BusinessExecutivesSlimmed-down Ecobank rises to the telecoms challenge


Posted on Thursday, 27 October 2011 14:31

Slimmed-down Ecobank rises to the telecoms challenge

By Nicholas Norbrook

After the pan-African bank doubled its profits to $132m in 2010, it opened its new headquarters in Lome, Togo on 28 June and signed a mobile banking deal with Airtel. Ecobank's CEO, Arnold Ekpe sits down with The Africa Report to discuss the other changes taking place at the bank

Arnold Ekpe, Group chief executive officer, Ecobank/ Photo/ Vincent Fournier-JA

The Africa Report: Ecobank has restructured recently. What has changed?

Arnold Ekpe: Originally we organised geographically, with African regions as business units. We've changed that now so that we organise according to customers. We have a corporate bank, a domestic bank which is really a retail bank and then Ecobank Capital, which deals with capital markets and treasury activities. That's the fundamental change of play.

Therefore, if you are Shell, for example, and you are dealing with us, you can deal with one person who will deliver the whole network rather than dealing with separate managers for each country. So regional companies now have what they call an account manager – a regional or current ac- count manager – and that person is responsible for delivering Ecobank services across the network.

There has been a new focus on risk and cost management, is it possible to go into those?

Our risk processes have changed. We have made sure the risk department is centralised and independent of marketing. We have made it less aggressive. We have also tightened our minimum requirements on loans. As a result, we have seen an improvement of 50% in our portfolio with regards to risk, and all the metrics are up. With regards to cost management, we are doing what international banks do – we are centralising, where we can centralise certain things. We're using straight-through processing where we can. So it's really strategic cost management, it's not reducing the cost of paper or something like that, though that can be done. But how do you really structurally reduce your costs? That's what we are trying to do.

We are a full-service bank – that won't change. But we will be a more selective full-service bank

That's why we're investing in technology because then we can operate on a single platform. Right now we're operating on multiple platforms. I used to work for Citibank, and Citibank operates on a single platform. So now we have a main centre in Accra, we are putting another centre in London and a centre in Lome, so we have double redundancies. Then the whole network will work around those centres. So, if Accra goes down then London takes it up, if London goes down then Lome takes it up.

But the real challenge for us is tele- communications. You can tell from using a mobile phone here in Lome. When people complain about their bank card not working, half of it is telecoms. If there is no connectivity, the card doesn't work – it doesn't matter what card you have. We would like to start investing in that. But in Europe I don't have to do that – the telecoms are there – the fibres are everywhere. Here, fibre isn't everywhere. If I use Visa and it's switched off – there's no connectiv- ity. If you want to use your data here, for example a Blackberry, you'll find that it's virtually impossible. Now most banking transactions are data, so that's really where we have to start.

Staffing levels have gone down. Is that another cost issue?

It was more optimisation rather than just cost. When you grow very rapidly, you can grow some fat in terms of headcount, and you can have too many people in a role that you don't really need. So, we needed to optimise it. But overall, the headcount is actually going to grow. It's probably not going to grow as fast as it used to, but the intention was not just to reduce headcount for the sake of it.

And I guess you've got to a point in your development where you're not going to enter too many more countries, you're not going to open up that many more branches...

We call it integrational optimisation, so we have a training centre here where we want to train our senior and middle-level people. We have a data centre here where we focus on the technology. We have put our head office here – we are not going to use all the floors obviously, it's much too big for us – but we could rent some of it out, but we can at least bring some of our people closer together to improve communication.

Your gross interest income was down last year. What are the main reasons behind that?

We just didn't grow the loans – in many cases we shrank, especially in Nigeria where they had a systemic problem. We just said, 'Look, there is no point growing loans in a market that's volatile.' This year it started growing again.

You have a new team in Nigeria now, and things are moving back into profit. Where will growth in Nigeria come from?

We are a full-service bank – that won't change. But we will be a more selective full-service bank – I think that's the best way to put it. We have a corporate business, so we'll focus on growing that business – and it is growing, we are trying to do a retail business with our 250 branches so we will see how we can grow that. We have a pretty good treasury business in Nigeria as well.

You have formed an alliance with Nedbank of South Africa. Are you hoping to reproduce the kinds of deals that Standard Bank is putting together with China's ICBC?

The alliance is well embedded, but the logic of the alliance is very different. We're trying to focus on day-to-day business needs, we're not looking at grand projects. There aren't even that many grand projects. What we want is that a company in South Af- rica that needs a guarantee in Mali, or needs to transfer money to Mali, or needs to convert money in Mali – the day-to-day banking, trade finance transactions – that we can do them just like that.

Now for us, it's additional business that we would not have had. For Ned-bank, it strengthens the relations with the client, allowing them to address their needs in countries where Ned- bank is not present. The South African mining companies are in Mali, in Guinea, all these difficult countries where we are.

Last Updated on Thursday, 27 October 2011 14:51

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