Lagos (INVESTADVOCATE) Peter OBIORA, Online Editor at www.investadvocateng.com Monday captured a Question and Answer Session at a Media Parley with Business Editors by Union Bank of Nigeria Plc’s Management.. The major issues discussed include; how Funke Osibodu, the outgoing Group Managing Director (GMD) of the Bank has faired so far with her team; how the Bank has come back to profitability, re-branding, etc. Excerpts:

Your success tips in Union Bank

I think Union Bank has been a very interesting Institution to work for; it’s an Institution that has a very rich heritage in terms of relations and people. I believe that’s what has kept me this long; because others appointed the same time with me to rescue Banks have since left.

Union Bank is a huge Institution and achieving the goal that was set when Sanusi Lamido, Governor of Central Bank of Nigeria asked us to come was to stabilise the Bank, move it into a new level; in other words, get investors to participate. We were ensuring as a Board; and I give kudos to the out gone Board whom from day one took a decision that Union Bank will stand on its feet again and we will do our best to ensure that this happens.

At this juncture, our Core Investors, Union Global Partners Limited (UGPL) came on Board. What is unique about Union Global is that they are a Foreign Investor that brought very strong Corporate Governance and International Exposure to Union Bank.

As some of you already know, externally, they have been making their own Press Announcements saying that they have invested in Union Bank. So, when you bring Foreigners into this type of environment, their time frame is not necessarily as fast.

Also, the methodology we used, which is different from the others was such that required careful process on Regulatory approval; so, while we wanted it faster, we couldn’t get faster; but we have even closed and finished long before now.

Again, to ensure there is a smooth transition, I had to stay and be part of the new Board, a new Board started in February 2012. The part of making sure there is a new Chief Executive and when I leave, it’s not all of us leaving. The three out of the four of the former Executives are staying as part of the process of making sure that the transition is smooth. We already have two new Executives joining us; with them, Union Bank will have a complete team. It was a well planned process, the change in baton is well organised.

On my own side, different things have kept me going, some very positive, others not so positive. When I read some of the negative speculations in the Newspapers, it gives me the need to stay and prove to them that that information is not correct.

Some are positive things in the Press in terms of celebrating what we have done some far; but some, it’s the people themselves. The change we went through at some point when we needed Shareholders to agree to our Scheme Document, we needed Staff and Shareholders to work together; that was one point where I saw the real strength of Union Bank. We had staff, Pensioners and Shareholders all working together to make sure that Union Bank remain that “Last Bank Standing”.

So, as the last person standing; maybe people were more gentle with me and decided to let me be; but generally so many factors has ensured our success.

What are the current performance indicators now compared to when you took over the Bank?

I will talk in general and not specifics, when I came in, there were three things wrong, Corporate Governance, Negative Capital and Liquidity Crisis. Today as I am leaving the Bank, from the Liquidity perspective, I think within the first three months of the Financial Year, we got over our Liquidity Crisis. Our Liquidity situation that was negative, I now leave with a Liquidity Ratio of about 90% positive. The statutory minimum Liquidity Ratio is 25%.

We are now leaving it far above the statutory minimum, in other words we are now liquid and a major portion of it came from the new Capital that came in and the loans we sold to Asset Management Corporation of Nigeria (AMCON). When it comes to Negative Capital, I think at our peak level, our Shareholders Funds was negative of about N387 billion. At that point, no Shareholder would want to associate with us; also Existing Shareholders technically lost all their value. Today, we have a positive Capital of N190 billion; so we have moved from N378 billion Negative to N190 billion Capital about N570 billion Positive to change the situation. This was something that took quite a lot of work from all of us and we are getting the gain today.

On the Corporate Governance side, everybody was doing their part and there were so many things that were done wrong. At that time, we came to clear all that was wrong in terms of Corporate Governance; I believe we have done a reasonable job. I always say we have un-reconciled Accounts of over N3.0 trillion; but today its in hundreds of millions, we had over 150 people who worked day and night and are still working cleaning it up. So, this was part of the cobwebs we were cleaning up. We had Bad Loans which we sold to AMCON, we wrote off some and we negotiated and we now have created a Unit called Portfolio Management. Their job is to manage those bad loans that we still have and resolve them. The Bad Loans are not substantial anymore, so we have a relatively clean Book and it meant that our Loan Portfolio reduced from about N700 billion to now N200 billion; we have a Smaller Balance Sheet at the moment and it’s very clean.

