Friday, April
03, 2020 / 02:07PM / By Oluchi
Chibuzor, Thisday / Header Image Credit:
Ecographic
On April 1, 2017, Mr. Hafiz
Bakare was appointed the Managing Director/Chief Executive Officer of Keystone
Bank Limited and he successfully steered the transition of the financial
institution during that crucial period and laid the foundation for its subsequent
growth. In this interview with Oluchi Chibuzor of Thisday, exactly three years
after, the former CEO of the bank provides management lessons, shares
experiences, and offers insight into the outlook for the economy post COVID-19
crisis. Excerpts:
Career Profile, Path
and Passion Before Keystone Bank
I was appointed MD/CEO of
Keystone Bank by the then new Owners, the Sigma Golf/River Bank
Consortium following the successful divestment exercise which led to
the transfer of ownership from the Asset Management Corporation of
Nigeria (AMCON) in March 2017.
Before then, I was the bank's
Executive Director in charge of Corporate Bank and Treasury, and also
overseeing the Lagos and West commercial directorate, having been appointed to
the immediate past board by AMCON in July 2014. So, with that sort of
background, I was not necessarily coming in from outside Keystone
Bank. I had been in the bank for about three years before I was
appointed MD/CEO to lead the transition from a government owned bank to
a private financial institution.
I had wide-ranging professional
experience that cut across management consulting, banking, insurance,
manufacturing, health and other sectors, locally and also across Africa.
I was Chief Strategy Officer for First Bank of Nigeria PLC, where I was
responsible for bank and group strategy; mergers and acquisitions;
conception and incubation of new subsidiaries; group coordination; new
business development; economic intelligence; local and
international ratings; investor relations; brand management and
corporate communications. Also, I was, at some point in my career at First
Bank, overseeing the products portfolio covering consumer banking
products, money transfer, agriculture business and wholesale banking
products.
In the course of my career, I was
also Group Director at Industrial and General Insurance (IGI) PLC, an
insurance conglomerate with business interests in other sectors locally
and internationally. At some point, I was Non-Executive Director at a company
called SONARWA i.e Societe Nouvelle d'Assurances du
Rwanda, which is the premier insurance institution in Rwanda, as
a representative of IGI on the board and as part of my oversight
responsibilities.
It may also interest you to know
that I am a qualified Pharmacist. I equally have an MBA from
IESE Business School, University of Navarra in Spain and was top
of my class at the preparatory programme where I had a record of
25 As in 26 courses. My main consulting experience was nurtured at
Andersen Consulting, which later became Accenture and I was on the firm's
outstanding track. Before I was appointed to the board of Keystone Bank as
Executive Director in 2014 by AMCON, I was actually running my own
management consulting and capacity development practice, which I
founded to assist different organizations across different sectors, and
post-Keystone, I have resumed management consulting practice among
other business endeavours.
I was also a Consultant for Knowledge
Factory International, UK; an alumnus of the European Bank Training
Network's International Banking Summer School; a Senior Member of the
Chartered Institute of Bankers of Nigeria; a Fellow of the
Nigerian Institute of Management and a member of the Institute of
Directors. In addition to these, I have received executive
education at Harvard Business School, USA and Wharton
School University of Pennsylvania, USA while I have participated in
major international conferences including the IMF/World Bank
Annual Meetings, World Economic Forum on Africa, and Economist Conferences.
I have also been a panelist at the
African Business Conference of the Harvard Business School at some point
and a council member of GLG, Gerson Lehrman Group, in the
USA, which is the world's largest knowledge brokerage and expert network
comprising thought leaders and specialists in different fields.
Leadership Journey,
Lessons and First Steps at Keystone Bank.
Like I said, I was appointed by AMCON
to join the board asan Executive Director in charge of Corporate
Bank and Treasury. We did what we needed to do to make sure that we worked
with the available resources to improve things further in order to make a
mark within the organization, providing adequate support to
the then CEO, Philip Ikeazor. When it also happened that
one of the Executive Directors who was in charge of the Lagos and West
Commercial Directorate had to move on, I had to take on that
additional responsibility.
