After leaving Afreximbank, Burkinabé Simon Tiemtore (pictured) went on to set up the New York-based investment fund, Lilium Capital.
Three years ago the fund purchased the assets of faltering First International Banking Group and transformed it into Vista Bank. Tiemtore tells African Banker of his plans to expand the bank in West Africa and beyond.
Lilium Capital has been involved in a number of transactions in the tourism sector and more recently in financial services. Can you talk us through the thinking and strategy?
Lilium Capital is an integrated investment and advisory firm, based in the US. In the hotel sector, what we have done so far is offer advisory services to companies, including arranging and providing financing; in fact, in certain cases in partnership with Afreximbank. What we have done in financial services is different: we acquired a banking group some three years ago, called First International Banking Group, which we have rebranded today as Vista Bank Group, operating in Sierra Leone, Guinea and The Gambia, with the view of expanding the footprint in the rest of Africa. Currently, we operate in the West African Monetary Zone (WAMZ). We want to expand in the West African Monetary Union and the Central African market.
And what’s the vision?
Well, the vision first and foremost is to be an African financial services group; more on the banking side than the insurance side. Then, the vision is about innovative products and IT development that we want to put at the forefront, to leapfrog and provide the best easy-access banking services to our clients, and to promote financial inclusion.
So in terms of the model, it’s about high volume, low margins, is that what you are saying?
It will be high volume, low margins but also we will be looking at some of the areas that have a development impact. Where we can play a role to provide financing, advisory services and contribute to the economies of the countries where we operate.
When you looked at the numbers before making the purchase of First International Banking Group, what attracted you most?
First of all, we were not looking for an established bank, we were looking for a bank under stress that we could turn around, restructure and recapitalise. That spoke to our strengths. We were looking to recapitalise the bank, strengthening all the different areas that it operates from – credit, operation, recovery, human capital – and give it the bandwidth and the means that it needs to fulfil its mandate in the countries where we operate.
How did you fund the purchase?
The funding was structured finance, done at the top, from Lilium Capital level, to enable us to acquire the bank, which we also used to recapitalise the institution. We then managed to work with other institutions such as Afreximbank to enable the bank, on the back of the capital, to provide trade finance lines in the countries where we operate. And we’re still negotiating trade finance lines with the likes of the African Development Bank, the Overseas Private Investment Corporation and other institutions.
What are you anticipating and working towards in terms of your growth forecast?
We are looking at growing our deposit rate, for instance, by 20%. We want to be within the top three in every country where we are active. We are currently fourth, sixth, and seventh. We want to improve on recovery. We want to improve on SME financing; SME represents 95% of our economy, so, if we are able to provide at least 30%-40% of SMEs in our books, I think we will have also made a significant contribution in the economies where we operate. Over time, we will try to grow the balance sheet steadily. We are going to be aggressive in the fact that we provide digital products that are going to help us grow the balance sheet, from mobile banking, card services, through our mobile payment platform and things like that.
What has the restructuring process been?
It took several phases. After a top to bottom analysis, we started by changing the governance, the management, the board of directors, at the group level and at the subsidiary level. The novelty that we put together is just that every group board member is also represented at the subsidiary level. We brought in two new managing directors, two women, that are very, very dynamic.
Where from? From within or externally?
The MD in Guinea was the then deputy MD, and the MD in Gambia was a consultant running her own firm. Both are ex-Standard Chartered, trained bankers. They know the market very well. They have a tremendous amount of experience and today they are the driving force of the bank, essentially. We changed the culture to make it more customer-centric. We also improved on our recovery process and we changed credit policy, essentially by improving the credit policy and reducing the level of credit that’s being authorised by the MD directly, to put the power in the hands of the board and up to a certain level, to the group board. We also improved training – there was no training before – to equip our staff with the knowledge that is needed to stay ahead of the curve, ahead of the game. So, there’s a whole host of things that we have done, that we keep implementing along the way.
The cost of lending to the SME sector is too high, in terms of the time that one spends, in terms of recovery, etc. So, how are you going to make it profitable?
We are looking at partnering with organisations such as the United Nations Development Programme (UNDP) and the Africa Guarantee Fund. The UNDP will provide training to some of the SMEs; making them more creditworthy and less risky. We are in discussions with the African Guarantee Fund and others such as USAID. This is to provide some level of credit enhancement for those SMEs. These are two examples of how we’re de-risking the sector.
Is the bank profitable?
The bank has been profitable and it turned profit back in 2016.
2016 and 2017 can be considered economically challenging years in Guinea, Sierra Leone and The Gambia. How did you cope?
Guinea still has GDP growth of 6.5%; Gambia’s GDP growth is still stable, even if it is a small economy. But these are our core markets, we don’t have any other market that we say we are going to retreat to, unlike a foreign bank. So you have to make the best out of it and you have to plan for these challenges. But you just need to readapt, readjust to the reality of the market economically to make the best out of it. I don’t think we have ever retreated because of Ebola. Maybe you slow down but we believe that these economies will recover and that is why we strengthen our system, to face these types of challenges.
How’s the first half of 2018 looking so far?
It looks good, we are very hopeful, with some of the numbers that we will be able to post at half-year, and we hope to continue in that trend, especially given the amount of partnership and liquidity that we will be able to raise.
And you want to expand your footprint in West and Central Africa. You plan to be in 15 countries by 2025?
So, you believe in the Pan-African model?
But on the regulatory side, it’s relatively straightforward?
It is very straightforward; I mean they have a similarity in terms of regime and once you enter one market, you properly capitalise, you meet some of the regulatory requirements, you can essentially expand your footprint in eight countries in the West African Monetary Union.