Ifie Sekibo, the Managing Director and Chief Executive Officer of Heritage Bank Limited, is an alumnus of the renowned Harvard Business School and Fellow of the Institute of Chartered Accountants of Nigeria, with over two decades professional work experience, spanning the financial services and energy sectors. He has a proven track record in turn-around management. In 2003, for instance, he led a team, which acquired Global Assurance Company Limited, previously under the technical management of the National Insurance Commission. Again in 2009, he led another team of professionals to nurture the re-birth of the erstwhile Société Générale Bank, and transformed it to Heritage Banking Company Limited (HBCL) and emerged the pioneer Managing Director/CEO. The bank recently successfully acquired Enterprise Bank Limited, to create a bigger, better and stronger Heritage Bank Limited (HBL). Sekibo, who is also a member and Fellow of a number of professional institutes, including the Institute of Directors (IOD); Institute of Petroleum, London; Nigerian Institute of Management (NIM) and Chartered Institute of Bankers of Nigeria (CIBN), recently barred his mind on the state of the economy, with focus on the nation’s financial sector, in a chat with newsmen. LUCKY ORIOHA was there. Excerpts.
What is the latest on the bank’s integration? Is the process over now?
On the integration, what readily comes to mind are the people; putting the people together, who are of different backgrounds – different orientations and different experiences. This is a defining phase of our integration experience. But luckily, both organisations – Heritage Bank and Enterprise Bank have very experienced and qualified people. So, for me, it has been a matter of identifying talent and integrating them into our system.
Though we worked with consultants, I can confirm that the collective resolve of our people to achieve success reinforces our tenacious spirit as a team. At some point, it was difficult to know who was from Heritage Bank or Enterprise Bank. That was one interesting feature of the integration.
The next step was technology. Again, we were lucky to have competent people on our Information and Communication Technology (ICT) platforms. They even won an internal award for being the group which put in their best effort. All we have been able to achieve was made possible because of the quality of people who managed this process. Of course, the third was regulatory support. We had a lot of regulatory support.
How about the challenges faced during the integration process?
Yes, some of the challenges include the Asset Management Corporation of Nigeria (AMCON) issues and the various cases in court, but we were able to settle all amicably. So, we can say the integration process was concluded on the 4th of September, 2015 and on the 7th of September, 2015, we got our approval. So, our birthday as a bank is on the 7th of September, 2015. We are actually less than one year old.
How did you resolve the labour issues arising from the integration of the two banks?
First, we took a decision as a group – both Heritage Bank and Enterprise Bank, to subject everybody from the general manager cadre to the last man, to a non-interference-based general assessment. We hired a consultant to look at our business plan and our job growth assessment. Every one of us went through the process and at the end of this process, three documents with various recommendations were submitted for our consideration and implementation.
These recommendations were to move people from one group to the other. Those who were marked for exit were those with disciplinary issues before this process. Initially, we thought we would lose about 10 per cent of the workforce, but at the end of the day, we lost less than two per cent.
Are you saying there was no agitation at all?
Aside the assessment by the consultant, we were also pro-active in dealing with it. We had union leaders who were invited to have a look at what we were doing. We also had our report open to the board and some external parties, who were able to review them to ensure that there was no case of witch-hunting.
Secondly, we also believed in the value each person could bring to the table and after the evaluation, we decided whether we wanted to reduce the number or not. Before now, Enterprise Bank had so many staff. We had lower level cadre staff manning our experience centres, the name for our branches. So, we had more of operational staff than marketing staff. This posed a mismatch, so all we did was to reshuffle and reassign people. Our promise was that nobody was going to be sacked in the first six months, so that we could have a transparent assessment of individual performances and subsequently all who did not live up to standard will be clear in their minds that there was nothing anybody could do about their exit. So, you see there was no way one or two people would not have been asked to go.
Now that the integration process is over, what next for Heritage Bank?
I believe growth is defined by the industry you find yourself in. Today, in the banking industry, the indices reflect the situation in the general economy. When I approached my board, and they asked me about our growth projection, I said sincerely, our projection would be pitched against current economic realities. Nigeria itself has dropped its growth projection from six per cent to 2.9 per cent. So, as a major player within the sub-sector of the economy, the slowdown in the general economy is a major factor to be considered. So, I told my board that the major thing for me is to create cost efficiency in the system and take the non-performing loans out of my balance sheet. What it means is that for each naira you spend, it must be channeled efficiently to the overall growth of the business.
