Managing Director and Chief Executive Officer of Enterprise Bank Limited (EBL), Ahmed Kuru, discussed the workings of the bridge bank and its future with Business Editors. Blessing Anaro was there. Excerpt
As a bridge bank, are? you expected to build and grow the bank or maintain and sustain it???
As for whether the bridge banks’ chief executives are here only to maintain and sustain the organisations, I say no. That is not our mandate. Our mandate is to build, grow and run the banks commercially as if nothing was going to happen. If you come to me today with N200 billion with the intention of acquiring Enterprise Bank, I will tell you I am very sorry I do not have such a mandate. What I am here to do is to run Enterprise Bank commercially, grow, position it alongside other banks in the industry and make it competitive. In the final analysis, if at any point my principals decided that they want to sell, that will be okay, but that is not my mandate.
What? is it like managing a medium size financial institution like yours ?
We still intend to be a medium size bank. With 153 branches and? by any standard, that is scale. I am sure, when you are talking about scale, you may be referring to the size of balance sheet, but a large balance sheet size does not necessarily mean you have the most efficient and profitable bank.
What we intend to do is to leverage on efficiency to create the type of scale we are talking about. Everybody in this industry today will tell you that the future is in retail business. But retail? as it stands today, does not bring money. It is for the long haul. Most of the banks will tell you they want to be retail banks. But when you scrutinise the balance sheet of most banks you will see that retail does not contribute more than five to ten per cent to the bottom-line.
However, for us to reach the unbanked as we all desire, we have to keep pushing at the retail banking end. Nevertheless, the commercial segment is very crucial and it is the area that all of us are now playing in, because it is also the area that gives you quick returns and makes it easy for you to cover the whole spectrum of? the market segments.
There is also the high end which is also known as the upfinance banking segment, which is the corporate and investment banking. Based on the universal banking model, there are banks that are playing in that beat alone.
For some of us, it is important to maintain presence in that segment also in order to follow the value chain. But you must focus on the segment of the market you want to play in. Every bank in Nigeria, besides those that are playing in the up-finance banking segment, will tell you that the retail business is what they are targeting and that informed the recent acquisitions and mergers we? are witnessing in the industry.
The cashlite project, which is the policy that would? limit daily cash transactions for individual and corporate customers to N150,000 and N1million respectively, starting January 1, with Lagos State? is? targeted towards deepening retail banking. The policy is aimed at encouraging banking culture and targeting most of the people that are yet to begin keeping their money in the banking arena without necessarily coming into the banking halls for their transactions.
What happened to the workers of Spring Bank?
In my opening remarks, I did clarify that one of the main objectives of the intervention was to safeguard employment and that has been made very clear by the regulators and it has been re-emphasised by us. I am not also aware of anybody that has been sacked because of the bridge bank arrangement.
Legally, there is no operating bank called Spring Bank in existence with a licence. The new bank has given employment to all the workers of the defunct Spring Bank under new terms and conditions in line with industry practice.
It is not just a change of name, the bank is now totally a new entity that acquired the assets and liabilities of a defunct entity. So obviously, if the staff is migrating to a new entity, there must be new rules of engagement on the basis of the new entity and that is what we did and all of them were offered letters of engagement and they were all incorporated into the new entity. So, there is no job loss at all because it has been the objective of government that no one should lose his or her job.
Nevertheless, going forward, you are running a performance-based entity. Everybody must perform. It is very important.
Banks? all over the world are expected? to?? grant low interest rates and finance small and medium enterprises and agriculture. How is Enterprise Bank dealing with these?
The Central Bank of Nigeria(CBN) has? initiated many interventions in the real sector of the economy particularly in the manufacturing and agricultural sectors.
Particularly, the CBN Governor is very passionate about this. It is agreed that once you have the right strategy in these two sectors and you are able to fix power, employment could be generated in an unprecedented manner. The economies of major industrialised countries of the world are? being driven by the small and medium firms and businesses. And that is why most banks are targeting the retail business. If we don’t manage inflation and exchange rate properly by encouraging production and local content enforcement, the cost of doing business will continue to be high without appropriate value creation.
As a country we have no option than to give agriculture and other small businesses that have easy “points of entry” for majority of our people priority attention. Big businessese alone cannot turn the economy of a nation where majority of the people are not engaged. We need to build capacity and expose our people on how to approach credit. CBN is doing a lot in this regard, but banks need to,as a matter of deliberate policy,build capacity of the small businessman and woman on how to interact with financial institutions
So, everybody is aware today that for us to move our economy forward, we have to pay a lot of attention to the small scale and agro-allied industries and from what I have seen, all hands are on deck to see that we achieve those mandates. The youth must be empowered by creating employment opportunities for them. All our retail and credit products are being designed to fund the opportunities and sustainability.
What are your managerial and business philosophies?
With a strong balance sheet and professional management team we are poised to create the kind of model institution desired by the regulators and our shareholders.? Part of current challenge is getting skilled workers to blend with our existing resilient workers to create a formidable team. If you don’t have good and experienced hands you can’t make it! Therefore our strategy is to attract and retain talent.
We have been talking about corporate governance and now we have the opportunity to demonstrate it ourselves.
What are you going to tell your customers about the bank?
We are a customer-centric organisation. We want to understand what our customers? want. Before we came in, because of the situation that I highlighted earlier, even lending was a challenge due to liquidity and infrastructural issues. Now we have to tell our customers that we are back to business and we are back to business for good.
We are in a position to attend to all their banking needs.
We are efficient and responsive. Our core values are service excellence, professionalism, innovation, integrity and work as a team of highly motivated service providers.