How Emefiele may use conservatism to change the face of banking

If Zenith Bank under the conservative leadership of Godwin Emefiele as managing director, now the Central Bank of Nigeria (CBN) governor designate, could be established as a leading, well-capitalised and stable bank with a high portion of assets sitting in T-bills and bonds, there is no doubt that he would bring his conservatism to bear in the face of Nigerian banking industry.

Emefiele, who has been a banker with 26 years of experience, became the managing director of Zenith Bank in August 2010, after serving as deputy managing director from 2001.

He has a MBA degree from the University of Nigeria Nsukka and lectured at the University of Port Harcourt. He is an expert in forecasting, and will leverage on his excellent acuity and calculated-risk-taking skills to crystallise any benefits from existing and future opportunities.

Zenith Bank, which by balance sheet size and other positive financials, has shaped and is shaping certain critical aspects of developments in the sub-sector, is in sheer entrepreneurial energy and verve, a bank without equal and one that has taken after its lead-manager.

The bank has got several achievements since he took over, making him an accomplished banker and erudite manager of human and material resources. His capacity for leadership and eye for growth opportunities is evident in Zenith Bank’s performance and geometric progression on a number of parameters.

Indeed, the prompt confirmation of Emefiele as the governor of the CBN by the Senate last week was a great testimony to Emefiele’s capability of changing the face of banking through conservatism. Besides, there is a general consensus that the coming on board of the quintessential banker is expected to bring sanity and calmness into the financial services industry.

Emefiele is managing a bank with the lowest non-performing loans (NPLs), and also lower cost to income ratio, a feat generally acknowledged both within and outside the shores of this country.

Also, his reputation as an adherent to the rule of law and corporate governance will engender confidence in both the local and foreign investors that will increase foreign direct inflows that will reverse the dwindling fortunes of the nation’s foreign reserves.

The implication, which has started manifesting, is that Nigerian bank stocks beaten down since the start of the year have started getting some reprieve through some of the banks that have released their financials and meeting market expectations through dividend payments and improvement in their score cards.

Another area that Nigerians are eagerly looking forward to seeing is the developmental banking, which BusinessDay gathered, would generate employment for the youth as well as engender industrialisation. Emefiele is expected to initiate policies that would impact the larger economy using the Development Banking Model (DBM).

Speaking at the screening by the Senate, he said his tenure would bring industrial growth and development, saying “we would do this through the Development Banking Model. The DBM is a model that have been tried and tested in different jurisdictions in the world. In fact, in some of the frontiers and emerging markets in the world we have seen development banking used as a tool towards achieving economic growth, development and industrialisation. In the Latin American countries of Brazil and Mexico, development banking was used to achieve economic growth and development in these areas. And today, Brazil is seen to be one of the BRIC states in the world.”

The Senate last week, March 26, screened and confirmed Godwin Emefiele as CBN governor following his nomination by President Goodluck Jonathan on February 20, 2014. He will assume office in June, when the term of Sanusi Lamido Sanusi, suspended governor, expires.

Emefiele after his confirmation as CBN governor, and in a manner suggestive of his preparedness to put the industry on sure footing, unfolded some of his plans as mentioned above.

“We would work very hard to ensure that we achieve macro-economic stability where inflation would continue to come down, where interest rate shall be seen to continue to come down. And where we would as much as possible continue to maintain strong exchange rate for the country and a strong foreign reserve,” he said.

Nothando Ndebele, analyst at Renaissance Capital (Rencap), who described him as very conservative manager, believes he is likely to maintain a firm policy environment and would be inclined to tighten policy in the current environment of naira weakness.

The CBN governor designate has indicated that the CBN’s exchange rate policy was correct and that a devaluation of the naira would be devastating for the import-dependent economy, a development analysts regard as a positive, as he will not depart from the CBN’s $/N stability stance.

This, Samir Gadio, emerging markets analyst with Standard Bank, London, said was a positive and important statement suggesting that the new governor will not depart from the CBN’s $/N stability stance implemented over the past few years.

He had also promised to take measures to support the naira, which has remained under pressure for quite sometime now.