June 15, 2009

Task Before Wema Bank New Management

The assumption of duties last week of the new management team at the bank also mean a task of redefining and reinvigorating the bank that has gone through a period of severe crisis occasioned by the irregular sale of the shares divested by the O’dua Group, Lucky Fiakpa writes



The survival instincts of Wema Bank    Plc must be very tough for it to have   survived all the heat it got in the last two, three years. Not many banks could have survived the management crisis it went through that saw the former managing director, Mr. Jeremiah Adebisi Omoyeni, losing his job. During the crisis period, two different interim management teams were appointed to oversee its affairs.

However, with the assumption of a new management team last week following the successful acquisition of 40 per cent of the bank’s shares by new core investors, SW8 Investment Limited, it is hope that the worse must be over for Wema Bank by now and have gotten to the end of the crisis.

The bank formally announced the assumption of duty by a new management team led by Mr. Segun Oloketuyi, last week. This followed the successful acquisition of 40 per cent of the bank’s shares by new core investors, SW8 Investment Limited.

SW8 emerged as the core investors in Wema Bank following a competitive bid exercise for 40 per cent of the issued shares of the bank and the approval of the Central Bank of Nigeria, CBN, and the Securities and Exchange Commission (SEC).

Mr. Oloketuyi, formally executive director, Skye Bank Plc, becomes Group Managing Director/CEO while Ademola Adebise (formerly of Accenture) and Taiwo Adeniji (of Africa Finance Corporation) would join him as executive directors. Mr. Nurudeen Fagbenro remains an executive director with the bank.

The new team is saddled with the task of redefining and reinvigorating the bank that has gone through a period of crisis occasioned by the irregular sale of the shares divested by the O’dua Group.

While emphasizing that the immediate challenge facing the new management is the institution of corporate governance best practices in the bank, Mr. Oloketuyi stated that the new team intends to pursue a strategic and sustained transformation plan which will reverse the fortunes of the bank.

This plan is expected to be rolled out in three phases – stabilizing the bank, preparing the bank for growth and finally growing the bank to take its rightful place at the fore front of the financial services industry.

The new management team acknowledged the immense contributions of the interim board led by Mr. Mahmoud Lai Alabi in ensuring the institution remained afloat during the crisis period and successfully executing the regulatory authorities mandate for the sale of the warehoused shares through a transparent and credible process.

Stakeholders last week expressed hope that the new team should be able to redirect it on the path of sustainable growth.

While many agreed on the need of stabilizing the bank as a good take off ground, they would also want the management to embark on a reconciliation process since the last three years of crisis did created various camps within the bank. While the crisis lasted, some staff believed that the former managing director, Mr. Omoyeni, was unduly being persecuted and for that reason, were very sympathetic to his cause.

Others saw the erstwhile managing director as the problem of the institution and could not wait to see his exit. Division such as this often led to occasional friction at the bank while the crisis lasted.

It is therefore hoped that the new management team should be able to carry everybody along. This it could do through a proper reconciliation process that would leave everyone nursing no ill feeling.

The crisis generated in Wema Bank was occasioned by the removal of Mr. Jeremiah Adebisi Omoyeni as the bank managing director. It soon became a mud-slinging combat as the embattled former chief executive officer fired back at his predecessor, Mr. Tunde Lemo, Central Bank of Nigeria (CBN) Deputy Governor, (Financial Sector Surveillance), accusing him of being the chief architect of the problems that plagued the bank.

His allegations against Lemo were that between 2000 and 2003, when he presided over the bank as managing director and chief executive officer, he led the bank into incurring N8.125 billion debt, as well as inflated paper profits and he would want the authorities to look into all that for them to understand the environment under which he (Omoyeni) presided over the bank as managing director.

But appeared his allegations against Lemo fell on deaf ears as he was directed to proceed on indefinite leave for misapplying some of the bank resources. This was contrary to earlier position of the bank which said the former MD was on his first annual vacation since assumption of office in December 2005.

Some of the allegations that led to Omoyeni being sent on compulsory leave had to do with the sales of the bank’s shares formerly held by the Odu’a Group, purchase of official vehicles, loans administration procedure and contract award processes. He was alleged to have authorised the sale of the shares without proper consultation and approval of some of the owner state.

There is also is the allegation of a controversial N450 million housing grant the former GMD collected for five years upfront at N90 million per year. Several other allegations have been made against the former Wema Bank boss.
However the former acting Managing Director of the bank, Mr. John Aboh, said the immediate reason why Omoyeni was asked to proceed on compulsory leave was to ensure unhindered investigations in the bank.

He was alleged to be frustrating the work of the investigators from the Central Bank of Nigeria, CBN and NDIC. “There is an ongoing investigation in the bank. Omoyeni was perceived to be obstructing access to relevant records needed by the examiners to ensure proper investigation. My role is to stabilize the bank to ensure that management is stable pending when the examinations would be concluded,” Aboh said.

