By Omoh Gabriel, Business Editor
Mr Segun Odusanya is First City Monument Bank?s? Deputy Managing Director / Executive Director. He joined FCMB in August 2011 with over 18 years of experience garnered across key banking functions, including Client Relationship, Sales, Corporate Banking and Operations.
His most recent experience prior to joining FCMB was as the Regional Executive Director, Client Relationship: Standard Chartered Bank, East Africa, covering Uganda, Kenya and Tanzania, a position he had held since 2009, with major responsibility for driving the group?s agenda and strategy for Client Relationship in East Africa.
Prior to attaining the aforementioned role, Segun had occupied different positions in Standard Chartered Nigeria, Zenith Bank and erstwhile Chartered Bank. Segun holds a bachelor?s degree in Banking and Finance, as well as a master?s degree in Finance from the University of Lagos. He has attended various managerial courses, including The General Management and Leadership Course at Said Business School, Oxford University. In this chat with Financial Vanguard, he spoke on various issues. Excerpts:
If somebody meets me somewhere and says ?do you know the DMD of FCMB?? Who will I say he is?
Segun Odusanya is a very simple, honest, highly professional and solution driven banker. I have been around for about 20 years. During this period, I have worked in four institutions starting with Chartered Bank for about two years, Zenith for about five years and Standard Chartered Bank for about 12 years before I moved to FCMB mid last year. My last posting in Standard Chartered Bank was as Regional Executive Director for Wholesale Banking for East Africa (covering three presence countries and about 4 non- presence countries).
Why FCMB?
I had always admired FCMB. One, because of their history and two because I always looked at FCMB as a highly solution-driven bank (especially within the Corporate space); a bank that is able to offer solutions at the upper level of Corporate customer?s pyramid of needs. For example, Mergers and Acquisition, Capital raising, Structured Trade Finance, etc.
These were complex transactions that not every bank could provide. The bank was also able to create a niche for itself within the high networth and upper middle market space. With my long years of experience as a corporate banker both in and outside the country, I wanted to work in a bank with a clear focus/strategy of providing solutions to this segment of the industry.
FCMB used to be a merchant bank and its niche is corporate banking, so you fit into corporate banking or is FCMB changing focus now?
What we are doing is expanding our focus to create a more robust and stable bank. We want to drive solutions across the various segments (corporate, commercial, small enterprises and consumer segments) of the economy. We have been doing this organically in the last five years, and have seen steady growths in all these segments.
Mr Segun Odusanya
The acquisition of Fin Bank is expected to give two/three years leap (especially in the area of branch network, liquidity, and balance sheet size). With the acquisition, we have been able to double our branch network, more than double our customer base, improved the liquidity position of the bank, and also create a very good platform to be able to provide more client-centric products in the consumer space.
We also will now be able to provide our expertise to more commercial and small enterprises. We will be able to help these clients grow their businesses with not just the banking products we offer, but also with our expertise in corporate and financial advisory. We want to help create? more Dangotes in this country and the opportunity to do this is enormous.
Not looking at the retail side of the market?
As I said, our focus cuts across all the segments. We are aggressively driving retail, but in doing this, we are not de-emphasizing corporate. We have made a lot of investments in people, products, systems and branches (from the acquisition) in both segments. We understand that both segments complement each other, and for us to continue to survive as a universal bank, we needed to provide services across all the segments.
When you look at it, majority of the retail customers are key stakeholders of the corporates. They are suppliers, distributors, staff etc. of the corporate. Our focus therefore is to provide services to all these stakeholders. We are also currently having discussions with the central bank to further extend these services to the mass market.
How equipped is the FCMB to do this?
As a commercial bank, we have the licence to do all these and over the last five years, we have been steadily expanding our business to cover all these segments. The acquisition just provided an opportunity for us to fast-forward by two-three years. With the doubling of our branch network, we are now able to serve more customers, we now have the scale to launch more value added products to our customers, and we are now also able to operate more efficiently as a bank. All these definitely will translate into overall savings for our customers.
Let?s come to the merger itself. What is the stage of the merger? Have you concluded or when are you concluding it?
I will say we are 95 per cent complete. Hopefully, the two banks will be fully merged by end of October. Our initial target was second quarter of the year, but we got delayed by issues around the Capital market probe and the sacking of the SEC Board. Things are now back to normal, and most of the approvals have been obtained.
All regulatory approvals on the acquisition have been sorted out?
Most of it.
An acquisition like this usually has cost implications. What are the cost implications for FCMB and what value has it actually added? When you talk about your customers, what value are the customers actually expecting from this acquisition?
This and the other two (Access and EcoBank) acquisitions were highly supported by Central Bank. So we got a lot of comfort especially around the bad assets and contingent liabilities in the balance sheet. Specifically on our acquisition, I think we chose the right bank both in terms of scale and value addition for all our stakeholders. Whilst driving the acquisition, we also needed to ensure that we did not create distractions to our normal business.
The key is to ensure we create value for all our key stakeholders: for shareholders by ensuring a better return on equity; for customers by offering a compelling proposition and for staff by creating a great company to work for that provides solid career aspirations. In essence, we must aim to be simply better than the rest, build on that and then become the best.
