongoing entity, which means quite a lot will be preserved in the process of repositioning the institution to meet these objectives.

Are there any regrets, whatsoever, that you may have concerning the sale?

We have no regrets because like I said earlier, we were sent here by AMCON for a termed or tenured assignment with set objectives of positioning the bank for sale. That was the passion with which we operated. Nevertheless, the reality of the situation has always been there, which somehow cushions the pain. Right now, my greater happiness is that we delivered on that assignment with the successful completion of the sale process. With the emergence of the new owners, I believe and pray that our modest successes will even be sustained and consolidated into a giant brand. That way, our little effort will always find a place in the new brand’s history.

What would be your advice to your staff; other bankers and young Nigerians who obviously would want to look up to you and draw some inspiration and motivation from your accomplishments both in life and the profession?

There are two things that should be very fundamental in the mind of any banker that is interested in retiring as a professional banker and not a businessman. These are service and integrity. Service will entail you being professional in your approach and putting all measures in place to satisfy your customers, who are primarily why you are in business in the first place! It is something that should come from inside but which will be aided by technology and innovation. If you do not have the service attitude, no technology will help you. Secondly, banking is a conservative old profession. Your customers must see you as someone they can trust without any strings attached. The moment you compromise your conduct as a banker you have lost it. It is a conflict if you are a banker and also at the same time competing with your customers, at times stealing their ideas. So I advise them to be interested in self development with emphasis on service and integrity.

After this job, which, more or less, was a national assignment, you obviously are still full of energy and not tired, what is next?

I believe in destiny, that is to say, the future is best known to God. We are only playing out a script written by Him. Left for me I will love to be a commercial farmer. I dream of waking up in the farm and driving a tractor first thing in the morning. I am very passionate about anything Nigeria. It is a great country with a lot of potentials. We are just starting. I am now like Nigeria, waiting to be discovered. There is so much to do.

Why Nigeria’s ranking in World Bank Doing Business report may slump

The state-level Ease of Doing Business for Nigeria has just been released by the World Bank. The ranking, which measures the economic competitiveness of Nigeria’s 36 states and the Federal Capital Territory (FCT), is a more detailed version of the national level ease of doing business.

A high ranking on the ease of doing business index means the regulatory environment is more conducive for starting and operating local businesses.

According to the World Bank report, while Abuja ranks as the best state for starting up a new business, Ondo State ranks as the worst. Lagos, the country’s commercial capital, is ranked 4th best state for starting a business, while Kano State ranks 34th.

In dealing with construction permits, Lagos State ranked the worst state in Nigeria, occupying 36th position. Abuja, the FCT, occupied 35th position. Kano State ranked 27th, while Jigawa State came first on construction permits.

In the property registration criteria, Lagos State came 31st, while Abuja occupied 7th position. Kano State was ranked as the 5th best state for registering property; Abia State was 36th, while Zamfara remains the best state in this area, according to the World Bank.

Under the contract enforcement criteria, Katsina State claimed 1st position, while Abuja came 5th. Kano and Lagos States, on the other hand, took 25th and 28th positions, respectively. Cross River State lags peers in contract enforcements, according to the report, occupying 36th position.

Nigeria’s performance on the upcoming National Doing Business Report that ranks approximately 189 countries will be based on the performance of Lagos and Kano States.

According to the National Competitiveness Council’s preliminary analysis, Lagos State is placed in the Bottom 10 in three of the four pillars.

In measuring the ease of doing business in the states, the report provides a snapshot of the period of time taken, monetary cost and number of procedures measured across four key business indicators: starting a business, dealing with construction permits, registering property, and enforcing contracts. These four pillars indicate the ease of doing business.

Incidentally in Nigeria, many factors are up against starting and running a business. Starting a business often requires registration, access to finance and meeting the demands of regulatory agencies of the government. Business registration is handled by the Corporate Affairs Commission (CAC). But the Lagos Chamber of Commerce and Industry (LCCI) recently expressed frustrations faced by investors in the course of business incorporation.

