Odds against new NATSAVE CEO Mukwandi Chibesa - Kunda
THE BOARD of National Savings and Credit Bank - NATSAVE recently announced the appointed of renowned and experienced Banker, Mukwandi Chibesakunda as chief Executive. This was after the erstwhile former Chief Executive Officer Cephas Chabu was sacked with reasons not made public, in June 2017.
Mukwandi comes with a relatively strong and solid background having served in various senior capacities in private banks including British Owned Standard Chartered, South African owned Standard Bank - trading as Stanbic Bank - and Nigerian owned subsidiary, Access Bank Zambia. She has amassed over 20years on banking experience with a stint at the Bank of Zambia.
The odds stacked against the new Chief Executive Officer are daunting and will require a combined skill of deep banking knowledge and a politically shrewd posture. Some of the grave odds the new CEO faces are:
Possible Industrial Action
The bank has a dissatisfied workforce, that will require infusion with new and industry best talent for it to tap the learning curve quickly. The labour force at the time of Chabu’s exit was brewing with possible industrial unrest as was confirmed by ZUFIAW General Secretary Chingati Msiska in June 2017.
Dysfunctional Rubikon Banking System
The need for an operational core banking system is critical for any financial institution for the purpose of efficient transactability and data processing in this modern cloud backed age. The Rubikon core banking system whose primary functions include among others banking operations, credit, finance, Automated Teller Machine - (ATM) administration and treasury management has not been successfully installed leading to questionable data quality and information system management needed aid strategic decision making. Core banking systems help the financial reporting function and simultaneously allows for use of analytics to track trends and improve cost efficiencies.
Legacy of Qualified Financial Statements
The bank has a record of qualified financial statements in the last (3) years from 2013 to 2016.
The Auditor General’s report revealed that NATSAVEs core banking and accounting system cannot be relied upon to report clientele balances. This then exposes the bank to credit and operational risks.
Moreover, the Bank’s balance sheet cash closing balances are not reliable and as such as there has been inertia to allow external auditors to conduct reviews on such as routine cash counts to ascertain and verify the cash closing balances in their financials.
Above Industry Recommended Loan Loss Provisions
NATSAVE’s total loans disbursed by Q2:2017 shows that Portfolio at Risk – (PaR) for credit default was 13.9% which was 890bps above the acceptable industry threshold of 5%. We recognise that this scenario is not unique the bank as the entire banking industry is in breach of the prudential limit of 10% at 12.5% as reported by BOZ.
The institution being government owned is also subject to political pressure in its lending drive and expansion decisions as its board is directly appointed by the Minister of Finance. There are no private equity interests to balance the board appointing authority interests which raises corporate governance concerns.
Lack of Profit Making Corporate Culture
Due to the banks ownership structure, it has historically relied on political patronage for its management as well as company survival. There is a general tendency to rely on government bail outs in adversity. This also transmits to the management and staff, who also not because of their inability to perform, but by the general culture obtaining, rather look for political support to retain their positions rather than earn them through performance based culture. This will perhaps be the biggest huddle or odd that the new management team will face, as culture is a delicate quantum to re-shape.
Turning around NATSAVE will not be an easy task and may require structural changes such as floating some share on the Lusaka Securities Exchange for Private Zambian interests to join the shareholder list as a control to counter expedient decision making.
What are the chances of Mukwandi succeeding as NATSAVE boss?
Mukwandi has worked for the best banks in senior executive positions of responsibility and has a flawless record of success wherever she has been. Many are banking on her expertise and drive to turn around NATSAVE, though this will be a mammoth task for her. With her track record and experience our strategists are confident that she will succeed in driving performance harder. Mukwandi will need total support from the Board of Directors in the powers they vest in her to make some tough decisions required to transform the bank. Further, our strategists are of the view that she has the requisite strategic acumen to achieve the long awaited turn around for NATSAVE.
New NATSAVE Chief Executive Officer Mukwandi Chibesakunda