There were a number of other things
that I had responsibility for as an Executive Director - for example,
even thedivestment programme itself that is, the divestment
of AMCON from the bank, was within my purview from the bank's side. So, I
was the one designated by the erstwhile Board of Directors of
the bank as Project Co-ordinator, to oversee that entire process and I was
managing the interface with different stakeholders. So, I mean that was
what I had to do in my capacity as a member of the erstwhile
AMCON-appointed board.
After the divestment, I was appointed
to lead the transition by the new owners under a Transition Board with Alhaji Umaru
Modibbo as Chairman while one of my colleagues on the AMCON Board
Mrs. Yvonne Isichei was retained as an Executive Director.
My leadership of the bank took effect from 1st April
2017, incidentally a Saturday, but the first working day was actually
Monday 3rd April 2017. With respect to my first major
pronouncements and actions on the way forward which were effected on
the very first day as the CEO to lead the transition, let me
mention a few.
One was the strategic direction of the
institution, which I had to indicate to all staff would
be hinged on six major strategic imperatives that would drive
all our activities thenceforth. These were
1. Governance;
2. Customers;
3. Employees and Resources;
4. Processes;
5. Delivery Channels - branches,
alternative delivery channels; and finally, considering where we were
coming from; and
6. Earnings.
So, that was one of my first
major pronouncements, stating basically that these would be the six
major imperatives to drive every activity of the bank and that
performance measurement with well-defined Key Performance Indicators
(KPIs) would be intensified for every job position. In fact, what we
did by publishing performance ranking or "league table" on a monthly basis,
changed behaviour across the institution and also gave staff
the assurance that change didn't necessarily mean that we would
start changing the people, because, of course, in any transition that's the
initial fear.
Then, what we did in terms
of external communication and engagement, was to send personal mails
and letters to all customers of the bank between my effective date of assuming
duty on 1st April 2017 which was a Saturday and the actual first working day on
Monday 3rd April 2017. It was important for the CEO to personally engage all
customers through mails and letters, so, we had that communication and
basically it was to inform them, first, about my assumption of office, then to
also indicate the successful completion of the divestment programme,
that the bank had become a privately-owned financial
institution. To also let them know about the leadership transition,
seamless handover from the immediate past MD and to equally build confidence
that I would leverage the institutional memory to the advantage of everyone, in
view of the fact that I was a member of the immediate past board and management
of the bank.
So, that message needed to go out,
seeing as customers were a bit apprehensive, not knowing who the new
owners were, but because I had been around, that gave them some level of
assurance. In the course of the transition, we followed this with face-to-face
business development and confidence building marketing calls to Chairmen
and CEOs of our various major customers across the country while establishing
new relationships.
I also sent on that very first day,
personal mails and letters to all CEOs of other banks, to introduce myself
because I knew that I would be working with them thenceforth. And of
course, like I earlier mentioned, there was personal communication
in form of an e-mail to all staff of the bank, to lay down the strategic
direction and my leadership philosophy. I subsequently had meetings with
senior management staff.
Later that same day Monday 3rd April
2017, I had a town-hall meeting with all staff of the Corporate Head Office, a
face-to-face, real-time meeting with everybody in the building. In the course
of the transition, we followed that with similar sessions across all the
different regions of the bank to meet all staff around the country.
Still talking about my first
pronouncements and actions on the very first working day as CEO, I equally
set up a multifunctional committee, with people of varied backgrounds and
interests across the bank, focused on Business and Service Optimization. This
helped us a lot during the transition period to resolve a lot of issues on
operations, systems, products and processes.
Then, also, the immediate
commencement of a bank-wide revamping of our branches, to bring life to those
branches. Considering the state of most of our branches at the time, they
tended to create a wrong impression in the minds of not a few customers and
members of the public that maybe the bank was not even operational. So, it was
important for us to send that immediate signal that could not be ignored
indicating that the bank had witnessed positive change and that we were very
much in business while also building confidence in our people as well as the
banking public. This was done in phases and the feedback from customers and members
of the public was quite positive in all respects.
The Power of Communication - Defining Objectives and Lessons for Success in a Turnaround.