More importantly, our customers do say that we have very old staff working for us; but today, the good news is that we have about 1000 young people we have recruited over the last three years. I recently had what I called a congress with them. The energy I saw at the venue was interesting, the testimonies they gave in terms of the experiences they have had with Union Bank was amazing.

The young people have taken over Union Bank and the way we have described ourselves as the new Union Bank is that there are two of us necessary for the future of Union Bank, the older people like us which you call “Experience”, and if you don’t allow experience, you will make wrong decisions and the young staff which we refer as “Energy”.

Imagine a new Union Bank with energy and experience, you cannot go wrong. When the experience tells you what to do, the energy takes over and executes same. Several things have changed and you will notice it in our Customer Service, we are just beginning, I have had quite a number of Customers express their surprise at the new turn of events from our staff, when they come in, we attend to them, do our best to be fast. Several of our branches were run down prior to this time, but now we have the new face of the branches, some of them we have launched, at least 75 out of over 300. These are the changes that I’m leaving behind; what I will call the foundation to move to the next stage.

Are you satisfied with your scorecard so far?

First on the retired staff which was the issue that I met on ground, we had a situation that there were so many things not been done from the staff perspective. So, we had the retired staff asking us whether their exit from the Bank was a retirement or retrenchment. We had those who said their retirement benefits have not been paid for quite awhile. And some said the timing to start paying retirement benefits should have commenced and the Bank is yet to do that. What we have done over the last three years is to streamline all the issues and start fixing each to resolve them. I’m happy to say that substantially we have resolved all. The bulk of it, we have reached an agreement; out of court settlement and both parties have executed it and moved away from that. In settling out of Court, part of the agreement is that there would be some Ex-Gratia   payment which have commenced.

More on your Scorecard

I think the Bank being a Financial Institution, makes it a Service Industry, and its all about people. So, basically in the last three years, fixing the figures, doing the turnaround, makes the Bank financially sound again. This also involved a lot of change in culture, getting people to realise that Union Bank needed to change to be able to compete in the modern world. We all know the leading Banks in Nigeria and we knew where Union Bank was prior to the crisis and we are yet to reach the stage of the leading Financial Institutions in Nigeria today; but we have turned the corner and that also mean that the people have realised that they have to bring something to the table; not business as usual, you cannot work in a Financial Institution like in the old civil service; without contributing your own quota to the development of the place. I think a lot of staff have understood that and have appreciated the training and changes that have taken place in the last three years. Like we said earlier, we now have a mixture of young and experienced people and we are going to see a better Bank going forward.

As earlier stated, we have done quite a lot in the area of reconciliation which was a major issue we had to face by the time we came to the Bank. We worked day and night to make sure that this is done, we have also worked very hard on improving the processes of the Bank, prior to this time, we had processes that are rather weak; but now we have done a lot to streamline the processes and achieve excellent service delivery. In addition, we have introduced a number of controls, there were a lot of loopholes and we are trying to plug them.

Apart from these, we have been able to show good leadership to the people and a lot of the staff has responded well; it’s not like every staff of Union Bank is backward or old, they have been able to inculcate the changing culture we introduced. Also, with the younger people on Board, the older ones know that they have to change automatically.

Another thing that is very important, is that the Bank had a lot of things within it and not been used. We are now at a stage we can see our Profit and Loss on a daily basis. Prior to this time, even after a month, it took awhile to know our position; but we had the technology to be able to find out. However, today like I said earlier we now know our Profit and Loss on a daily basis. When we have our weekly Assets meeting, everybody knows the position of the Bank. Now we are more performance oriented and that’s also the way we try to reward staff. So everybody is aligned to working for the Shareholders and other stakeholders. It takes this as a major gain from the culture change we have introduced.

What is the projection of Union Bank in the next one year?

On projection, we have published our Half Year Result and it surpassed everybody’s expectation. The Nine Month Period will soon be out, we are putting finishing touches to it and the trend is still the same. I don’t want to mention figures due to regulatory processes. For next year, I expect the trend to continue. We won’t be saying we are trying to make a change. We have made the change and growing the business; it easier to grow than laying the foundation, nobody will see the foundation, until the pillars come out. Now that the pillars are out, it will be easy to see the building block.

Where is Union Bank in terms of IT?

On technology, while we had Computers, most people would not use them, it was largely on the Secretarial side; note, not because they where not educated to use it, they didn’t need to use it; just give whatever to the Secretary and he or she does the typing. Today, my unread Emails is 3,000 and everybody is IT Compliant, we don’t have to buy anything new, we had all the technology internally, all we had to do was to turn them around. When it comes to Banking using technology, we had everything; which include Telephone, Internet Banking and so on.

