Nationalised banks: one year after.

By Bukola Afolabi.

•CBN Governor, Sanusi Lamido

This is exactly one year after Afribank, Bank PHB and Spring Bank came under the receivership of the Assets Management Corporation of Nigeria (AMCON). In this report, Bukola Afolabi examines the challenges and prospects of these nationalised banks thus far

THE intervention by the Central Bank of Nigeria (CBN) to revoke the operating license of Afribank, Bank PHB and Spring Bank on 5th August, 2011 and their subsequent renaming by the National Deposit Insurance Corporation (NDIC) and acquisition of its majority shares by the Asset Management Corporation of Nigeria (AMCON) may have paid off.
It would be recalled that following the revocation of the banks’ licenses, its assets and liabilities were transferred to the National Deposit Insurance Corporation (NDIC), which then renamed Afribank as Mainstreet Bank; Bank PHB (Keystone Bank) and Spring Bank as Enterprise Bank.
Following AMCON’s acquisition of the banks’ majority shares, it became the owner of the banks. This intervention initially created short term uncertainties and panic amongst customers and key stakeholders of the bank, but the situation appears to be different now.
With a sum total of N679bn pumped into the three banks by AMCON, new boards and management was put in place run the institutions and charged with a clear mandate of achieving a number of aims and objectives. 
The Mandate
The Board of Directors and Management of the new banks were tasked with turning the fortunes of the bank around. In pursuance of this, the overriding objectives were to stabilize the banks, refocus them, win the confidence of the customers, achieve greater buy-in from the workforce and return the banks to sustainable growth and profitability. 
The banks assumed duties in environments that was characterised by an absence of a clear strategy, diffused market focus and persistent losses over the years. In fact, over 90% of the banks’ branches were loss-making. 
The banks met an aged workforce with huge skills gaps, obsolete Information Technology (IT) infrastructure, weak organisational structure, high cost to income ratio, weak processes and procedures, poor expense management, high non-performing loans (NPLs) and poor performance management impeding accountability and ownership.
Structures
The organisational structures also lacked ownership, accountability and a performance measurement capability. Thus, new structures with clearly defined responsibilities, processes and procedures that facilitate accountability and performance measurement in line with best practice were put in place.
Infrastructure & Technology
The legacy bank was plagued with system challenges and ailing IT infrastructure which needed to be overhauled to pave way for a robust new application platform that would enable us drive our business more efficiently. The new cutting edge IT platform was expected to drive e-channels effectively and efficiently and enhance competitiveness within the electronic banking space. 
Policies, processes & procedures
The policies, processes and procedures inherited from the legacy bank needed a comprehensive review and revalidation to put us at par with the competition. The enterprise-wide institutionalisation of the new paradigm is being implemented with vigour, just as new technologies are being deployed to simplify, streamline and integrate processes ultimately to prevent fraud and meet stakeholders’ expectations.
Keeping staff morale high
shedding light on the strategy adopted by her bank, Faith Tudor Matthews recalled that at the inception of Mainstreet Bank Ltd, the morale and level of motivation of the staff were at a very low level. There was palpable fear, anxiety and uncertainty in the minds of staff. 
“A large number of staff had stagnated on the same grade for a long time without promotion. The evaluation of performance did not follow any known modern management standards. To boost the morale of staff, we carried out a review of our reward, recognition, performance and celebration system”, she recalled.

Ambitious targets
Convinced that the banks have attained the right fundamentals, the management have set what analysts consider as ambitious targets for themselves.
For instance, the Managing Director of Keystone, Oti Ikomi, holds the view and very strongly too that the banks is on its way to becoming one of the top five in the industry.
The reason, he said is because, the bank’s results for full year 2012 shows a considerable improvement over prior years.
 “Approval in principle from the CBN is in place, subsequent to a full well conducted audit by our external auditors KPMG. Keystone bank financial control is finalizing the issuance process and we expect to release our accounts very shortly”, said an elated Ikomi.
Speaking further, he says he is optimistic that the management has re-positioned the bank for efficiency, market share growth and significantly improved governance and control environment. 
“Related to this vision, we have put in place a “let’s build “ strategic focus to be a top5 bank in Nigeria by 2015 focusing on innovation and meeting customers’ needs in the middle market and retail banking. We are making early progress and in the statistics released as a part of the cashless Lagos drive, keystone bank already features as a top 10 bank in Nigeria, measured by active pos deployment.
“Our governance and control environment is well in place, in line with best practice.  Our distinguished board of directors under the chairmanship of Mr. Moyo Ajekigbe provides the required oversight and strategic direction and support.  We have full functioning 5 board committees as well as a host of management committees, under the leadership of the CEO that run the bank.”
AMCON’s intervention
Expectedly, as the landlord of the banks, AMCON is happy that things have gone absolutely well with the nationalised banks under its care.
Giving this insight over the weekend was Mofoluke Dosunmu, Executive Director, Finance and Operations, AMCON.
Going down memory lane, she recalled that before AMCON came on stream things were pretty bad as confidence within the banking sector had long being eroded, because many of the distressed banks paid scant regard to corporate governance procedures and International Financial Reporting Standards.
But thankfully, she said, with AMCON’s intervention came a lifeline for the troubled banks whose finances were in a mess, to say the least.
“Today, the banks have more money deposits compared to the past when there was investor apathy”, she enthused.
The confidence level at the banks, she stressed, is such that today there is no fear of the management running the institution aground as happened before AMCON stepped in.
But to many analysts out there, they would rather the banks don’t get complacent but gird up their loins to ensure that things improve for the better.
Pray, is someone listening?