By Bashir Ibrahim Hassan
In what may be seen as a pre-emptive move to ensure seamless change of guard, the Board of Directors of Unity Bank Plc readily accepted the resignation of its Managing Director/CEO, Mr. Henry James Semenitari last Friday, to forestall any further public misconception capable of denting the hard-earned stakeholder confidence achieved by the bank among the investing public.
Mr. Henry James Semenitari was recently in the news over the alleged directive from the bank’s board that he should proceed on compulsory leave, which the bank’s spokesperson insisted then was a normal annual leave. The sudden resignation of Mr. Semenitari will generate comments in the days to come. Could his cost-cutting strategy of rightsizing have consumed him? Hardly!
Cutting-cost is a wise thing to do for a bank with foresight, given the current economic situation in the country. The falling oil revenue signifies trouble for banks as it raises the spectre of rise in non-performing loans (NPL). Similarly, banks are witnessing the erosion of their income fees due to the new policies from CBN such as the reduction of Commission on Turnover (COT) from N5 to N3 and N1 per mille. This is even expected to reduce further by next year to zero. Another example is the tightening of control over foreign exchange being put in place by the CBN. All of these are depriving banks of the fee incomes they ordinarily would have enjoyed. This means that banks must find ways of generating additional income otherwise their cost structure will be too heavy for their generated income to bear. So any bank managing director can ill-afford to ignore these indicators and the need to be pro-active.
Then, was it Semenitari’s expensive life style, as alleged in the media, that led to his sudden exit from such an enviable position? Whatever is the reason, we should appreciate that the board of directors is responsible to the bank’s depositors, other creditors, and shareholders for safeguarding their interests through an efficient and effective administration of the bank. The board cannot delegate its responsibility for the consequences of unsound or imprudent policies and practices whether they involve lending, investing, protecting against internal fraud, or any activity capable of affecting the credibility of the bank.
Directors of a bank are placed in a position of trust by the bank’s shareholders, and both statutes and common law placed responsibility for the affairs of a bank firmly and squarely on the board of directors. The board of directors in turn delegate the day-to-day routine of conducting the bank’s business to its management and employees.
One can therefore appreciate the powers of the board and its position of trust. The managing director is but the public face of a bank. The real power lies with the board. For example, in the case of Unity Bank Plc, the board under the leadership of Mr. Thomas A. Etuh has already decided the business focus of the bank which is small and medium-scale enterprise development and the promotion of agricultural and rural economy. Thus, the CEO will have to focus on these strategic areas and bring to bear his or her experiences and skills to add value to realise the corporate objectives.
These are areas not chosen for their own sake but rather the board is leveraging on the comparative advantages of the bank’s history, structure and market presence-cum-penetration through a network of well positioned branches. Since the bank commenced business in 2006 following one of the largest mergers in Nigeria’s banking history, it has developed competences in investment, corporate and retail banking.
Four years before Semenitari’s arrival, Unity Bank witnessed a stable growth especially from 2010 to date; except for a brief sharp drop in exceptional earnings in 2011. For example, for the financial year ended December 31, 2010, gross earning was N61.36 billion, representing 36.46% increase over the previous year’s figure of N44.96 billion. Profit after tax stood at N12.41 billion in 2010 as against loss of N15.86 billion in 2009. Despite stringent competitive regulatory environment in the year 2012, the bank posted an impressive performance. For the financial year ended December 2012 customer deposit grew by 1.19% from N266.88 billion to N270.06 billion. During the same period, shareholders’ funds grew by 17.43% from n43.82 billion in 2011 to N51.46 billion in 2012.
In 2013 Unity Bank recorded gross earnings of N45.393 billion, up from N38.9 billion in 2012. Net interest income rose from N18 billion to N21 billion, while total operating income stood at N29 billion compared with N27 billion in 2012.
The erstwhile managing director only consolidated this steady growth pattern with rights issues and private placement of N39.224 billion in 2014, which was swiftly oversubscribed. The over subscription was a pointer to growing investor confidence.
Analysts estimate that with an average professional banking experience of 24 years each, the board of Unity Bank Plc led by Thomas Etuh (Chairman) and Aminu Babangida (Vice – Chairman) has 120 years of combined experience of highly talented professionals with a zeal for leadership to drive growth and continued improvement in services to customers while upholding the principle of responsible banking practices.
Latest numbers from the bank show the lender on Friday, July 24, 2015 reported that net income rose 11 percent to N8.236 billion in the half year 2015 period, despite the tight money and tough macro environment. Similarly Unity Bank’s fee and commission income increased by 23 percent to N4.66 billion to offset the dip in interest income in 2015 from the earlier period.
Also, total assets increased by 4 percent to N429.662 billion, while cash and cash equivalents stood at 23.46 billion as at June 30, 2015.
However, what is more re-assuring to all stakeholders and other keen observers is that none of the banking regulatory institutions—CBN, NDIC or SEC—in the country have raised any concern over happenings in Unity Bank since the news of the out-going MD’s compulsory leave broke. What more, the NDIC 2014 annual report recently released gave clean bill of health to all the banks in Nigeria.
*Hassan wrote this piece from Abuja