Even on the Cashless Policy, we are number one active POS, I never dreamt we will get there to be number one. Customers will only use your machine because you have educated them well enough and you have enough machines working well to do the job. This is technology and for the Mobile banking, we didn’t need to buy anything new, we have all on ground; is just to start using them. Be it Credit and Debit Alert, Transfer of Funds using phones, going online using Computers to move money, we do all that.

Prior to this time, we had a very low number of Cards that we had issued to our customers; but now, it’s a thing of the past. Before, somebody was telling me that when they request for a Card, at best if it is very fast, it might take about two or three months to get it. But today, the maximum it will take is 10 days; we are working on turning around to make it 48 hours. Even Cheque Books, the turnaround has changed; it could be delivered within a week or less. So, a lot has happened in terms of technology; which we are on top of. We now have the technology were customers can use their Naira Cards abroad as some Banks do; this we are yet to unveil to the public. We will be starting it before the end of the year and we have had it for awhile. We are still Big, Strong and Reliable. And our latest advert says “We Only Just Begun”. We are starting a new phase; we are no longer an old Institution; but a young and vibrant one.

Where is your rural Banking Culture under this new dispensation?

When we came in, some of our customers went to the branches and began withdrawing their funds; our staffs were trying to dissuade them from doing this. But I told them not to do that; but let them take their money; subsequently, they will see that in spite of the challenge we were going through then, we will bounce back. Even a big Iroko tree can shake when the wind is so strong; but that doesn’t mean the tree is not big and strong. So, I told them to let the customers take their money and they did. Within a short while, they returned. All within three years, and this is very important, because it tells you the strength of Union Bank.

Our Savings and Current Accounts continued to grow; these two are very strong mark of confidence and it’s largely from our Retail Network; both rural and all the branches across the country. I call the rural “Retail”; because there is nowhere you cannot reach with technology as at today. Those locations became bedrock of Savings and what I will refer to as “Low Cost Deposits” that continued to be our confidence. You will here from our customers saying that this is our Bank and they are going nowhere; because nothing is going to happen to it. So, in this area and in terms of our performance we did not have any issue.

Issues of not receiving alerts on transaction

We are still working more on the IT side and looking at the issue of the Alert. Also, there are two issues; those using Airtel has a challenge and now from the Service Provider, when the Alert comes, it comes with a London Number, those are the two issues. They are working on it, it’s not a Union Bank issue; but we take responsibility for it.

On the current shareholding structure of Union Bank

On the shareholding structure, Union Global Partners Limited own 65%, AMCON, 20% and Existing shareholders have 15%. The Bank was commended at the just concluded Annual General Meeting (AGM) in Uyo, Akwa Ibom State that out of all the Rescued Banks, Union Bank kept the largest Shareholding for Existing Shareholders. So, part of our focus during the recapitalisation process was actually to negotiate the best deal for Existing Shareholders. UGP as earlier reported put in $500 million to acquire 65% of the Bank and in that process, we still managed to retain 15% for Existing Shareholders. UGP shareholders is made up of major Foreign Groups; mainly the Standard Chartered Group; through Standard Chartered Private Equity. We also have Carlye Capital, a major Private Equity Capital based in the US and UK, the African Development Corporation, which is a German Private Equity Firm that owns Banks in East Africa. Other major investors in the Bank are FMO Netherland, a Dutch Development Financial Institution, African Capital Alliance and Richard Chandler Group. They are parties to UGPL.

Also, we had a Rights Issue that was unsuccessful; though we made a case to Securities and Exchange Commission (SEC) to see whether we can get acceptance to the shareholders that attempted to invest which was against the rules; but we were not granted that concession. Therefore, we had to cancel the idea; otherwise if those that invested were accepted, the Existing Shareholders would have had more than 15% current holding.

Clarification on the recent Performance Based Human Resource Exercise by the Bank

This was a staff process, it goes back to the new culture, this culture is that everybody knows what is expected from him or her in terms of goals and expectations, and those goals are reviewed on a Quarterly basis. The performance review starts directly from the Supervisor and gets to what we call the “Ranking Panel” to eventually get to the level of the Executives. In that performances review process, there are those who are excellent performers and others marginal or poor performers. Compensations are benchmarked compared to that; but in addition, staffs get their promotion. Those who are not up to it know, because they get a Quarterly Report and there is timing if you don’t improve, you are better off leaving the Institution. It’s an ongoing process we commenced last year.

End