Government-owned Consolidated Bank of Kenya returned to profitability last year in the middle of a boardroom spat that triggered the ouster of the CEO and some directors.
The Business Daily sat down with the bank’s acting CEO, Dr Dominic Murage, on his entry in the C-suite from academia, the turnaround of the State-owned lender and the push to join politics.
What challenges have you experienced shifting from academia to the C-Suite?
I can see I have fitted in very well. I’m not feeling out of place. Maybe if I were doing something not finance-related, then I would struggle a bit, like if you put me in an engineering firm.
At this level, what you require is leadership skills more than anything else. In every unit, in every department, there are technical people to execute operational requirements.
So, as much as you must be able to appreciate the technical bit, what is more critical is your leadership skills. How are you able to tap the knowledge of the technical persons in each department and motivate them toward the organisation’s goal? So long as the team is strong, you can achieve.
You don’t have any banking experience. What gives you confidence that you are the right person to lead the bank?
I am a very aggressive person, and I will give an example. For many years, our shareholder, the government, has been promising to inject additional capital into the bank, but it hasn’t.
When I came in, I went to the Treasury and showed them why they needed to invest in the bank. If we make profits, we will pay them dividends, so it is like they are extending a loan for a short while.
I can also assure you that since the staff heard that the government is injecting additional capital, it has changed the attitude in the workplace, so there is more hunger to grow the business.
That aggressiveness and hunger to perform are crucial.
Other than just lecturing, I’ve been an accountant for many years. I started as an administrator in the university before actually taking a pay cut so as to shift and go into lecturing, where I started as a tutorial fellow.
I am also a tax practitioner with an audit firm. So I am not just a financial scholar but a financial practitioner, and I had consulted on banking even before joining, so I knew the ropes.
Consolidated Bank has been operating with capital below the minimum regulatory levels. What confidence does the public have when depositing money with you?
We are the only fully government-owned bank in Kenya, so you can take confidence in the fact that your money is safe because we are giving it to the government. You buy government securities on the faith that the government cannot default – that surety is the same here.
There’s no difference. The person backing the Treasury bond and the person backing this bank is the same person.
And if you look at the history of this bank, it was formed to salvage nine private banks that were collapsing in 1989.
They stepped in when they were not the owners and paid the depositors because they saw the impact a collapse would have. Today, they are the owners, so why should somebody be scared?
You and a large number of your colleagues in the C-suite are serving in an acting capacity. How does this affect your operations?
Yes, that’s true, and I’m pushing to reverse that situation in the case of my colleagues. We have started putting them in substantive positions, like the head of finance and risk, who have been confirmed.
If you have a staff member who is not sure whether they’ll be confirmed or not, and they have been in that position for a long time, then they are not happy. So together with the board, we are doing what is necessary to confirm them.
And when you have been acting for a long time, you have already grown into the job, and to be sincere, we have good, qualified staff who are up to the task.
For me, the issue is not being confirmed, but to create an impact – I was called to step in when the bank did not have a captain. My confirmation is not a call for me to make.
There are those who will say you are a political appointee, given that you had expressed political ambitions before you came here. Are you comfortable with this position?
I see myself as a professional, as a scholar, more than a politician. If you look at my life, I’m a leader. If you look at my journey all along, I have been a leader right from primary school.
When people identify your leadership, they seek you out, and that is the case in politics and in corporations.
You got a letter from the Treasury asking government institutions to bank with you. Do you need a government memo to grow business?
Even before we got the letter, we were already knocking on doors looking for business, not just deposits. And we are going with value propositions, so even before we say we have the Treasury backing, we have shown you the value of banking with us.
I believe that being a government bank is our competitive advantage – that is, the one thing we have that other banks don’t have.
There is no harm in playing to our advantage, so we won’t shy away from it because the government is a good customer.
Consolidated Bank turned profitable last year after a decade of loss-making. How do you intend to keep on the profitability path?
When you look at our fundamentals in terms of key performance indicators like deposit and loans uptake, they are all looking up, so we expect to exceed last year’s performance.
In the three months to March, we posted a profit of Sh92 million compared to last year when we had a loss in the first quarter before closing the year profitable.
We expect the trend to continue and record growth.
