She came, she saw and she conquered. This line best describes the success story of the immediate past Group Managing Director of Union Bank of Nigeria Plc, Mrs Funke Osibodu. She was one of the turnaround managers hired by the Central Bank of Nigeria (CBN) in August 2009 to rescue some lenders that posed a threat to the financial system, after eroding their capital. From the outset, Mrs Osibodu’s role (to stabilise and retain the identity and name of the bank) was clear. Mrs Osibodu, the last ‘man’ standing, who held sway until last Wednesday, was mandated to fix three issues weighing down the 95-year-old lender: corporate governance, negative capital and liquidity crisis. It was not an easy task as she had to contend with sceptical shareholders, pensioners, employees, brokers and other stakeholders. In this interview with journalists in Lagos, she speaks on her three-year tenure. The Nation’s Group Business Editor, AYODELE AMINU was there.
Since October 2009 when you came to Union Bank, what has been your experience trying to revamp the bank? Considering that a lot of people had come and gone, what made you the last ‘man’ standing in view of the fact that you have been able to achieve the mandate given to you by the CBN? What has kept you going over the years?
I would say that I am not the last ‘man’ standing. I thought that Union Bank was the last man standing. I think Union Bank has been a very, very interesting institution, though tough to work for. Union Bank, you know, is an institution that has a very rich heritage in terms of relationships and people. There are many stakeholders with their various angles. I believe these were what kept me this long. What the CBN Governor, Sanusi Lamido Sanusi, asked us to do was to stabilise the institution and move it to a new home; in other words, get investors to participate. My stay in Union Bank couldn’t have been shorter because the Board from day one took a decision that Union Bank must stand on its feet again. From that perspective, we opted to look for investors who will ensure that, going forward, some of the things we had in the past will not take place again. As you already know, we have core investors called Union Global Partners Limited. But what is unique about them is that they are largely foreign investors who bring strong corporate governance and international exposure to the bank. As you know, even externally, they have been making their own public announcements about their involvement with the bank; i.e., some of the members of Union Global Partners who have invested in Union Bank. When you bring international players who are foreign into the Nigerian environment, their time frame is not necessarily fast. And two, the methodology we used was different from that of the other intervened banks. It was such that it required careful process, lots of due diligence and regulatory approvals. So, while we wanted it faster, we couldn’t get it faster.As you also know, we had closed and concluded the recapitalisation process long before now. Again, to ensure smooth transition, I had to stay and be part of the new board. The new board started in February, this year. We had to make sure that there is a new executive. It was also important to make sure that when I leave, it is not all of us (executives) leaving, so that there is continuity. And as you know, three of the former executives – Executive Director, Commercial Banking (North) and Public Sector, Alhaji Ibrahim Kwargana, Executive Director, Commercial and Retail Banking (South), Mr Kunle Adeosun and Executive Director, Corporate Banking and Treasury are staying behind as part of the process of making sure that the transition is smooth and two new executives will join them. One of them has commenced and she is Executive Director Finance, Mrs. Oyinkan Adewale. The other one will not be able to join the bank until sometime next year. With that, the bank will have a completely effective executive team. We have everything planned out to ensure that with the change in baton, the transition is smooth.
Sometimes when I read some of the reports in the newspapers that are speculations, it gives me the energy to say that I will stay and prove to them that the information is not correct. But most of the time there are positive reports in the press in terms of celebrating what we’ve done so far. The change we (Union Bank) went through has been very significant. You remember, at some point when we needed shareholders to agree to what we were doing, we needed staff and shareholders to work together. That was one point where I saw the real strength of Union Bank. We had staff, pensioners; and shareholders all working together to make sure Union Bank remains the last man standing. Generally, there were so many things in bits and pieces that ensured that we (my team) were successful.
It’s been a long story from 2009, bringing the bank back from tatters. We would like to have some performance indicators. When you met this bank, what were the indicators?
Well, I will talk in general not very, very specific term. As you know, when I came in there were three things wrong: corporate governance, negative capital and liquidity crisis. Today, from the liquidity perspective, I think within the first three months we dealt with the liquidity crisis. Our liquidity ratio has moved from below 20 per cent to between 80 and 90 per cent. This is very positive as the minimum statutory liquidity ratio is 30 per cent. And we are leaving it far higher and above the statutory minimum. The major portion of this came from the new capital that came in and the loans we sold to the Asset Management Corporation of Nigeria (AMCON).
