Business News of 2014-07-10

No dividend for ETI shareholders

Shareholders of Ecobank Transnational Incorporated (ETI) will not be paid any dividend this year due to the financing of some non-performing assets in 2013. The finances of the pan African bank were impacted by a decision to take a one-off provision against some non-performing assets to the tune of US$165 million.

This has led to a 34 per cent decline in pre-tax profit to US$222 million in comparison with 2012 and a 48 per cent decline in net profit to US$148 million. Interim board chairman of the bank that blazed a trail across African borders to build the continent's most geographically diverse network, Mr André Siaka said at the 26th Annual General Meeting of the bank in Lome, Togo that the financing of the non-performing assets in Nigeria had impacted on the bank’s finances.

“As our parent company, Ecobank Transnational Incorporated generated no distributable earnings in 2013, we are unable to propose a dividend payment for the financial year in review”, Mr André Siaka said. In 2013, Ecobank generated revenues in excess of US$ 2 billion, while the Group's total assets amounted to US$ 22.5 billion. Ecobank now has a presence in 36 African countries with a network of more than 1,280 branches and offices. A Nigerian, Mr Emmanuel Ikazoboh, succeeds Camerounian André Siaka as the new chairman of the board of ETI.

The decision was taken at the bank’s AGM following a proposal by the selection committee for a replacement of Mr Kolapo Lawson, the former chairman who stepped down in October last year after a bitter board room wrangling and subsequently retired at the end of 2013.

Mr Ikazoboh, a certified accountant who graduated from the United Kingdom, a member of the chartered association of certified accountants, Institute of Chartered Accountants Nigeria and the Nigeria Institute of Taxation (order of accountant-experts in Nigeria and the Nigerian taxation institute), was Managing Director of Deloitte/West and Central Africa from 2007 to 2009.

Ikazoboh, 56, is the current chairman of Hedonmark Management Services Limited, a mobile payment platform in Nigeria, and also a member of the board of governors of the International Institute for Sustainable Development based in Winnipeg, Canada. He holds an MBA in financial management and marketing from Manchester University Business School.

The new Ecobank chairman has promised to set new bases so that the progressive group will continue to move forward. Shareholders of ETI also amended the articles of association of the company as part of efforts to strengthen its governance and make it a more efficient and profitable organisation.

Shareholders of the ETI had last March met in Lome to address governance lapses discovered in the company by the Securities and Exchange Commission (SEC) of Nigeria. The discovery of the governance weaknesses was the outcome of an audit carried out by SEC and KPMG Professional Services following allegations of breaches of corporate governance against the board of directors and certain principal officers of ETI.

SEC had identified some gaps which include absence of a clear vision and strategy to drive the institution, inadequate transparency in the recruitment procedures and mechanisms for board members and executive staff which fostered conflicts of interest. It, therefore, directed ETI to implement a remedial plan that would eliminate the lapses. The Commission also asked ETI to convene an extraordinary General Meeting of the shareholders to address these issues.

In line with the SEC’s directive, the shareholders of the company met and at their meeting, which was attended by institutional shareholders as well as minority shareholders, resolved to amend the articles of association of ETI.

Under the new articles of association ETI shall not undertake any acquisition, merger or disposal of the company's assets whose value is equal to or above 20 per cent of the book value of the company without the approval of a simple majority of the shareholders present in general meeting. The shareholders voted to limit the maximum size of the board to 15 members, and pressed that no director could serve more than nine years in total.