Business News of 2014-01-14

Merchant Bank to chase debtors in court

Debtors of Merchant Bank who have, for various reasons, failed to honour their indebtedness to the bank over the years are to be pursued aggressively to pay back the loans, the Managing Director of the bank, Ms Nilla Selormey, has vowed.

“We will reopen dialogue with the debtors in the hope that we can persuade them to do the right thing. However, if we need to pursue them in court we will pursue them in court but I can assure you that we will leave no stone unturned to collect what is owed the bank, remember also that in quite a few cases, we do have personal guarantees of directors, and if you execute such an agreement you are just as liable as the firm whose debt you guaranteed" she told the Graphic Business in her first exclusive interview with the media since the changeover of ownership of the bank.

“We have looked at the portfolio and we are strategizing on how to proceed bearing in mind that a cordial resolution is our preferred option" Ms Serlomey said adding that, “First and foremost, we have started to invite some companies to initiate a process of dialogue in order to see whether we can have some amicable solution in terms of restructuring those debt to fit into their own cash flows but we will not leave any stone unturned in terms of what is done within the law, to get the money back from the debtors. We should shortly be seeing one of the large debts paid off and that will be testimony to the efforts we have begun to make".

She did not immediately mention the quantum of money owed to the bank which was said to be running into tens of millions of United States dollars.

Some banking analysts have described the size of the debt on the books of the bank as unacceptable and wondered why previous managements had not used all the necessary means (including court action) to pursue the debtors, but watched the once vibrant bank fall to its knees in silence over the years.

Debt is said to be one that has a lower chance of being repaid with interest.

Invariably, the debt, as it sits in the books of Merchant Bank, is one considered "toxic" because it imposes harm onto the financial position of the bank.

Presently, with the changeover of the ownership of the bank, many are of the view that the debtors, including the brother of the sitting President whose debt size is said to be about 16 per cent of the total debt stock of the bank, will be left off the hook as the debts are likely to be written off.

But Ms Selormey gave the assurance that such a situation would not happen under her stewardship.

“You cannot write debts off and go to sleep. I think any bank which has that side of a bad debt portfolio has sleepless nights. You need to go get back that money and we are going to aggressively pursue that.”

She said, “No investor would want to put money in an organisation and watch it turn into bad debt. We will have a way to treat it but we will definitely get them back. We definitely will.”

Change of name

Since the Social Security and National Insurance Trust (SSNIT) announced its intention to offload its majority stake in the bank, the process has been questioned in various quarters for what some perceive to be a raw deal being handed contributors of the pension scheme of which SSNIT was the manager.

As a result, the bank’s name has been tainted for obvious reasons and that is said to be affecting its image as some major institutional customers are reportedly withdrawing or reducing the level of business they have with the bank.

On the other hand, there are those who think that a change in the name of the bank will help bring some freshness to its image.

But Ms Selormey said, “We will do some research to see the perception out there and see whether we should change the name of the bank or not.”

“We have to look at various options but no decisions have been made on that yet,” she added.

Bank rebranding

“We will look at rebranding the bank. Rebranding is not necessarily the change of name but we need something that will freshen the brand a bit,” she said.

She said presently, what was there was nice; it served the old Merchant Bank that was into corporate banking.

“We want to go into retail banking so we need a brand that the retail customers can be drawn into it. We believe there is an urgent need to refresh and re-awaken the brand, and aggressively expose this to the market, so we can create top of the mind awareness which should draw people to us,” she said.

“Of course we will be ready to receive this, and will ensure the customer experience at every touch point is such that they become unsolicited ambassadors for our brand,” Ms Selormey added.

She revealed that the rebranded bank would be launched during the first quarter of this year, and, “we have begun working on refresher training programs as part of offering the right level and quality of service.”

Headquarters relocation

Presently, the bank’s headquarters is located within the heart of the Central Business of Accra.

But Ms Selormey said, “Change will also come by way of a relocation of our head office, and possibly repositioning some of our branches. We will do this to make ourselves visible and accessible to our clients and the market at large.”

“Again, I am happy to tell you we are in the final stages of negotiating for a property to house the head office. I guarantee that more customers will be happy to visit us at this new location than at our present location,” she said.

Retrenchment

One of the first major exercises that characterises the changeover of management of institutions is staff retrenchment.

This is done to ensure that those retained and the new ones hired help to contribute to the new direction of those institutions to enable it achieve its objectives and realise its mission and vision.

But when asked if such an exercise was to be expected, she said: “We have made no plans yet to do any retrenchment as at yet,” adding that, “You need to get in there see what you have and see how best you can manage it.”

“Merchant bank has a strong team; we have a lot of bankers scattered all over the country in various banks - coming out of Merchant Bank - and in the last couple of weeks that I have had some interactions with the workers, I have noticed that they are knowledgeable and are passionate about what they do.”

“So with that, unless there are issues of non-performance or total indiscipline, there will not be any retrenchment now,” she said.