Business
Keystone Bank repositions to stem declining fortunes
By Yusuf Mohammed
Keystone Bank’s recent elevation of three General Managers from within its ranks to the exalted position of Executive Directors says something about the leadership style in place at the bank presently: it believes in, and has chosen to adopt the organic growth path. The challenge however would be whether this is enough.
The three former General Managers who were appointed to now serve as members of its board of directors at the 49th annual general meeting of the bank that took place in Lagos recently, and whose appointment ordinarily remains subject to the approval of the Central Bank of Nigeria (CBN), are Tijani Aliyu, Olaniran Olayinka and Lawal Jibrin Ahmed.
Announcing the decision which he outlines is part of a strategy to realign the bank’s operations for sustained business growth, Chairman of Keystone Bank, Alhaji Umaru Modibbo emphasized that the promotion of the three general managers to their new positions fitted the bank’s corporate governance schedules as well as its culture of maximising human capital through consistent leadership development and training.
“Since we restructured, we have intentionally and proactively nurtured our talents in readiness for future leadership opportunities that will arise in the organisation. It is, therefore, a major feat for us that we were able to appoint the three new executive directors from our internally groomed executives,” Modibbo enthused.
And this would not be the first time that Keystone Bank would be taking this route. When its previous Managing Director/Chief Executive Officer, Mr. Obeahon Ohiwerei exited the organization in March, it was also from within that his a successor and the current Acting Managing Director and Chief Executive Officer, Abubakar Danlami Sule was to be appointed.
Corroborating this point, Omobolanle Osotule, Divisional Head, Marketing & Corporate Communications at Keystone Bank affirmed that with their new appointments, the new executive directors would join the executive management office in pursuing and delivering on the bank’s strategic business objectives even as they bring on board the in-depth wealth of the experience they had respectively garnered over the years from their training and involvement with across various sectors of the economy.
Looking through the profiles of the three honoured bankers that have presently made their way into the bank’s boardroom, one would readily confirm that they are fairly accomplished and experienced strong hands in their own rights. But the question remains: would this be enough? We will return to this presently.
Tijani Aliyu holds a Bachelor’s Degree in Economics from Bayero University, Kano and an MBA from the Bangor Business School, UK. His work experience spans over two decades in both regulatory and top financial institutions in Nigeria. He is a member of various professional bodies and has undertaken various post-graduation training schedules within and outside Nigeria, including the notable INSEAD Business School and the US Federal Reserve Bank in Washington.
A consummate Risk professional and member of Risk Managers Association of Nigeria (RIMAN) and the Chartered Institute of Bankers (ACIB, HCIB), his experience in the financial services sector covers operations, treasury, Banking Supervision, Finance, Mergers and Acquisitions, and Risk Management. Until his elevation, he was the Chief Risk Officer at Keystone Bank.
On his part, Olaniran Olayinka bagged a First Class degree in Economics from the University of Lagos at the Bachelor’s level and followed this up with a Master’s Degree also in Economics from the same University. He has since then attended several executive courses and programmes in Banking Operations, Credit, Risk Management, Business Process Re-engineering, Change Management amongst others.
In work terms, he had a four-year stint with PricewaterhouseCoopers in addition to a 25-year banking experience spanning Operations, Human Resources Management, Corporate Banking, Commercial Banking, Retail Banking and Institutional Banking.
Until his elevation, he was the Regional Head Corporate Bank and West, Keystone Bank Limited.
As for Lawal Jibrin Ahmed, he holds an LL.B Degree from the University of Jos, and an LL.M from University of Dundee, United Kingdom. He has had over 19 years post-call experience that cut across Legal Practice, Banking Regulation, Process Improvement, Conflict Resolution, Project Management and Regulatory Compliance.
A Fellow of the Compliance Institute of Nigeria (FCIN), he has attended top global educational and professional institutions including the London School of Economics (LSE), UNESCO-IHE, Institute for Water Management Delft; Netherlands, the Clingendael Institute for International Relations;, Den Haag, Netherlands, US Federal Reserve; Washington DC, USA and Financial Stability Institute of the Bank for International Settlements.
Until his elevation, he was the Chief Compliance Officer at Keystone Bank Limited.
Insights from history
Presently being driven by the Sigma Golf-Riverbank Investment Consortium, which had acquired it from the Asset Management Corporation of Nigeria, AMCON in March, 2017, the bank has in antecedents in the 1981 establishment of Habib Bank Nigeria Ltd by several investors that included the late General Shehu Musa Yar’ Adua and Chief M.K.O Abiola.
In the banking consolidation exercise of 2005, Habib Bank Nigeria merged with Platinum bank to form BankPHB.