The major objectives, like I've
said, were anchored on six strategic imperatives, which I made very
clear to all staff from the very first day. Recall I mentioned,
governance, customers, employees, processes, delivery channels and
earnings. Those were the major anchors. Then, as part of these
objectives we had looked at a few things that we felt were very key,
going forward. There was need for some culture change and continued
engagement, which was why we had to do all of those things about
communication, being open and transparent.
And then,
capital injection. Of course, if you had a
divestment programme it was expected that moving from being a
government-owned institution to a privately-owned institution would
substantially enhance the capacity of the bank to be able to do things
that it hitherto was not able to do. So, under the "Governance" strategic imperative, we highlighted capital injection as one major anchor
of what should ultimately happen going forward with the support
of the new owners along with forbearances requested from the Central Bank of
Nigeria, some of which were granted both during the transition and
subsequently.
It was equally necessary
to further build the confidence of customers to facilitate deposit
mobilization and retention because the life blood of any bank, is to be
able to mobilize deposits that you can lend to your customers. It was important
that we built public confidence, such
that we were able to retain existing customers and develop
new business relationships, which provided foundation for
post-transition customer attraction, retention and business growth.
Something that had been an issue
generally in the Nigerian banking industry and particularly at the
time, was the issue of non-performing loans. As a player in the
industry, the bank had its fair share of non-performing
loans. Some of those loans became non-performing, essentially
due to the fact that the country had gone through recession and therefore, the companies
operating within could not be completely divorced from what was
happening in the economy. A number of the loans
were both syndicated and stand-alone facilities in strategic
sectors which had been affected by significant changes in the
assumptions underlying the original government roadmaps even as these companies had
significant verified government receivables. As the economy
itself was gradually getting out of that recession, it was
important for us to also find a way of working very closely with
these customers. So, one of the major anchors was risk
management, something that we were very keen on, particularly in
the areas of loan recovery, rejuvenation of business activities along with
resumption in meeting obligations and perhaps most
importantly, collateral enhancement to ensure adequate coverage.
We took concrete actions in these areas during the transition with
positive results that transcended the period as the
succeeding management followed this lead which was reflected
particularly in first-half 2018 results underpinned by reversal
of impairment charges.
I had earlier mentioned branch
transformation and this was about improving the façade of our branches as
a form of brand projection. We did
not contemplate changing the bank's name from Keystone to
something else because at the time, we needed to send a strong
message first that we were back in business, projecting the
brand through the outlook of our branches/service outlets, the
quality of service delivery and also continued media
engagement. There was sustained media presence as a number
of our visits to Chairmen and CEOs of customer companies were given
publicity, to create further confidence and use that as a basis for
projecting the institution positively.
Legacy: Repositioning
Keystone, Laying a Good Foundation - Were You Successful and by what
Measurement?
With all modesty, I would say
yes! I have mentioned the bit about performance management, which
remained very key. Performance stood at the very base of all the
cultural transformation, by way of leading by example and the signal
that came from the approach and style of the leader. Everybody
took a cue from that.
So, with the cultural transformation
and performance management it became clear that it was an
open environment where anyone could succeed.
You didn't have to know anybody, you didn't have to be my
friend, just do what you had to do. We developed very clear
performance parameters and followed the strategic direction which was
well communicated to all staff leading to a very seamless and
successful transition.
Let me mention a few of the key
highlights in addition to those already indicated: Deposit liabilities increased significantly even within
the first four months post-divestment despite the intensely challenging
and competitive operating environment at the time, especially for a bank
in transition; loan recoveries increased by over 100% and the number
of profit-making branches also increased considerably while there was
a resurgence in dormant and inactive account reactivation;
there was 40% growth in activity levels on self-service
channels and improved efficiency of operations with considerable growth in ATM transactions, POS collections, internet
banking and mobile telephone banking volumes.
Alongside operational
improvements, cost-to-income ratio improved consistently every
month during the transition; We enhanced controls leading to
effective cost containment, revenue recovery through optimization of
revenue assurance tools and enhanced compliance. Specifically, the bank
successfully processed USA Foreign Accounts Tax Compliance Act (FATCA) with
Global Intermediary Identification Number (GIIN), to facilitate correspondent
banking relationship and thereby reduce cost.