On negative capital, I think at our peak level, our shareholders’ fund was negative, somewhere around N378 billion negative; in other words, we were in such a deep hole, and as you said, nobody would touch us and even at that point, existing shareholders technically abandoned their bank. Today, we have positive capital of N190 billion, so we moved from N378 billion negative to N190 billion positive – that is over N570 billion positive. That was something that took quite a lot of work by all us and we are reaping the gain today.
On the corporate governance side, you remember, the corporate governance issue was that everybody was doing his own thing and there were so many things we (Union Bank) had done and were still doing wrongly.A number of these have been corrected using best practice as our guideline. Standards have been set and are monitored. I think the example I usually use is that when you go into an old woman’s house (Union Bank is 95 years old now), you are bound to find a lot of cobwebs and junks because she will not throw away many things that are no longer useful or relevant away easily. Even though the sitting room may look okay, it is only when the children and grandchildren go into her bedroom and forcibly clean up the bedroom that a new and modern environment is formed. Our job when we were brought in by the CBN was to go in and clean out those cobwebs. I believe we’ve done a reasonable job. There are many things we have cleared up. Remember that I used to say we had un-reconciled accounts of over N3 trillion, today our un-reconciled accounts is in hundreds of millions not even billions. We had an army of over 150 people that worked day and night and they are still working and cleaning it up. So, that’s part of the cobwebs that we were cleaning up. We also had bad loans, which we sold to AMCON. We wrote off some, renegotiated some.We now have a department called portfolio management and part of their job is to manage and monitor those bad loans in such a way that we still resolve them. We only have those that are in very small bits, nothing substantial anymore in terms of bad loans. So, we have a relatively clean book. It means that our loan portfolio reduced from somewhere around N700 billion to around N200 billion. When you look at our balance sheet, it is small but very clean. All the things clustering us are gone. It’s now for us to build on it.
More importantly, some of you are our customers. People used to say, that Union Bank is for the old senior citizens. The young man cannot have an account or work in Union Bank. Even the young man will say: “That it is the bank of my father or the bank of my grandfather; they took me there in those days.” But there is good news for you. We have an army of young people that we recruited over the last three years now working in the bank. As at the last count, they were about 1,000-man army. I had what we call a congress with some of them (600 people) about two weeks ago. We gathered all of them into one big canopy hall, somewhere in Victoria Island and we had our own mini- rally. It was interesting, the energy I saw in that group and the testimonies in terms of their experience in Union Bank. So, we have this strong army that is taking over Union Bank. The way we describe ourselves is that we now have energy and experience in the new Union Bank. The young 1,000 people recruited over the last three years have the necessary energy for the future of Union Bank.The older people like us have the necessary experience, which will ensure that we learn from our experience and mistakes. And with that, we can’t go wrong because when the experience tells you this is what we have to do, the energy takes over and moves very fast.
So, many things have changed. When you look at customer service, even though we will not say that we have got to where we should be, quite a number of our customers are surprised at the good quality and responsive service that they now receive from our staff. When customers come into our branches, we attend to them fast. We had many of our branches looking very, very run down and we are working round the clock to revamp them. We have changed 75 out of about 300, all of them are wearing a new look.The one on Oba Akran, Ikeja, Lagos is a good example of our new look. So, those are some of the changes that I am leaving behind and what I will call the foundation to move to the next level.
Finally, the third issue of inadequate capital was sorted out through the combined help of AMCON and the new core investors – Union Global Partners Limited (UGPL).
What is your projection in the next one year? What should the shareholders and the customers expect in the next one year? Secondly, banking is now Information Technology (IT) driven. Where is Union Bank in terms of technology?
I want to start from the last one. As you know, just as it happened with the intervened banks, when we came in, some of our customers came to withdraw their money from the bank. Our staff were trying to pacify them, to stop them but I said no, allow them to take their money in spite of the fact that you are shaking. You know even the Iroko tree can shake when the wind is very strong but that does not remove the fact that it is an Iroko tree. So, we said that we (Union Bank) will show them that we are still big, strong and reliable. Let them take their money and they did. But within a short while, they returned. And this is very, very important. In the last three years, our savings account has continued to grow, not going down and our current account has also continued to increase. Now those two (savings and current accounts) are very strong marks of confidence. It is largely from our retail network. That is from our entire branch network. That rural banking, you call it rural, I call it retail because there is nowhere that is rural anymore; there is no where you cannot reach with technology today. Those locations became the bedrock of savings and deposit accounts. These customers are so strongly committed to Union Bank. We continue to hear from these customers: “this is my bank and am not moving anywhere and there is nothing going to happen to it.” So, in the area of continuous growth in confidence and bonding from our customers, we believe that we are still big, strong and reliable. We do not have any serious issue.