He described his appointment by the CBN, as a partial intervention at the board level of the bank stressing that the board of the bank had not been dissolved.

He said the objective of the on-going investigation in the bank was to ensure that the bank is run in a safe and sound manner and complies with all relevant banking laws and regulations. And when the examination is completed, he said, a report would be drafted and forwarded to the board of the bank on the way forward.

Apparently aware of the divided loyalty of staff as a result of the crisis, Aboh assured the employees of the bank of the security of their jobs, and enjoined them to make conscious efforts at providing unparalleled quality services to the customers. “In today’s competitive landscape in the banking industry, quality services remain a key differentiating factor to superior performance by banks.

The key element in service delivery remains our human capital and hence the need for all staff to brace up to the challenges ahead and face competition for customers with determination and zeal”, he said.

But with the reappointment of Lemo for a second term of five years at the CBN a fortnight ago and the successful acquisition of the bank by SW8 Investment Limited; it appears Omoyeni is the only loser in the crisis.

Infrastructure Uplift

Another factor the new team may want to look at is the upliftment of the bank’s infrastructure base. A good number of the bank branches are yet to embrace modernity. Often customers are told in some of the branches that server is down and that could leave customers frustrated for a long time. In these days and time where information are better stored in systems, file cabinets probably as old as the bank, can still be seen in some branches of the bank. Even some of the building housing the branches do not offer conducive banking environment. If the new management team must position the bank on the path of growth as it has promised, some if not all, of these needed to be addressed.

Regional Bank Status

Wema Bank has come a long way. It is arguably the only “regional” or “indigenous” bank still standing. New Nigeria Bank for the old Bendel State is gone; National Bank for Western Region, gone; Bank of the North gone; Lion Bank for Plateau State gone; Lobi for Benue gone; Pan African Bank for old Rivers State gone; African Continental Bank for the Eastern Region gone; among others.

Again, the survival instincts of Wema Bank appeared to have seen it through all.
But it is doubtful if such regional linkage can still be counted as asset to rely on in modern day banking these days. With the South Western governments out of the picture, the new owners/management would do well to position the bank as a truly national bank by taking their businesses to areas where they have never been to compete for jobs. This should be able to give the bank a good footage in the current banking environment.

Need for more Capital

There is no gainsaying the fact that Wema Bank needs all the money it could garner to do business and upgrade its ICT infrastructure if it must compete well in the current Nigerian banking landscape. Wema Bank had planned to raise a total of N150 billion from the capital market through offer for subscription, rights issue and foreign capital injection before the CBN asked Omoyeni to step aside.

Mr. Aboh had wanted to go on with the bank’s planned public offer except that the timing was going to change in the light of current developments in the bank. The unhealthy development of the capital market at the moment could even make things difficult for the bank’s desire to raise fresh funds through the market.

However, should things start looking up in the capital market; the management should not be shy to approach the market for fresh funds because the bank needs it.

Aggressive Marketing

Another challenge the new management may want to address is the need for a robust marketing strategy. The market environment is replete with various banking products beckoning on customers to patronize them and only the creative and innovative ones get patronized.

Wema Bank should not be found wanting in this terrain. Before the crisis, the bank parades some very juicy products which in fact were pioneered by it. For instance, the Wema Assets Acquisition Scheme, WAAS, was such a great product. In fact, it is one product many believed was cloned by other banks as consumer product that is making the entire wave in the industry today.

The bank is replete with such products and all the new team needs to do is dust them up, repackage them and market them effectively in order to have a good head start in the industry.

Wema Bank Plc was incorporated in May 1945 as a private limited liability company and commenced business operations as a commercial bank in the same year. The bank was converted to a public limited liability company in April 1987 and was subsequently listed on the floor of the Nigerian Stock Exchange in January 1990.

On February 5, 2001, the Central Bank of Nigeria granted a Universal Banking Licence to the bank, thus allowing the bank to undertake a wide range of financial services to its numerous customers across the country.

The bank has witnessed tremendous growth and development in branch network, quality of service delivery and overall financial performance in the last two decades. We have embarked on a process of corporate transformation that has resulted in the emergence of a restructured Wema Bank Plc, strategically positioned to fully optimize opportunities in the industry.

Wema Bank Plc is adequately capitalized, our shareholders’ funds is in excess of N25 billion and our asset base is N165 billion. Presently, Odu’a Investment Company Limited holds 10% equity stake in the bank, while private individual investors and staff of the bank own the remaining 90%.

The authorized share capital of the bank is N7,000,000,000.00 divided into 14,000,000,000 ordinary shares of 50kobo each.

With banking operations spanning 60 years, Wema Bank Plc is reputed to be the longest surviving indigenous bank in Nigeria. Wema Bank Plc is a customer-focused bank. It takes delight in learning the intricacies of its customers businesses and preferences, thus its byline “taking you to greater heights”.