New CEO out to turn around Equatorial Bank's fortunes

The new managing director of Equatorial Commercial Bank is a man on a mission. Mr Tim Gitonga says his major assignment is radically turning around the lender’s fortunes which have significantly dwindled in the recent past.

The bank has been struggling to post profits but Mr Gitonga is oozing confidence that soon this unenviable state of affairs will fundamentally change.

“My vision is to create the best organisation to work for, work with and in the process deliver real value to our customers and shareholders. This should allow us move to tier-2 status in three to four years,” the new CEO said on Friday.

Mr Gitonga was formerly the director of business operations at Housing Finance. He replaces Mr Sammy Itemere who was recently appointed Principal Secretary for Broadcasting and Telecommunication having left the bank in February last year.

In announcing his appointment last week, ECB board chairman Mr Dan Ameyo said Mr Gitonga will be responsible for developing strategies to “turn around the bank and deliver shareholder value.”

In his first media interview since the appointment, Mr Gitonga who at 44 years of age is among the youngest bank CEOs, told Smart Company that his elaborate plans to turn around the lender include a radical internal re-organisation and introduction of new products targeting particularly the SMEs.

DELIVERING SOLUTIONS

“We plan to take leadership in SME market by delivering solutions that our target market clearly resonates with,” Mr Gitonga said.

To achieve this, he said the lender would leverage on technology to provide several new banking products.

“The future of banking lies in investment in appropriate technology given the infrastructure that we have in payment solutions – both cards and mobile banking solutions. We will aggressively provide our clients with holistic solutions in line with our unique position,” he said.

“The Kenyan economy is expected to grow in the range of between 5.6 and six 6 per cent, politics notwithstanding,” he said pointing out that one of the key segments to deliver this growth is SMEs.

Mr Gitonga said the bank is well-positioned to exploit this opportunity because of its deep understanding of the segment.

The lender, founded by Kenyan tycoon Mr Naushad Merali in 1983 and became a fully-fledged bank in 1995, has in the past few years been weighed down by poor performance.

It suffered losses in 2011 and 2012 but made a profit in 2013. In the year ending December 2014 it posted an after-tax loss of Sh326.4 million on the back of bad loans recorded ahead of the controversial buyout by Mwalimu Sacco.

MASSIVE GROWTH

ECB made a net loss of Sh61.8 million in the nine months ended September, reversing a new profit of Sh49 million a year earlier.

But the new MD said he has the remedy to this loss-making streak. He would cut non-performing loans and embark on a massive growth campaign. “First, we are establishing a rapid recovery measure that brooks no nonsense to ensure that we get back what we have lost.

Unfortunately, following the change of law, recovery especially where we are secured by properties, has become a very torturous process,” he said.

The bank’s monitoring and control processes are being reviewed to enable the management to detect and nip problems in the bud.

Mr Gitonga said in the next three years or so, ECB will be a “very profitable bank, and yes a gem, the next big thing.”

The lender’s plan to bolster its capital base is on course, he added.

“We have already received Sh0.5 billion from our shareholders as at the end of last year. Plans are under way to increase the capital through a variety of options. We will be sharing with you the options in due course as careful scrutiny and approvals are required,” he said.

The lender was at the centre of a protracted buyout bid by Mwalimu Sacco which analysts said impacted on the bank’s image.

Mr Gitonga said the controversy emanated from “misinterpretation” of issues, adding that the lender is working on changing this image.
“Honestly, there was a lot of mis-interpretation and misrepresentation of material facts with respect to the acquisition,” he said adding that the controversy was unnecessary.

LOYAL CLIENTS

“…Obviously, the noises scared away some very loyal clients but we are rebuilding the trust, grain by grain, brick by brick. To refocus our business, we intend to reposition the brand in the market this quarter and deliver unparalleled experience to our clients to match the promise.”
He said the merger had given the lender “more muscle and capability”.

The opportunities that the ECB is now cashing in on include joint product development, joint market development, agency arrangement and partnership to enter into different markets.

“In my very considered opinion, this was and remains the best decision that Mwalimu National ever made and will pay off shortly,” he said.
Despite his optimism, Mr Gitonga is not blinded by the monumental challenges ahead of his onerous task.

“First, we need to change the market perception of who ECB is and our capability. Recent failure of both Dubai and Imperial banks have not helped the cause,” he said.