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‘We’ll use post office for Financial Inclusion’

Ahmed Kuru is the Managing Director of Enterprise Bank. In this interview, Kuru highlighted the efforts of management in the last two years in revamping the bank and the plan to embark on financial inclusion through the use of local post offices nationwide. Excerpts:

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 percent. As you know, the industry average growth rate is 15 percent, but we have grown ours by 27 percent between last year and now. In loan book, the industry growth rate is 16 percent; we have grown ours with 200 percent. In the area of total assets, the industry growth rate is 15 percent; we have grown those of Enterprise bank by 26 percent. On Return on Investment (ROI), the industry rate is 7 percent; we have achieved about 20 percent. By any standard, if your ROI is 20 percent, 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 auditors and the Central Bank of Nigeria (CBN) officials are currently checking our books. I can tell you that in the next couple of weeks.
Sometime ago, CBN intervened in some banks because they were adjudged insolvent; the apex bank appointed some managers that were later sacked for non-performance. But the same CBN went ahead to pay those managers huge sums of money.
Every management has a different mandate. When the previous management came on board, after the CBN’s special examination of 2009, the banks were 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.
They succeeded in stabilising the banks. Five out of the 10 institutions succeeded in finding core investors. The apex bank intervened and appointed new management for the 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). So, we were given the institutions and mandated to run them commercially and competitively and I think that that is what we have done and what we are doing.

The last pronouncement by AMCON was that the three nationalised banks will be sold by next year. Will this have any kind of set-back on your current operations?
AMCON made a statement that the banks will be sold either next year or this year or anytime they like. For us, the statement doesn’t affect 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.

Looking at the decision of the Bankers Committee to kick-off the Financial Inclusion (FI) initiative in Borno State, will any chief executive send staff to Borno State, considering the current security situation in that place?
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. You don’t just employ people and send them to a volatile area. Every organisation has the responsibility to protect its workers.
Part of the structures we want to leverage on, 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 language. 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 move people from other locations there. So, what we need to do is to build capacity and train them.
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 because some of these security challenges have linkages with economic empowerment and youth restiveness and so on.

One of the things that led to the collapse of the former bank was the challenge of structure. What have you done so far?
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 in 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 is 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 abuse of processes.
Everybody on the board is an independent character. They are professional people. The chairman of the board is the former Managing Director of Diamond Bank. CBN has ensured that what happened in the past doesn’t happen again. It’s usually the abuse of process that allows banks to engage in unethical practices.

In 2011 you wanted to be a medium-size bank. Now, considering all the achievements you highlighted, are you still a medium-size bank?
We’re still a medium-size bank. If you look at the unverified figures that I gave you in absolute terms, you will see that if I grow by 20 percent of N200 billion or N40 billion, and another bank, for example, grows by one percent of say N5 trillion, in terms of size, I’m still a medium-size bank.
Like I said in December 2011, we aren’t here for any size game or size war. We want to be an efficient bank and that is our strategy.

What is the current number of depositors in Enterprise Bank?
In December 2011, we had about 1.5 million customers. What happens in the industry is that you always have five to 10 percent dormancy and deposits continue to go down. We have not gone farther than the 1.5 million, because immediately we stop managing dormant accounts, naturally we have to drop so many accounts.

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