BusinessExecutivesNo more shadow-boxing over leadership - Ade Ayeyemi, Group CEO, Ecobank Transnational


Posted on Thursday, 21 January 2016 13:01

No more shadow-boxing over leadership - Ade Ayeyemi, Group CEO, Ecobank Transnational

By Nicholas Norbrook

Ade Ayeyemi Group chief executive officer, Ecobank Transnational. Photo©Guilhem Alandry/Documentography for TARWith its expanded continental footprint, new investors and a new chief executive, the Togo-based bank is poised for the next step, though there may be global trouble ahead.

The Lomé-based pan-African bank Ecobank has come a long way since its recent governance crisis. In his characteristically blunt fashion, Ade Ayeyemi, who became Ecobank's new group chief executive in September, says, "This organisation went through a near-death experience two years ago. And now we've recovered, we need to power through."

This is not a dramatisation. Existential scandals repeatedly rocked the lender in 2013 under the stewardship of Ivorian banker Thierry Tanoh. Hedge funds and activist investors were looking at the undervalued stock with sharp eyes.

Today, our revenue on individuals is great, but our cost to serve is high

And perhaps, in some way, the old Ecobank did die: the 'Ecobank de papa', majority-owned by Nigerian and Togolese business interests, is no more. The bank has spread its wings over 35 countries in what it likes to call 'middle Africa', building an asset base of over $20bn, and with a new set of owners.

South African shareholders in the form of Nedbank and the Public Investment Corporation (PIC) pension fund own nearly 40% between them. The bank today has Qatar National Bank (QNB) as a major shareholder after it raised its stake to 23.5% in September 2014.

History matters

It helps, then, that the new boss has experience with global capital markets and the South African banking scene but also a sensitivity to history. "To be honest, I'm going to be standing on the shoulders of the people that came well before me. They've created a financial institution that is present in multiple countries in the continent. The job of building a house is done. It's my job to make it a home."

He bats away any suggestion that the headquarters could leave the Togolese capital. Likewise, any hint that Ecobank, following its purchase of Nigeria's Oceanic Bank in 2011, has become overly focused on the Nigerian market: "I haven't lived in Nigeria for 16 years because I've been working across the continent. I didn't get the job because I'm a Nigerian, I got the job because I'm a professional. And I hope people understand that I live in Lomé, I don't live in Nigeria."

Prior to joining Ecobank, Ayeyemi spent more than 27 years with the US multinational financial services corporation Citigroup, rising to head Citibank's sub-Saharan African operations from Johannesburg. As Citigroup cut back many of its international operations amid the fallout from the 2008 US credit crisis, Ayeyemi was tasked with boosting the bank's African business portfolio to take advantage of the higher growth rates in Africa's leading economies.

Despite a quiet public demeanour, Ayeyemi has a reputation for strong management skills. The divided institution may require them as storm clouds gather over Africa's economies.

Ayeyemi may also need to put his diplomatic hat on. "I think the tensions are no longer there, because what we've done is to allow the institution to rise beyond individuals and go back to the reason why the founding fathers created Ecobank", he says.

The tensions he refers to grew out of the dismissal of executive director Laurence Do Rego, sacked by Tanoh in 2013 for blowing the whistle over a controversial salary increase. She was reinstated at the beginning of Albert Essien's custodianship in March 2014.

"I think people are mature enough to see that now the succession war is over we need to come together as a team and win in the marketplace with the customers," says Ayeyemi. "And that is where the real fight is. As we go into 2016, there's going to be turbulence in the environment and we don't need to distract ourselves with shadow-boxing because of the leadership position."

In particular, he sees Ecobank's advisory role as critical in the months ahead: "Remember – if it's challenging for us, it will be challenging for our clients. It's like when you enter a plane and you're going to go through rough patches. If the pilot anticipates this and asks you to fasten your seatbelt, the impact on you becomes much less."

Centralised products

But to do that, Ecobank needs to get its own house in order, a process started during the brief post-Tanoh tenure of Essien, who reached the statutory retirement age of 60 earlier this year. For Ayeyemi, this will go beyond simple consolidation, as Ecobank put an end to its big expansion push two years ago.

Instead, he wants to centralise the creation of banking products. "[There are] the lending products, the cash management products, the trade products: those things we'll manufacture centrally," says Ayeyemi. "We have letters of credit that are open in so many countries today. Given the level of technology, there has to be a way to do that in a central location or at least not more than two or three locations in the continent."

He points to the bank's Accra technology hub as a possible place to start. Positive signs have come from the corporate investment banking segment, whose revenues have helped offset weakness elsewhere.

Next on the agenda is cutting costs. This was already underway in Nigeria, with the absorption and rationalisation of Oceanic's branch network, and Ecobank's existing network. Here, as elsewhere, the retail operations and network of branches are the problem. "Today, our revenue on individuals is great, but our cost to serve is high," explains Ayeyemi. Again, technology is mooted as the solution, in the form of mobile banking, with small-business owners also targeted.

The bank also accepts that regulators will need to take a closer look at institutions with large international footprints. The International Monetary Fund recently issued a note on this subject.

"We cannot deny the fact that we are becoming systematically important because we are in multiple locations [...]. It's like when an airline purchases a Boeing 747 or Airbus 380: when you put 800 people in one capsule, you become systematically important."

Ecobank will need to be at the top of its game to tackle the next phase in Africa's economic emergence, particularly in the twin challenges of infrastructure and industrialisation. For the latter, Ayeyemi points to the need for better business environments. "If it's going to take people more than 80 days to get permits issued, then nobody is going to come."

Currency concerns

In particular, he takes aim at governments' attempt to shore up currencies. "I think manufacturing will only happen to the extent that we do not subsidise imports. In the countries that artificially try to hold their currency, they are exporting jobs and importing poverty."

For infrastructure, Ecobank's new shareholder configuration comes into play. "If there was a power company that wanted to build electricity infrastructure in, say, Nigeria, Ecobank wouldn't have been able to do it on its own. But when you team together Ecobank knowledge of the environment with Nedbank's structuring capability, [and] the financing power of QNB and PIC, it becomes an easier problem to solve," explains Ayeyemi.

The role of long-term investors like pension fund PIC is particularly relevant here. It could help in matching the long tenors needed for infrastructure projects. "We need to figure out how to structure the funding mix to be able to take the project-finance risk and post-project finance – to structure that and input those instruments back into the fixed-income markets, through pension companies investing in it together with insurance companies that have long, patient capital." The new tricks of an evolving bank. ●

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