ETI (Ecobank): Great idea, looking forward to implementation

Dear Africa interested individuals:
                                                     I mentioned in my article titled "29 African Banks published on May 23, 2016" that ETI is one of two banks (the other is National Bank of Egypt) in grave danger due to a combination of excessive leverage and high contingent liabilities relative to total assets. The CEO of ETI recently spoke about changes to the status quo during a presentation to stockbrokers at the Nigerian Stock Exchange.  His speech reflects the understanding at the helm of ETI that significant changes to the way the business is being run presently have to be made.  I could not agree more.    

The key takeaways for me are:

1. ETI has simplified its operating model which has led to the redefinition of business segments and geographical regions.  Portfolios will be clarified across countries and businesses.  No more investing in products in which the cost of equity exceeds the return on equity.      

2.  The bank will revisit operational strategy in high potential markets and consider constructive exit (withdraw from products that are not profitable) from low potential markets.   

3. ETI will spend on what reduces cost and improves revenue for the bank.  There will be consolidation of data centers and branch rationalization/productivity drive as part of the key focus for 2016.  

It is a good to know that the bank is making significant changes to its strategy as it strives to remain and become a top three bank in its key designated markets.  As strategy execution gets underway, I applaud a bank that realizes it has to follow the road not yet traveled by it yet, in its quest to overcome difficulties in its operating environment and maximize its potential.  ETI also intends to act swiftly to execute its strategy.  As the cliche goes. "you have to walk the walk, not talk the talk."  

The biggest challenge for ETI will be how to manage the vagaries of the market (Nigeria) that has 40% of its assets and pretty much dictates the group's earnings and the market (South Africa) where 40% of the group's ownership emanates from.  Tough decisions will definitely have to be made. Shareholder value extraction needs to built on asset value extraction.  Assets have to be sowed properly to reap shareholder value.  Business facts and diverse shareholder feelings need to stay in separate bedrooms if ETI is going to even come close to reaching its potential.  Good luck!          

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