Riley keen to restore African Bank’s image

New CEO ready to take on competitors and turn the institution around

BRIAN Riley, African Bank’s incoming CEO, has already rattled cages by challenging the troubled bank’s business model. After he officially steps into the role in October, the new-look African Bank will be nothing like its predecessor.

He is aware of the mammoth task ahead of him. “It is the toughest challenge I have ever had,” he said this week.

He said that in the past month he had stoked up “an enormous amount of dissatisfaction” with the status quo. However, he believes people have accepted that the group cannot remain as it was but has to broaden its customer base and products.

He was reluctant to elaborate on his plans but said the company needed to change its way of doing business.

“There is no business that makes R600-million a month in the loans business. I have to change that.”

The bank’s target is R1-billion a month, but Tom Winterboer, the bank’s curator, said it was unlikely that it would reach this figure by October, when the new bank will be set up.

The new bank, which will retain the African Bank brand, will incorporate the bank’s performing loans; the bad loans have been taken over by the Reserve Bank.

This week, the depths of the crisis at African Bank before its collapse were laid bare. It reported a R9.3-billion loss for the 12 months to September 2014, a 58% increase on its restated R5.9-billion loss for the 2013 financial year.

The restated 2013 loss had climbed from a previously published R4.5-billion loss.

For the 2014 financial year, the Midrand-based bank increased its coverage of impaired loans from 64% to 80%, resulting in a R3.1-billion pre-tax impact on its bottom line.

Riley was not shocked by the figures. “Their numbers are not exactly the same as those I had. To be honest, they are close to what I was told by Tom [Winterboer] when I took on the job. So there was no surprise,” Riley said, adding: “[But] that was the old bank.”

African Bank has been without a CEO for more than nine months since Leon Kirkinis’s sudden resignation in August last year after running the bank for 20 years. The bank was put under curatorship within days of its share price taking a spectacular dive after the company revealed that it needed more than R10-billion to keep afloat.

Now Riley’s first priority is to restore the bank’s credibility in the next nine to 12 months.

He hopes to give Capitec — African Bank’s closest rival — and the rest of the banking sector a run for their money.

“We have been at the mercy of Capitec, FirstRand, Absa and Nedbank’s strategies,” Riley said.

He said African Bank could begin to poach other banks’ staff and steal their customers.

Before Riley accepted the job, he wondered whether there was enough for him to work with to make something out of the “good bank” — but he found “there are a lot of things that are better than I thought”.

He said: “The team is better than I thought it was going to be. Why? Because there was more of an autocratic approach [from management]. I take more of a facilitative approach . . . seven minds are better than one.”

However, this week Riley’s temper seemed to get the better of him when he stormed out of an interview with a CNBC Africa journalist. His spokesman played down the incident, saying the misunderstanding had been resolved.

Previously some shareholders bemoaned the fact that Kirkinis — who took home R2.1million last year despite the crisis at the bank — had become bigger than the bank.

Shareholders questioned whether Mutle Mogase, African Bank’s chairman at the time, had the power to rein Kirkinis in. Shareholders said Kirkinis would dominate Mogase.

Mogase scoffed at these suggestions and told Business Times he could handle Kirkinis. A few months later, the company collapsed.

Riley said morale at African Bank was better than it was two months ago, when the group had no CEO. Middle management now plays a larger role, which is yielding results.

Riley accepted the role of CEO after his former employer, FirstRand, parent company of WesBank, released him from a restraint of trade.

FirstRand had vested interests in African Bank getting on its feet, Riley said. BIG PLANS: Brian Riley, African Bank‘s incoming CEO