Barth Ebong : They got the wrong man

By BOLADE AJAYI

IT was sometime in late August this year. The place was    London. The people – a diverse group of prominent Nigerians which included a sprinkling of professionals and businessmen – were engaged in what Nigerians do so well: Discussing and disagreeing about current issues in the country. The issue on the agenda was the banking tsunami precipitated by Lamido Sanusi. Opinion was divided as to the propriety or otherwise of the action. There was also a sharp division as to who ought to have been hit by Sanusi’s sledgehammer. However, with regards to Barth Ebong of Union Bank, there was unanimity of opinion: They got the wrong man. Different voices rose in defence of the man who is seen by colleagues as a consummate professional, a man with no hint of scandal, one for whom the board of Union Bank had to pass two resolutions, first to ensure he ascended  the office of CEO, and, thereafter, to renew his tenure in light of his sterling performance. Both times he was past the age limit.

Conspiracy theorists are still having their say. One, therefore, begs to admit to a certain degree of fuzz beclouding the entire exercise. This is even as one tries to be sympathetic with the articulate governor and his near ‘unassailable’ reasons for taking the actions he took. Anyone with a sense of history, especially a history of the cycles of turbulence in the Nigerian financial sector, would be quick to endorse Sanusi’s action. Which was why when the governor made his case about a pervasive weak liquidity problem, shrunken balance sheets and impaired shareholders funds, many players and observers nodded their heads in agreement. When he said the measures to be taken would be drastic, there wasn’t much credible opposition. How could there be? It was common knowledge that the banking sector had been severely impaired by the bubble bursting experience of the Nigerian Stock Exchange, while not forgetting the impact of the global economic recession.

We were all as astounded as Sanusi when he said – while announcing the sack of the initial five bank CEOs – that “I did not believe that there were banks that have up to 48 or 50 per cent non-performing loans of their total loan portfolios.” Such a clearly unsustainable margin would draw the fury of any responsible regulator. And this obviously informed Sanusi’s decisive step: “We had to move in to send a strong signal that such recklessness on the part of bank executives will no longer be tolerated”. Strong words, but which, in the particular case of Barth Ebong, does not quite stack up. The immediate past group managing director of Union Bank is neither known for rashness nor recklessness. In fact, if he would be accused of anything, it is his old school prudence and reputation for far-sighted and well considered strategic decisions. This rigorous discipline it was that informed his contrarian approach to Union Bank’s capital base build up in the days when the capital market was the destination of choice for every ‘serious’ organisation in search of fresh funds.

Barth Ebong and his team decided that rather than do the fashionable thing by going to the market like everyone else, Union Bank needed to approach recapitalisation with the intent of killing two birds with one stone. The idea was to offer sizable shareholding to a reputable foreign partner who would, as part of the deal, inject both fresh funds and world class human capital that would energise the Union Bank franchise and position it properly for leadership in the Nigerian financial sector. You ask why this was necessary. Ebong, who had been at Union Bank all of his working life, had been witness to the slow motion at the management level of the bank. He knew the bank needed a serious shot in the arm if it must  compete.

To achieve this, he and his management, in concert with Accenture as consultants, came up with a reform agenda. For those who say speed of implementation might still have been a problem, they must not forget that the Union Bank way of doing things had evolved over more than a hundred year period and so required careful management, ongoing consultation and deliberate reorientation to pull off while carrying everyone along. Even so, petitions were frequently fired to CBN by interest groups who felt Ebong’s reform  was a threat to their interests. But the reform was already hitting its stride. Staff salaries had been increased across board, for certain levels up to 500 per cent. The message was clear: If Union Bank had to compete, its staff had to be well motivated. The steady loss of its best hands to other banks was thinning quality input, blunting innovation and reducing confidence amongst staff who were beginning to consider themselves second rate. This had to be checked decisively.

Comprehensive recapitalisation was also a major part of Ebong’s reform agenda, seeing as it would shore up confidence both internally and externally. However, although the proposed foreign equity participation was unanimously endorsed by the board and management, and also well received by prospective foreign partners, the CBN, under Chukwuma Soludo, refused to convey a definite position. Industry sources ascribed this to CBN’s reluctance for foreign equity in Nigerian banks by more than 10 percent. Union Bank management was incapacitated by CBN pussy-footing on the issue.

So, even though the bank’s Plan B was to go the capital
market to seek N300 billion in the event of the disapproval of its foreign bank participation request, the slow regulatory process saw the process caught up in the meltdown thereby triggering a rethink on the part of  management. One of the most pressing issues at Union Bank, therefore, in light of these developments, was how to husband its funds while researching fresh angles to recapitalising.

There is also the issue of allocation of percentages for the non-performing loans. When that is done, it becomes clear that a sizable portion was accrued under the UBA-led Transcorp syndicated loan, something the banks were called upon to do as a patriotic duty to help create a Nigerian version of the Asian Chaebols. When it became apparent that Transcorp’s loan default was not likely to be short term, the banks approached the government to allow them take over management of the company to enable them recover their monies. This was resisted by government. After the shake-up in the banking sector, however, government has issued bonds to the banks for the Transcorp debt.

Union Bank was never at the risk of going under or defaulting in its obligations. The right measures and atmosphere were being created to ensure the bank was restored to its status as a financial powerhouse. And to further buttress this contention, the interim management is sticking with the reform agenda document and entirely toeing the template crafted by the Ebong management. The reticent Barth Ebong, respected as he is, with his deluge of professional accolades, has steadfastly refused to be drawn into the fray, preferring instead to trust the courts for justice. His admirers and other observers are, however, not impressed with this strategy. They believe the man has been embarrassed by the entire episode and that his case needs to be reviewed by the apex bank. Such a review, they say, would help build confidence among professional bankers who look up to Barth Ebong as a role model banker, a man who has been instrumental to mentoring a new crop of Nigerian bankers and who models the right attitude and temperament. Indeed, in Barth Ebong, the CBN got the wrong man.
Ajayi lives in Lagos