On the 31st of July, 2017 after very
intensive cross-functional teamwork which
I supervised personally, we launched Keystone Bank's
Unstructured Supplementary Service Data (USSD) product with the original unique
*533# short code so that we could stand to be counted in the
industry. It was necessary to ensure our customers continued to have
confidence in the bank and have every reason to enhance patronage as we
offered them convenient service comparable to, and even better than
what was offered by competitors. Our PIN driven product at the
time was superior to a number of already established USSD offerings
in the industry as we consciously combined customer convenience with
security. This provided the foundation for the succeeding management which
further fine-tuned the product with subsequent changes in the short
code.
So, under my
leadership, we gradually repositioned the bank during the
transition, building on the work done by the previous AMCON-appointed
team of which I was a key member. We put the bank on a turnaround
path and laid the foundation for subsequent growth.
Insights on The Conduciveness
of Nigeria's Business Environment from an Investor's Point of View
Well, I will just say a few
things here. You know, government itself had to put
together some initiatives towards having a business-friendly environment.
I believe this has impacted positively in the last couple of
years and further improvements are expected once some of the things that
the government is trying to
do are fully implemented. What we've seen in
previous efforts by government to reform the policy and regulatory
landscape didn't quite deliver the significant results that were expected,
because the efforts were fragmented and there was also inadequate
prioritization at the highest level.
Now, to overcome these challenges,
the Federal Government set up what is called the Presidential
Enabling Business Environment Council (PEBEC), chaired by the Vice-President,
with its membership drawn from the Central Bank and the key Ministries,
Departments and Agencies (MDAs) that are involved mostly in
providing such services. It has yielded positive results over time
with considerable improvement in the country's Ease of Doing Business ranking
and my belief is that when PEBEC initiatives
are fully implemented, this will create an even more
business-friendly environment for both existing and potential investors.
On the sale of the bank to investors,
it is important to state that while the AMCON-appointed
Board had me as Project Co-ordinator on the basis of which I
anchored the interface with different stakeholder groups during the
divestment exercise itself, the responsibility for evaluation of bids and
final selection of the preferred bidder was exclusively that of AMCON. In that
regard, AMCON was the Seller and Keystone Bank was the Target. To guide AMCON's
sale decision, there were reputable Transaction Advisers like FBN
Quest, Citibank, Ernst & Young, Banwo & Ighodalo and Crosswrock
Law that supported in making the process thorough, competitive
and transparent.
Thoughts on Nigeria's
Growth Prospects Post COVID-19 Crisis
The current situation has
made the approved subsisting 2020 budget with
its assumptions, revenue and
expenditure projections, unrealistic. The Federal Government is
already working towards adjusting the budget with a planned 20%
reduction in capital expenditure across ministries, departments and
agencies (MDAs) and 25% reduction in both recurrent and capital
expenditure of government-owned enterprises leading to an estimated
N1.5trillion reduction in the size of the N10.59trillion budget. And
with the planned reduction in oil price benchmark for the
budget from $57 per barrel to $30 per barrel, the implication is an increase in
the budget deficit from N1.8trillion to possibly over N3trillion.
Growth would therefore be a
struggle in the circumstance!
There has been a significant drop in
oil price to 17-year low at under $30 per barrel due to the effect of
COVID-19 on economic activities across the world with our major
trading partners, some of the worst hit. This is coupled with the
direct implication of the trade war between Saudi
Arabia and Russia, having United States also in
the mix.
Notwithstanding our genuine
diversification efforts through the non-oil sector, we still remain a
mono-product economy driven by hydrocarbons. So, the dynamics of the oil industry
as earlier indicated will ensure a drastic reduction in oil, hence foreign
exchange revenue. Limited accretion to the foreign
reserve due to reduced FX inflow would put pressure on CBN's ability
to sustain the naira at the level it has been for the past three
years and we are already seeing the signs with CBN's recent N380:$1
peg for interventions at the Investors & Exporters and Bureau De Change
windows, which the apex bank has termed "price adjustment".
