Chief Executive officer of the Ecobank group is pushing for more consolidations among banks in Ghana.
The renowned banker, Albert Essien says scale is all that matters in banking and does not believe in market niches as some schools of thought propose.
He made these comments at the 14th MTN Business World Breakfast Meeting under the theme ‘banking in Africa: Lessons from a top banker’
The core lesson from Mr Albert Essien was, there needs to be more consolidation of banks in Ghana.
He indicated this is what will promote big ticket transactions.
“I think the smaller ones still have a chance of survival. Some believe they can play the niche. I don’t believe in niche banking. I believe banking has everything to do with scale. I go for consolidation”, he said.
According to him, “when you consolidate and become big, you can stand the shocks that come with the industry, and you can also be able to offer more to your clientele.”
“So I think what the small time locals should do is to look for alliances. They should look for partnerships, if they do not want to actually merge. But I think ultimately, it will be good for the industry if they merge”, he added.
He adds that Ghana has a huge infrastructural gap because banks have small balance sheets and cannot participate in huge infrastructural projects.
“We need scale so that we can write big ticket transactions. If you go to South Africa you always see development- property, infrastructure over there. It’s being powered by the banks there. The banks have scale”, he said.
“Standard bank is the biggest bank in sub-Saharan Africa if not Africa. You have Ned Bank, First Rand, and Barclays ABSA.
In Nigeria, you have Firstbank, Zenith, you have GT. That is what it is, it is a scale business”, Albert Essien added.
According to him, “If you have scale, you can participate in the agenda. Otherwise it is buying and selling- Dubai and back, China and back, and of course the banks are business people and so they will do that.”
So what are the key things banks should focus on while scaling up?
Albert Essien says Skills Development, Technology and governance.
“The human, the talent is very important. And I think that banks themselves should also participate and deliberately train people in the industry.”
“We also need to work on our processes and systems. Technology is a big enabler and we should make sure we have that technology right to be able to drive our business”, he added.
The leading banker also said “governance is very important because if you don’t have a good governance structure, your business will cave in at a point in time”.
“Finally, I think they should look for partnerships, alliances, if they don’t want to consolidate so that they could have those partnership and alliances that will bring in a larger pool to be able to let them do their business and to withstand any downturns”, Albert Essien stressed.
Ghana struggles to increase its unbanked population. Conservative estimates put the level of banked population at about 11%.
The boss of the Pan-African Bank says telecommunication companies hold the future to increasing the level of the banked population.
According to him, “If you look at mobile telephony in Africa, its well over 60% and growing, if you look at banking penetration, it is about 20% especially in middle Africa. If we work with the disrupters (Telcos), they could bring into the banking sector another 20% perhaps in the next three years.”
“Mobile telephony has redefined financial services because almost everybody holds a mobile phone and for some it is more than two”, he added.
Mr. Albert Essien was appointed Chief Executive Officer of the Ecobank Group in March 2014.
Executive director of the Group since 2005, he has held several senior positions including Deputy Group Chief Executive Officer, in addition to serving as Group Executive Director for Corporate Bank & Investment Bank.
Prior to that, he was the Regional Head for Anglophone West Africa (excluding Nigeria) and Niger and Eastern and Southern Africa (ESA) regions.
Mr. Albert Essien started his banking career in 1986 with the National Investment Bank in Accra, Ghana.
In 1990 he joined the Corporate Banking Department of Ecobank Ghana before becoming 7 years later Country Risk Manager.
He was appointed Deputy Managing Director in 2001 and became Managing Director in December 2002.
Albert Essien has a degree in Economics from the University of Ghana (graduated in 1979) and is an alumnus of the Executive Development Program of INSEAD (France/Singapore).
He is also an honorary fellow of the Chartered Institute of Bankers, Ghana.
By: Kwaku Anim Boadu/citifmonline.com/Ghana