Specifically for customers, the merger will provide the customer with increased touch points to the bank ? more branches, more ATMs and a wider range of alternative transaction points.We will be a stronger bank with increased liquidity and the ability to support client activities through increased loans. We will offer better products, better service levels and an outstanding client experience. From the efficiencies and synergies created, we will be able to deliver our services and products at highly competitive pricing to the customers.
I do know that FinBank used to have a very good product, the Flash me cash and people were running after it so how do you intend to deal with that. Is that part of the things you are going to cash in on?
Absolutely! FinBank had that product and I tell you, the product was well received but because of the issues in the bank,, they were not able to take advantage of the product. With the acquisition, one of the things we did was to audit all the products and processes in FinBank and I can tell you categorically that Flash me cash is one of the products we will be enhancing to improve its efficiency in terms of delivery and reach.
From all the acquisitions we have seen in the industry, any bank that has acquired another usually has issues with staffing ie, staff redundancy, overlapping functions etc. For FCMB in particular, in the head office here, do you have such issues and how are you dealing with them?
If you look at the two banks separately, there are two managing directors but you can only have one in a company so definitely, a lot of functions will go and ours is not an exception. We have, however, done ours in a very transparent manner, and with a lot of empathy.
The redundant staff were adequately catered for ? both in cash and non- cash benefits (such as medicals and entrepreneurial training). So ours was a win-win for everyone. Win for us because we have been able to reduce overlapping functions and therefore, come next year, the bank will not have to pay huge salaries. There will also be huge savings in operating expenses as a lot of overlapping and excess assets and costs will be eliminated.
Mr Segun Odusanya
The lasting benefit for us, will be how we are able to leverage the combined business to improve service experience and cost of doing business to customers, achieve sustainable profit for our shareholders and become a great place to work for our staff.
What mechanism are you putting in place to ensure lower charges to customers. There is talk about unnecessary charges in the industry so in terms of value addition, customers don?t like unnecessary charges or higher charges. So how will FCMB tackle this?
Occasionally, systems or processes do fail, and this could sometimes mean frustrations and extra costs to customers. However, we have developed a robust feedback/tracking mechanism in the bank to take care of this. In addition to the internal tracking system, we have also recently launched a customer feedback process called Net promoters scores). This enables us to get regular feedback from our customers on all our touch points. The feedback is used to improve our service, process and also introduce new products.
The margin between interest rate charged by banks and deposit rate is very wide. You are charging 22 per cent interest rate and paying 5 per cent for deposit. That is what people are complaining about. They are saying that the regime of interest rate is very unfavourable to the real sector of the economy?
The interest rate is always a function of the structure of the economy. It is a function of government monetary policy, a function of cost of doing business, inflation rate, among others. People complain because they don?t have full information on all these. The amount banks spend on powering their branches 24 hours and the cost of moving cash around, among others, are enormous.
So, interest rate is dependent on the structure of the economy. If power is stable 24 hours, the cost of doing business will crash by about 30 or 40 per cent. If insecurity is tackled, cost of moving cash will be reduced. The combination of all these affect the way banks charge. Banks are not out to kill businesses because we need them to survive to sustain our operations and profitability.
I read a report by Fitch on Nigeria banks that banks declare dividends in order to placate shareholders and that non-performing loans are also going soon after AMCON bought the non-performing loans of banks. What do you have to say?
Dividend payment is a decision of directors and shareholders. Directors and shareholders have to put a lot of things into consideration before deciding to pay or retain. Such decisions will normally be driven by regulatory requirements on capital, dividend policy, growth opportunities and the opportunity costs of funds. The good thing about Nigeria is that there is some statutory retention that banks must make unlike some other countries where banks are allowed to have a 100 per cent payout as long as they have met the regulatory capital.
On bad loan, I think Nigerian banks have learnt some lessons and you could see some restraints in the way loans are analysed and disbursed. For us in FCMB, we are doing something different because we are not over- concentrating our portfolios. We are diversifying our portfolios and spreading our risk. That is expanding more into commercial and SME space. We appreciate that the individual company risk in these segments may be higher than corporate, but it is better on a portfolio basis. Also, we are developing a robust risk management mechanism to help control and manage the risks.
Why are banks not lending much to manufacturers?
We are actually lending. There is always room for improvement. Also, some of these manufacturers also have to help themselves. Some of them are not business savvy. They need to improve on their corporate governance. One of our core businesses is lending, but in doing this, we also must ensure that the borrowers are of good character and also have the capacity to repay.
Where do you want to see this bank in the long run?
We want to see this bank in the top three in the creation of value to all our key stakeholders (customer, staff, community, shareholders). Our focus is not on size, but in value creation across the spectrum.
What are the opportunities available to take you to your destination?
The opportunities are internal and external. We just did an acquisition. So there are a lot of efficiencies that will improve service delivery to our customers, give higher returns to our shareholders, make FCMB a great place to work for staff, and make us good partners with the community and also the government. Those are the internal. Looking at the external, there are massive opportunities in this country.
This is a country with a potential GDP growth of over 10 per cent per annum if the basic infrastructural gaps can be fixed. Fixing power alone can add over 40 per cent to the economy. There is absolutely no reason why manufacturers should be moving their plants to Ghana, with a population of just 20m. We have the population, and the market. So fixing the infrastructure gaps will create growth potential all across the economy.
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