More than a bank
Ecobank shareholders have long been critical of the languishing share price and the low dividends. Admittedly, those making the noise have in large part been individual shareholders as opposed to the institutional ones, which have been more patient and have a longer-term approach to their investments. But he will address this, continuing the investor days his predecessor initiated and focusing on reducing the cost to income ratio.
The problems at Ecobank have raised another question. Has the bank grown more quickly than the institutions that regulate it? Regulators in Nigeria, where the bank has over 40% of its assets, were worried about systemic risk, or, in other words, that problems in another country would spill over to them and endanger depositors in that country. Essien thinks that this is a natural process and, if anything, Ecobank has acted as a catalyst for regulators to work together to collaborate more closely and improve cross-border regulation.
The founders of Ecobank always felt the institution was more than a bank and served a bigger purpose. Essien reflects this school of thought when he stresses that Ecobank is not purely a bank that is there to make money but rather has a role to play in deepening financial systems throughout the continent. When the problem at Ecobank arose, it ensured the regulators in the region spoke to each other and as a result “they have also become wiser and stronger”.
How does Essien see the current situation in Africa as a whole? “To a large extent I think Africa is getting better; there are pockets of problems, but these are generally localised. Opportunities abound when you have a combination of good governance and stable politics.”
Resource-based industries still get much of the headlines, he feels, “but we are seeing strong growth in the FMCG sector, even in smaller capitals like Lomé, our headquarters, with many new commercial entities springing up. The population dynamics fuel this sector, and in banking these are all positive signals.
Some years ago, the use of plastic [credit cards] was unheard of. In a few years it will be everywhere, which is why we have signed agreements with both MasterCard and Visa.” The bank has also signed agreements with Airtel and other network providers to roll out mobile banking, although he does not see his bank adopting a similar route to Kenya’s Equity Bank [who recently applied for a mobile network licence].
The Ecobank model is one based on partnerships and leveraging on their partners’ core skills. With Old Mutual [the leading insurer in Southern Africa], and other partners, the bank is considering offering BankAssurance services through their branch network and to their clients.