In 2011, the Asset Management Corporation of Nigeria (AMCON) purchased shares of Keystone Bank. BankPHB assets, deposit liabilities and certain other liabilities transferred same to a newly created Keystone Bank.
This was the operational state of affairs until March 24, 2017, when as new core investors, the Sigma Golf-Riverbank Investment Consortium took over management of Keystone Bank Limited following the completion of AMCON’s divestment from the bank.
Taking effective control of affairs, on April 1, 2017, a 5-man transitional board was put in place to run the affairs of the bank. It included two members of the immediate past board as Executive Directors to ensure continuity and stability.
On August 15, 2017, a substantive MD/CEO, Obeahon Ohiwerei, was named for the bank. His coming on board then effectively marked the end of a transition process that had in real terms, spanned the better part of six years.
The Ohiwerei years
While the abrupt manner in which Ohiwerei took his exit from the bank in March 2019 clearly left much to be desired, the fact of the matter however remains that his being confirmed as MD/CEO of the bank helped to communicate to the world that Keystone Bank may have indeed begun to come into its own.
However, underscoring the fact that this was still a work in progress, its posted numbers continued to drive on a somewhat eclectic note. In its Q1 2018 showing for example, Keystone Bank posted a Profit After Tax (PAT) of N5.3bn. This was to surge dramatically to N79.2bn in Q2, before tumbling to a loss of N1.3bn at the close of the third quarter.
In traditional economics studies, it is said that there are two ways in which businesses keep their heads above water, namely spending less and then earning more. Peering down somewhat closely to look at its sectoral analysis scores within the same period under reference, the bank’s Operating expenses trajectory showed that it also surged at this time from N2.04bn in Q1 to N2.4 billion in Q2 and further on to N2.8billion in Q3. Much of this was traceable to an expansion in capital and administrative expenses, particularly when it is observed that its profit before tax (PBT) position had moved from N3.7bn in Q1 to N5.9bn in Q2 before thumbing down to N3.5bn in Q3.
While costs were rising, operating income was taking the alternate path, dropping from N7.35billion in Q1 to N2.50billion in Q2 and further down to N1.55 billion in Q3.
On the net interest income side however, Keystone Bank recorded some boost, moving from N7.5bn in Q1, to N15.5bn in Q2 and on to N18.3bn in Q3.
And underscoring the work that the new owners and the management put into their acquired baby, the bank’s demand deposits rose from N59bn in September 2017 to N79bn in September 2018. Equally, loans and advances, moved marginally N174.8bn in March 2018 to N186.5bn in June and N 209.8bn in September 2018.
Also of note has been what an analyst describes as the mismatch between the bank’s financial asset base and its current liability status over time. In Q1 2018 for example, Keystone Bank posted a financial assets base of N258.9 billion. At the same time, its current liability stood at N298.5 billion. In Q2, financial assets grew to N286.2 billion but liabilities also grew, this time to N331.2billion. And this trend was to be sustained in Q3, where financial assets rose to N316.7 billion with liabilities also rising to a new figure of N357.1 billion.
As for administrative expenses, they also rose from N466.6 million in Q1 to N1.1 billion in Q2 and further on to N1.6 billion in Q3.
Building again
In a sense, the coming on stream of the new supporting cast at the top rung of the bank’s management is likely to be viewed by market watchers and industry insiders from the point of view of the tangible returns that they help to bring to the table. This is more so when, as long-standing banking sector practitioners, as well as sharing the distinction of having been drawn out completely from internal Keystone Bank waters, some will be waiting to see what new magic they would be bringing to the table.
But clearly the onus now lies upon them to work in tandem with the Ag MD/CEO in driving the objectives of the institution and delivering on its pre-eminent profitability and service delivery mandates.
In a December 2018 report, the analysts at Proshare had suggested that critical to Keystone Bank getting it right would be its ability to tackle three quantitative and qualitative challenges that it had noted.
It listed them as the Management and Board being largely unmindful of escalating expenses, the brand identity challenge that alleged political maneuvering in the acquisition of the bank may have engendered as regards the brand’s credibility and a second allegation that there may also have been some exaggerated performance indicators and which now needed to be addressed.
It then concluded that ‘for the bank to pull back from the brink of illiquidity, it must reduce capital expenditure, build up a reliable deposit base quickly and reduce political interference.’
It was notably after this evaluation that news filtered in about the resignation of the Managing Director / Chief Executive Officer of Keystone Bank, Mr. Obeahon Ohiwerei and the consequent appointment of Mr. Abubakar Danlami Sule as Acting Managing Director/CEO.
It remains to be seen how much leverage the new additions to the board would be bringing to this much desired process of corporate restructuring and a heightened focus on the bottomline.