The naira is said to be currently on trial and there has been a debate as to whether to devalue or not to devalue the naira. What is the way out for the currency?
Devalue or not to devalue is about the process. Devaluation in actual fact is about how we manage the process. What are the learning points which have led to these level of distortion in the value of our currency? If we identify them, have we attempted to correct these anomalies, such that if we devalue today, we will not find ourselves seeking for further devaluation within a month or year? If we do not learn and understand those principles, the devaluation may be meaningless.
Devaluation is a sound economic theory in the concept of demand and supply, which clearly has its arguments for and against in the life of any economy. But before the decision to devalue, let us look at the basic economic foundation of our country. Today, we are 90 per cent dependent on imports and our purchasing power for these imports is limited and affected by the price of the singular commodity, oil, that we export, which has now fallen to an all time low.
As a country, a lot of our elites send their children abroad and pay school fees from the same dollar chest that we do not have. Some others travel abroad to buy jewelries, coffee and even groceries, as well as stuff their hand luggage with all manner of things, and yet pay from the scarce dollars.
Devalue or not to devalue is about the process. Devaluation in actual fact is about how we manage the process. What are the learning points which have led to this level of distortion in the value of our currency? If we identify them, have we attempted to correct these anomalies, such that if we devalue today, we will not find ourselves seeking for further devaluation within a month or year?
With this development, we are unable to pay for our raw materials, while the money we are supposed to use to pay for these raw materials is used for all kinds of foreign goods which are not necessary. Can we as a nation sort ourselves out? Let us begin to use made-in-Nigeria goods or spend less of our money on frivolities. If we devalue the naira and still continue with our warped lifestyle, we may end up creating more problems with the devaluation.
To be clear on this, devaluation itself is good. Today, if we are talking on how to finance the Gross Domestic Product (GDP), if we devalue, the difference between the official rate and the unofficial rate in the black market is a big buffer. Since we do not pay our salaries in dollars, and even when we borrow, say, like One billion dollars, the quantum of the naira will be more. So, devaluation is not all evil. But on the contrary, it does not happen as easy as that because of the peculiar structure of our economy. Since we are mostly import dependent, even the made-in-Nigeria goods we want to produce, we need to import the raw materials.
How then can we sort ourselves out?
As a way out, we need to get a plan as a country. It is that plan that will give us a clear picture as to whether to devalue or not to devalue. Those that are saying that we should devalue are not also being very realistic. Apart from being an economist, it only takes a secondary school student with a basic knowledge of demand and supply to know that you cannot sell a scarce commodity for a reduced price.
Secondly, the current level of dollar demand is unrealistic. It is not real demand. To an economist, it may make sense to devalue, but as a country, we must look at all the parameters that make sense for us to devalue. If we do not address these parameters, devaluation will lead to further devaluation.
What exactly is your own suggestion?
My personal submission is that I will not call it devaluation. What I would rather suggest is a currency adjustment against what we call devaluation. But the adjustment must be predicated upon a yardstick which sets out what we want to spend the scarce resources on. When we devalue, we must revalue our priorities as to where we want to put the extra naira made from devaluation, so that we do not squander it, but put it in areas that will lead to further economic growth. Most importantly, if we devalue the currency and continue to behave the way we behave presently, we will not get anywhere.
The real sector is complaining that banks are not lending to them despite the repeated assurance from the Central Bank of Nigeria (CBN) and the Bankers Committee. What exactly is the problem?
Let me quickly correct one impression. The money in the bank belongs to customers and if we lend to borrowers and cannot recover it, the customer must still get his money back. Today, the real sector is struggling and not performing because the fundamentals are not right. Today, we import things like eggs into the country. Can you imagine an economy where we cannot produce our eggs? We must understand that manufacturing is not about producing cars, television, among others. No. For instance, we can manufacture tomato paste. We have good materials to feed the whole of Africa. But how many farmers are able to buy tractors? Can we as a nation create a leasing company that will lease these tractors to the farmers for a fee, and with the money, we will be able to do co-operative farming. The only area Nigeria can compete today is in agriculture. Nigeria can feed the whole of Africa if we get it right.
A lot of bank customers are complaining of being shortchanged with the sudden return of bank charges. What are the issues involved?
The bankers believe that charges on turnover ought not to be the proper way to express service to customers. But we must also know that we are in an Information and Communication Technology (ICT) age, where for every account you hold, the banks incur cost for maintaining the account. It is not a charity.
