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InterviewsNovember 1 2013

Ecobank chief executive looks to the future

Ecobank has been hurt recently by several allegations concerning its corporate governance. But Thierry Tanoh, its chief executive, insists it has done nothing wrong. He also explains why the pan-African lender represents a unique investment opportunity. 
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Ecobank chief executive looks to the future

Thierry Tanoh’s first 10 months at the helm of Ecobank have been a baptism of fire. The Togo-based institution, which operates in 34 African countries, far more than any other bank, has recently been hit by a series of controversies.

Problems first surfaced in July, when it was revealed that the Central Bank of Nigeria (CBN) had concerns over “huge outstanding non-performing facilities” owed by Kolapo Lawson, Ecobank’s chairman, to Amcon, a state-owned bad bank. The group was further rocked shortly afterwards by a letter sent by its suspended head of finance, Laurence do Rego, to the Nigerian regulators. She said she was pressurised to manipulate the bank’s 2012 results and to write off loans owed to Ecobank’s Nigerian subsidiary by a company Mr Lawson chairs.

Mr Lawson has since been cleared of any transgressions by Amcon and the CBN. And his company repaid in full, before its due date, the N1.6bn ($9.9m) of debt it owed to Ecobank Nigeria.

Categoric denial

Mr Tanoh, who joined Ecobank in July 2012, acting as its chief executive designate for six months, opted to give up his bonus of $1.14m for last year. But he and Mr Lawson reject Ms do Rego’s claims. “I categorically deny them,” Mr Tanoh told The Banker in a interview, saying the accusations were only made after Ms do Rego was informed she would be suspended over disputed professional qualifications. Ms Do Rego denies the allegations about her CV and motives, and says her suspension was illegal.

He says that even if he had tried to coerce Ms do Rego, it would have been “almost impossible” to manipulate Ecobank’s accounts. “The structure of the organisation is such that ETI [Ecobank’s holding company, of which Mr Tanoh is CEO] doesn’t control its revenues,” he says. “Those are controlled by the affiliates. These affiliates have regulators, auditors, a board and a managing director. If you wanted to change anything, you would have to have a conspiracy of people doing something.”

While insisting that corporate governance at Ecobank is not a problem, Mr Tanoh admits it could be improved. “It’s good, but you can always do better. That’s my objective. A comprehensive review of it is something that should be done. The board has taken the decision to do it.”

Mr Lawson and Mr Tanoh have faced calls to resign, but both look likely to keep their jobs, as long as an ongoing investigation by Nigeria’s Securities and Exchange Commission into Ecobank’s corporate governance does not reveal any major wrongdoings. Investors seemingly still have confidence in the two bankers. The share price of ETI, which is listed in Côte d’Ivoire, Ghana and Nigeria, has dipped slightly since July, but is still up almost 25% this year on the Nigerian Stock Exchange.

Building a legacy

The success of Mr Tanoh’s tenure will depend to a large extent on whether he can contain the fallout from the past few months and make sure Ecobank’s reputation is not damaged in the long term. Arnold Ekpe, Mr Tanoh’s predecessor, told The Banker last year that ETI’s board had given approval for the bank to list outside Africa, with London being one of the main candidates if it decided to do so. Such an undertaking would scarcely be feasible if there were still questions surrounding governance standards.

Mr Tanoh, an Ivorian who previously spent 17 years at the International Finance Corporation, the World Bank’s investment arm, will also be judged on his ability to boost Ecobank’s profitability. Mr Ekpe’s reign was characterised by the bank’s rapid growth across what it calls middle Africa – essentially sub-Saharan Africa excluding South Africa. That phase is more or less over, even though it still wants to move into Angola, Mozambique and, once it opens to foreign financial institutions, Ethiopia.

As a result of its geographical expansion, which involved many acquisitions and ate up plenty of capital, the returns of Ecobank, which has a $21bn balance sheet, have lagged those of other similarly sized sub-Saharan lenders. Its return on equity last year was 16%, whereas that of most of Nigeria’s big banks was more than 20%.

In the next few years, Mr Tanoh hopes to increase revenues organically and improve efficiency. He has hired McKinsey as a consultant to help Ecobank reduce its fairly high cost-to-income ratio of 72% and ensure it has the right incentives in place for employees. “I’m at the stage as CEO of optimising the platform,” he says.

Mr Tanoh believes that African banking has a bright future, pointing to the continent’s fast economic growth and rising levels of financial inclusion. Ecobank, he says, is a unique opportunity for investors seeking exposure to these. “We are very difficult to compare to any [other company] in Africa,” he says. “What Ecobank is offering is the most diversified investment you can get in sub-Saharan Africa.”  

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Read more about:  Analysis & opinion , Interviews , Africa , Nigeria , Africa , Togo