In view of this,
planned FX borrowings by the government would have to be put on hold
given the potential to spend more naira than budgeted to support servicing
such loans if the pressure on the currency reaches a breaking
point despite the controlled exchange rate management regime. And it
appears this is well understood by both the executive and legislature given the
current disposition to the proposal for $22.7 billion foreign
borrowing which was initially enthusiastically pursued but now
suspended. In that case, even the laudable infrastructure projects might
be held back as government devises alternative sources of local
funding like the N1.5trillion Infrastructure Fund, an idea which has just
been conceived by the CBN working with the private sector to
develop the modalities.
So, putting it mildly and without
delving into details on other macroeconomic
variables, economic slowdown is expected but this would not be
Nigeria-specific as the world economy and most individual economies across the
world are expected to slow down as a direct result of COVID-19. I
acknowledge government's proactivity through the CBN with the earlier
mentioned Infrastructure Fund and others amounting to over N3.5trillion to
cushion the COVID-19 effects on the economy in addition to forbearances
on loan structure and interest rates.
In Closing, what did
the "CHANGE BEGINS WITH ME" Mantra Mean to you and Keystone Bank then?
Well, when the Federal Government's
campaign started, it was essentially aimed at educating and enlightening
Nigerians to appreciate the values of integrity and accountability, and it was
part of the government's National Re-orientation Programme. When the
President launched it in 2016, the slogan was about the need for us to see
change, not just in economic terms, but also in terms of our personal behaviour,
how we conducted ourselves, how we engaged our neighbours, friends
and generally how we lived within the larger society, in a positive
and definitive manner, so that we could promote the common good. Those
were some of the things the President said at the point of launching the
campaign.
So, what that campaign meant to
me and to Keystone Bank was how the philosophy of the
leader would permeate the organization by the symbolism of the
leader's words and actions as he led by example and the entire
organization took a cue. Therefore, as a leader I believed (and still
do) that the key principles that would ensure a changed and better work
environment must be hinged on attributes like personal discipline; work
ethics; fairness to everyone; no special privileges to anyone
considered your friend or "loyalist"; openness; transparency; being
true to your words and regard for everyone whether contemporary, superior or
subordinate; and inclusive decision making to give a sense of
ownership and worth, while leaving no one in doubt that as the
leader the buck stopped on your table! Remember I said on the
first day I assumed duty as CEO, we formed a multifunctional committee,
with people of different backgrounds (and interests!) to look at
issues of business and service optimization, just so that people
had a sense of being part of the decision making. And we achieved a
lot with this during the transition.
Finally, especially given the
context of the bank, it was paramount to be prudent while following
due process in all respects despite one's privileged
position as the leader. So, I believe these were the
ways we internalized and manifested "change begins with me" in a manner that gradually improved the mood and culture of Keystone Bank. I
wish the shareholders, current board, management and staff the
very best as they continue to move the bank forward on this
journey as a privately owned financial institution.
Credits
The post Bakare: COVID-19 Will Slowdown Nigeria's
Growth first
appeared in Thisday on Wednesday,
April 01, 2020. The
modified version published here was from the original acknowledged above and
received from the interviewee for our insight, information and publishing to
enrich literature on CEO experiences.
Related Links
1. HAFIZ
BAKARE - Harvard Business School - Nigeria | LinkedIn
2. Keystone Bank Accepts Ohiwerei's Exit; Appoints Abubakar Sule
As Acting CEO - Mar 31, 2019
3. The Many Headaches Of Keystone Bank - Underlying Pressures
Persist - Mar 31, 2019
4. Keystone Bank appoints Hafiz Bakare as
Acting Chief Executive Officer - FinancialNigeria,
Mar 29, 2017
5.
AMCON Announces Sale of Shares in Enterprise, Keystone and
Mainstreet Banks - May 17, 2013
6. Shehu Mohammed Appointed MD/CEO of Keystone Bank - Oct 13, 2012
7. Chief Executive of Keystone Bank Resigns - Oct 12, 2012
8. Keystone, Enterprise and Mainstreet Banks Operations
Unhindered - CBN - Nov 16, 2011