On technology, for some of us that have been in the bank before we joined, while we had computers, several people did not know how to use the computers or the technology. Today, everybody is technology compliant. We did not have to buy anything new. We had all the technology internally. All we had to do was to turn them on. When it comes to banking using technology, we had everything –whether it is telephone or mobile banking, whether it is internet banking, the facilities existed in-house but were not utilised.Even in the latest cash-less initiative and the Point of Sales (POS), we became number one out of all the banks in terms of active POS utilisation. I never dreamt that we will get to be number one in active POS. In other words, our customers use our machines and they will only use your machines if you educated them well, and you are making sure that those machines work. We are becoming very effective in technology utilisation.
For mobile banking and internet banking, again, we didn’t need to buy anything new; we had them. All we need was to open them up for our customers to use them and get our staff to appreciate and start using them, so whether it is using technology to transfer money from one account to the other, whether it is going on line using your computer to move money, we do all that. We used to have a very low number of cards that we issued to our customers, now that is a thing of the past. Somebody was saying that before when he requested for ATM cards from Union Bank, at times if we are very fast, it might take you two or three months to get it, at times it might even take you up to six months. Today, the maximum is 10 days. We are working on turning it around to make it 48 hours. Even to collect cheque book from the bank, it used to take a long time.Now if you want a cheque book you get it by latest the next day. So, a lot of things have changed and are still changing on that technology side. We even have the technology where you can use your Naira ATM card to withdraw money abroad, which we will soon be activating.
So, what I am highlighting to you is that the ‘big, strong, and reliable’ bank is not only back but much better. Our stallion brand remains very strong and resilient. Within the first month in office after I resumed in Union Bank, I went to Abuja to see a customer. The security man at the entrance called me big, strong and reliable, merely by looking at me. He saw the way I looked at him surprised and he just pointed at my stallion lapel pin. That is how strong our brand is. Our marketing and advertising communication campaign now has the line: “We have only just begun.” This is to mark the commencement of a new beginning and a new phase for Union Bank. We are no longer an old institution but a young and vibrant institution.
When you look at our published performance as at June 2012, we exceeded our budget and market expectations. We expect we will continue to exceed our budget going forward. We have laid the foundation, it is time to build. As you know, laying a good foundation of any house is critical and often is not easily noticed. Now that we have put the pillars, the bank is ready to move fast.
When will the new Group Managing Director resume?
The new GMD will officially take over on the 1st of November, that is, Thursday (last week). We’ve been working together and even tomorrow (Tuesday) again we’ll be working together so as to make sure that the handover of baton is smooth and effective. Thereafter, I will take my accumulated leave but will always be available for any clarification. Someone was telling me that I am looking relaxed. It’s just the thought of the leave that I am about embarking on. This would allow me an opportunity to ‘let my hair down’ after these years! The thought is enough to relax me. So, in the initial period I’ll just take that leave, travel and then come back.
You said you are going on leave and after a while you’ll come back. Could you be more explicit?
I did not say after a while I’m coming back to Union Bank. This is why it is very useful to have an interactive session. What I said was that I will be proceeding on leave. I will be taking my accumulated leave and come back to Nigeria after that. Technically, I am still a staff member of Union Bank till the end of December. I was talking about transition with the new chief executive; we’ve been exchanging information for a while in order to ensure a smooth transition.For the next two days (last Tuesday and Wednesday), we will be working together and when I leave if there are things that are unfinished, that I need to clear, I will be coming in to sort them out, so I am not returning to Union Bank. I’ll just be performing my duty as a staff of Union Bank.
I know initially you had this problem with the staff, especially the retired ones. What is the situation now? And, again, are you satisfied with what you have done in Union Bank?
First on the retired staff, it was an issue that I met on ground. We had a situation where there were so many things done wrongly in the past. We had staff that had issues on whether they were exited on retirement or retrenchment. We had retired staff who said their benefits had not been paid for quite a while and some who had issues with the timing of the commencement of payment of their retirement benefit. We had over 2,000 ex-staff affected, with very many cases in court, and picketing being the order of the day. What we’ve done over the last three years, is to streamline all the issues and start paying those who have genuine issues. I am happy to say that substantially, we have resolved all these issues. On those who had issues on if they were retired or on retrenchment, we reached an out-of-court settlement.
We are now more performance oriented, and we are accordingly rewarded; so everybody is aligned to work for the shareholders and the stakeholders. This bank has a new orientation. I think we now have a major culture change as a result of the measures we have introduced.