The chamber said rather than live up to the high expectations of better service delivery promised few months ago, the quality of service at the CAC has deteriorated.

“Rather than take the promised 24 hours, business incorporation now takes well over one week in most cases,” said LCCI.

In terms of finance access, the business community says the high cost of funds, which ranges between 17 and 30 percent, stifles business and makes its growth difficult. The Manufacturers Association of Nigeria (MAN), in its recent economic review, put the average interest rate charged by banks to its members in 2013 at 20.4 percent.

“With the current interest rates hovering between 17 percent and 28 percent and for a growing economy like ours, it will be difficult to achieve the desired economic growth and motivate indigenous entrepreneurs to create businesses since they will not be competitive with their foreign counterparts who obtain fund from their countries at single digit and invest in the Nigerian economy,” said Mohammed Badaru Abubakar, national president, Nigerian Association of Chambers of Commerce, Industry, Mines and Agriculture (NACCIMA).

Lending in South Africa, Africa’s second-largest economy behind Nigeria, as of March 2014, is 9 percent. In Thailand, business owners borrow loans from commercial banks at 6.9 percent interest rate, according to World Bank data.

Moreover, many businesses in Nigeria provide their own energy needs to the detriment of their margins, even amid multiplicity of taxes and regulatory agencies. The LCCI, NACCIMA and other businesspeople have questioned the rationale behind the Standards Organisation of Nigeria (SON), National Agency for Food and Drug Administration (SON) and the Consumer Protection Council (CPC) all exercising regulatory authorities on the same business, amid high levies and fees.

Secondly, obtaining construction permits in the country is usually cumbersome. According to the World Bank, there are up to 18 steps that will be taken before a resident or citizen obtains a permit. Some of the steps include obtaining soil investigation report, swearing of affidavits at the Commissioner of Oaths, obtaining Environmental Impact Assessment Report, among others. In South Africa, there are only 16 steps and the business owner is certain about the fees to be paid and the period every step will take.

Furthermore, registering a property in Nigeria involves ministries of land, federal or state, as well as an unclear number of agencies, each with different charges. The World Bank puts the steps for Nigeria at eight. They include swearing affidavit for search at the Commissioner of Oaths, conducting a property title search at the land registry, executing the deed of assignment/conveyance and land Form 1C, among others.

In an earlier report, BusinessDay had quoted Olusola Olubode, former managing director of Refuge Homes Savings and Loans Limited (mortgage bankers), as saying that Nigeria lagged behind countries like Ghana, Thailand and New Zealand in ease of registering property, pointing out that in Ghana it required just five procedures, 34 days and 1.3 percent of a property value.

Olubode also hinted that in New Zealand, property could be registered online in two days at a cost of 0.1 percent of the property value, stressing that Nigeria was one of the world’s most difficult places to register property, especially when, in Thailand, registering property required just one step, less than a day and 1 percent of property value.

Similarly, Abdulrahman Kadiri, CEO of Lagos-based Oak Properties, told BusinessDay that in Dubai, United Arab Emirates (UAE), in less than 72 hours a buyer should have perfected his land titles, adding that “you don’t even have to pay through your nose to get building approval”.

Dapo Ojo of Estate Links Limited also said that in the UK, it took 1-2 months, six procedures and 4 percent of the value of the property to register a property, while it took the same 1-2 months, six procedures and between $1,000 and $8,000 to do the same thing in the USA.

Contract enforcement in the country often involves legal fees, which may not be easily affordable by business operators in the micro, small and medium-scale category (MSME). Some business owners lament that cases of contracts in court often take a long time to be settled. According to the World Bank, it takes about 447 days to enforce contracts, involving filing and service, trial and judgment and enforcement of judgment. But generally, businesspeople say trust is key to successful contract enforcement, a trait still lacking among many Nigerians.