As a country, a lot of our elites send their children abroad and pay school fees from the same dollar chest that we do not have. Some others travel abroad to buy jewelries, coffee and even groceries as well as stuff their hand luggage with all manner of things and yet pay from the scarce dollars. Let us begin to use made-in-Nigeria goods or spend less of our money on frivolities.
The other is the card. You do not have to have a card. Financial services have to be inclusive and everybody must have access to it. For that accessibility, you have to deploy some technology. All over the world, the cost of technology has come down, but here in Nigeria, the cost is still very high. We pay three times what other parts of the world pay for data and every time you use your ATM card, you use data and in the process, passing a cost to the bank. But the bank does not charge you until the customer’s fourth use. In other countries, once you insert the card they charge you.
In good times, the mortality rate of the Small and Medium Enterprises (SMEs) is very high. Now that the economy is going through some challenges, how do you think the SMEs can survive and will your bank continue to support them?
SMEs have to survive if the economy has to survive. It is not an option. It is the bedrock of our economy. The artisans, the fitters, the technicians… if they do not exist, our maintenance culture will be very poor. Funding is the last thing on the menu for SMEs. Let us begin to inject methods and give guidance to these companies. For some of the SMEs, the owner is the chairman, managing director and everything. The day he drops dead, the business dies. But what we are saying is that they can organise themselves into clusters and share responsibilities.
Notwithstanding, SME remains a priority. We will continue to support and help them. All big corporations today, including our brother and mentor, Aliko Dangote, started as an SME. As a bank, we have set up an SME clinic and partnered with professionals who teach them proper methods of running and sustaining their businesses.
The Minister of Information said recently that some bankers were involved or collaborated in the looting of the nation’s resources. Do you not think this can erode customer confidence in the sector?
I am not privy to the information the Minister has, but banking is a very honourable profession. But there are a lot of things about banking that we do not understand and I want to put this in perspective. A banker seeks your deposit and you give it to him in the name of Company XYZ. If tomorrow, they found out that the money is stolen, the bank may be liable. Today, the customers are shouting that we are stretching the Know Your Customer (KYC) beyond reasonable levels. It is not because we want to, but because it has gotten to a level where you will hold me liable for money held on your behalf. The banker’s stock in trade is money and deposits. He also creates loan portfolios. That we have one or two bad eggs among us is a societal thing – and the banks, unfortunately, are in the middle of this.
What is the future of Heritage Bank?
I believe that as a bank, Heritage Bank was set up to do one or two things and there are three steps to it. One is the creation, preservation and transfer of wealth. We sat down as a bank and noted the difficulties faced by businesses and families in Nigeria in the area of generational wealth transfer, and so, we are saying that Heritage Bank should be able to serve as a catalyst to create wealth, preserve it and fashion out a succession plan for the next generation.
With this in focus, we believe a few things must be in place in the organisation and also have a target we can measure. To us, the main target is that our activity, our investment, our catalytic behaviour will help make businesses move from one level to the other. That is the goal.
When is Heritage Bank coming to the capital market?
We believe in the next three years or thereabout. Do not forget we are less than one year old. The capital market rule is that you must have run the business successfully for at least, three years before coming to the capital market.
SUGGESTED QUOTES
Devalue or not to devalue is about the process. Devaluation in actual fact is about how we manage the process. What are the learning points which have led to this levels of distortion in the value of our currency? If we identify them, have we attempted to correct these anomalies, such that if we devalue today, we will not find ourselves seeking for further devaluation within a month or year? If we do not learn and understand those principles, the devaluation may be meaningless.
As a country, a lot of our elites send their children abroad and pay school fees from the same dollar chest that we do not have. Some others travel abroad to buy jewelries, coffee and even groceries as well as stuff their hand luggage with all manner of things and yet pay from the scarce dollars.
Let us begin to use made-in-Nigeria goods or spend less of our money on frivolities. If we devalue the naira and still continue with our warped lifestyle, we may end up creating more problems with the devaluation. So, as a way out, we need to get a plan as a country. It is that plan that will give us a clear picture as to whether to devalue or not. Those that are saying that we should devalue are not also being very realistic. Apart from being an economist, it only takes a secondary school student with a basic knowledge of demand and supply to know that you cannot sell scarce commodities for a reduced price.
Notwithstanding, SME remains a priority. We will continue to support and help them. All big corporations today, including our brother and mentor, Aliko Dangote, started as an SME. As Heritage Bank, we have set up an SME clinic and partnered with professionals who tutor them on proper methods of running and sustaining their businesses.
