Pan-African lender Ecobank announced the departure of chairman Kolapo Lawson on Wednesday in an attempt to restore confidence after a series of blows to its reputation.
Ecobank has often been touted as a pan-African success story due to its strong growth and aggressive expansion strategy, which have made it attractive to foreign investors. But allegations of mismanagement have tarnished its image in recent months.
Lawson, whose own judgment had been called into question, said on Wednesday that independent parties would investigate the allegations and review corporate governance.
“I decided that it wasn’t appropriate for me to preside over the (review) process so I thought it was best to step aside. It’s something I’ve been thinking about for a long time,” he told Reuters.
Ecobank, which is headquartered in Togo, listed in Nigeria and Ghana and has operations in 35 African countries, said nine-month pretax profit rose 56 percent year-on-year to $299 million. In March, it announced a record annual profit of $348 million.
Ecobank shares, up 22 percent since the start of the year, eased to 13.70 naira in early trade on the Lagos bourse on Wednesday, from 13.80 at Wednesday’s close.
The bank’s governance problems surfaced in April when Nigeria’s central bank notified it of Lawson’s failure to repay 1.4 billion naira ($8.79 million) in debts sold to AMCON, the state-owned “bad bank”, and a further 1.6 billion naira owed to Ecobank by businesses associated with him.
Ecobank has since said Lawson has repaid the debts owed to it and no company rules were broken.
But the bank’s leadership was put under further pressure when suspended head of financeLaurence do Rego alleged that she was asked to misstate 2012 results and that assets were being unnecessarily sold at a loss.
Nigeria’s Securities and Exchange Commission in August began investigating the allegations, which Ecobank denies, although its chief executive has said transparency could be improved. Banking analysts have highlighted that Lawson’s loans only account for 0.1 percent of the bank’s total loan book.
“RIGHT SIGNALS”
The bank said that Vice Chairman Andre Siaka would take over as chairman on an interim basis and Lawson would retire from the board at the end of the year.
Lawson played down the suggestion that problems with corporate governance had impaired the group’s ability to raise cash, and said the bank could right itself quickly.
“We are giving all the right signals,” he said.
But a senior source at Ecobank said the group needed to raise at least $300 million this year and the bank’s problems have prevented it from starting that process.
In addition, the bank was waiting to hear from South Africa’s Nedbank about a major outstanding debt, which Nedbank can convert into equity in November under an agreement. The governance issues had complicated questions regarding this debt, the source said. Nedbank declined to comment.
“That’s why this situation shouldn’t have been left to fester . Everybody’s waiting for the audit,” said the source. “We have major challenges and we need a lot of money.”
Lawson said Ecobank had not received a signal yet on whether Nedbank would convert the debt into equity.
Ecobank and regulation of transnational lenders were talking points at an IMF conference in Accra this week on banking in West Africa.
Nigeria’s Central Bank Governor Lamido Sanusi said he had agreed after meetings with the central bank of West African states to strengthen the supervision of Ecobank and increase the flow of information between regulators.
He said the first step would be a “College of Supervisors” for the bank. In extremis, its Nigerian holding company might be required to register as a financial institution, but this was not necessary for now, he said.
[Reuters]