African lender Ecobank Transnational Incorporated (ETI) has downplayed fears raised by the International Monetary Fund (IMF) over its expansion, regulations and governance.
According to a report from the IMF, ETI’s ‘rapid expansion, lack of regulation and poor governance poses a wider threat to financial stability in Africa’.
The report which was released on 4 February 2015 “Ecobank group is one of the most rapidly expanding pan-African banks and this rushed growth with poor governance poses serious concerns”.
It further said “With the rapid scope of expansion, Ecobank is gaining systemic importance in many cross-border operations and the deficient supervision system is a major source of peril to financial stability.”
The IMF fears ‘Ecobank’s Nigerian subsidiary in particular is plagued by “poor governance, questionable transactions and an unsustainable operation model.”
But Ecobank says the report is full of inaccuracies.
‘The report suggests that ETI’s rapid expansion, lack of regulation and poor governance pose a wider threat to financial stability in Africa. The report, which contains some inaccuracies, is roughly 18 months out of date as regards some of its references to the Ecobank Group’.
It adds that the internal governance issues that the IMF refers to at Ecobank date back to a period of several months between mid-2013 and early 2014 and ‘Ecobank Group dealt conclusively with those internal governance issues at the time.
The matter culminated in the dismissal of its then Group CEO, Mr. Thierry Tanoh, who was replaced by Mr Albert Essien in March 2014. Since that period, a reconstituted new Ecobank Group board and senior management team has been able to restore stability to the bank and regain the confidence of its stakeholders, including its regulators, shareholders, customers and staff. The board is led by the experienced and well respected Mr. Emmanuel Ikazoboh as Chairman. He is supported by a diverse group of directors with a rich mix of experience and knowledge of the African banking industry’.
According to Ecobank Transnational Incorporated which is the parent company of the Ecobank Group, the senior management led by Mr. Essien, a veteran professional of Ecobank for almost 25 years have provided strong leadership for the institution since their assumption of office at Group’s 2014 Annual General Meeting.
It says ‘It would be wrong for the report to inadvertently convey the perception that past governance issues still exist at Ecobank. A lot has taken place between the preparation of the aforementioned IMF report and the present time’.
The IMF’s report also stated that Ecobank’s Nigerian subsidiary in particular is plagued by “poor governance, questionable transactions and an unsustainable operation model.”
It adds that the unit represents as much as 45 percent of group operations.
The report stated that While Ecobank’s balance sheet is small compared with those of banks in South Africa or Morocco, the lender’s rapid expansion has raised questions about how to regulate African banks that operate across borders.
ETI reacting to that said ‘At the end of 2014, Nedbank and Qatar National Bank became the largest shareholders of the Ecobank group. The INVESTMENT by both of these banks demonstrates their confidence not only in the Ecobank Group’s future growth prospects, but also in the strength of its governance and its management. The Ecobank Group took well calculated steps in its expansion over the last eight years. Its deliberate intention, on which it followed through, was to expand only so far within its specific geographic footprint of Middle Africa, and thereafter to concentrate on improving quality delivery in affiliates across this footprint. It thus took a very guarded approach to ensure that rapid expansion did not pose a liability. With operations today in 36 African countries and total assets of US$23 billion, the Ecobank Group continues to register strong growth. ETI reaffirms the financial strength of the bank as well as governance actions taken to comply fully with its systemically important status in the African banking industry.’ it stressed.
Source: citifmonline