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THE LEADERSHIP CHALLENGE IN THE
NIGERIAN BANKING INDUSTRY
IDRIS YAKUBU
REGIONAL MANAGER - NORTH
FIDELITY BANK PLC
JOS NIGERIA
JUNE 3rd, 2010
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PRESENTATION OUTLINE
Issues in the Macroeconomic Environment
Economic Growth Vs Foreign Investments
Leadership Vs Management
The Nigerian Banking Industry - pre & post 2009 Key Challenges affecting Bank Leaders today
The New Industry Leader
IBMs CEO Search Criteria
Famous Quotes on Leadership
Closing
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ISSUES IN THE MACRO ECONOMIC ENVIRONMENT
Tough/Stagnant Economy Unstable Political environment
Frequent changes in Government Policies
Public Sector Reforms
Governments Anti - Corruption posture
Social Unrest - Niger Delta, Religious Crisis, MOSOP, etc
Political uncertainty - build up to 2010 Elections
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ECONOMIC GROWTH VS FOREIGN INVESTMENTS
Transformation in the Nigerian political structure (Military to civil rule) has reshaped thefundamentals of the economy to create new opportunities and challenges.
Successive governments (since 1999) aware of the investment benefits democracy representshave seized on the goodwill to create a platform for flow of foreign investment.
Investment flows have been helped by core reform programs such as privatisation,liberalisation, banking sector consolidation program, anti-corruption crusade, debt reliefprogram etc
Economic Growth has been substantially spurred by rise in non-oil investments particularly inkey areas like telecommunications, hospitality and financial services
As investment flows improve, government (holding the highest stakes) in the economy hassubstantially reduced its presence in many sectors including financial services
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LEADERSHIP
Influence, the art or process of influencing people so thatthey will strive willingly and enthusiastically toward theachievement of group goals.
- Koontz & Weihrich
People should be encouraged to work with zeal andconfidence. Zeal is ardor, earnestness and intensity inthe execution of work; confidence reflects experienceand technical ability.
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LEADERSHIP
The capacity to create a compelling vision, translateit into action and sustain it.
The art of influencing others to their maximum
performance in order to achieve the desired goal.
A Leader is a Dealer in hope.
- Allan Leighton
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LEADERSHIP
Leaders act to help a group attain objectives
through the maximum application of it
capabilities. They do not stand behind a group t
push and produce; they place themselves beforthe group to facilitate progress. They inspir
organizational goals achievements e.g, the Leade
of an Orchestra.
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LEADERSHIP
Effective Leaders guide & facilitate the work toaccomplish tasks & objectives while at the same
time maintaining cooperative relationships and
teamwork.
- Yukl, Gordon & Taber, 2002
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4 INGREDIENTS OF LEADERSHIP
- Power
- Fundamental understanding of people
- Rare ability to inspire followers to apply self
fully to a project/task
- Style of the Leader and the climate
(environment) he/she develops
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LEADERSHIP STYLES
- Autocratic Leadership- Democratic/Participative Leadership
- Free Reign Leadership
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QUALITIES OF A GOOD LEADER
Leaders are Strategic thinkers: they plan ahead andanticipate difficulties.
They quickly spot inefficiencies and re-organize
people to make improvements.
To effectively perform these functions, a Leader
must possess the following qualities:
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QUALITIES OF A GOOD LEADER ........Continued
TECHNICAL COMPETENCE: Business literacy and mastery of onesfield.
CONCEPTUAL SKILLS: a facility for abstract or strategic thinking.
TRACK RECORD: a history of achieving results.
PEOPLE SKILLS: an ability to Communicate, Motivate and Delegate. A
Leader without Followers is just taking a walk.
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QUALITIES OF A GOOD LEADER ........Continued
TASTE: An ability to identify & cultivate Talents within yourTeam
JUDGEMENT: making difficult decisions in short timeframes
with limited Data. Avoid buck passing; take responsibility
CHARACTER: This is the Quality that defines who we are. Itis framed by drive, competence and integrity (moral
compass).
Character is the mother/key to Leadership.
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KEY LEADERSHIP TERMINOLOGIES
- Power Visionary- Motivation Influence
- Charisma Mentorship
- Expertise Entrepreneurship
- Empowerment Will Power
- Delegation Servant Leadership
- Going the Extra mile Humility
- Effective Communication Followership
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MANAGEMENT
The process of designing and maintaining anenvironment in which individuals, working together
in Groups, accomplish efficiently selected aims.
Koontz & Weirich
Getting things done through the instrumentality of
others.
Focuses on the bottom line; how can I best
accomplish certain things?
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MANAGEMENT VS LEADERSHIP
Management Leadership1. Plans Visionary
2. Organizes Empowers
3. Delegates Involvement4. Controls Passion
5. Procedural Commitment
Inspirational
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MANAGEMENT VS LEADERSHIP (Contd)
MANAGEMENT
Transactional
Keeping the system going in thesame direction.
The Manager does things right.
LEADERSHIP
Transformational
Doing things that change thesystem.
The Leader does the right
things.
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THE BOSS VS THE LEADER
The Boss The Leader
1. Drives his men Coaches his men
2. Depends on Authority Depends on goodwill
3. Inspires Fear Inspires Enthusiasm
4. Says I Says We5. Fixes the blame for Fixes the breakdow
breakdown
6. Knows how to do it Shows how to do it
7. Says Go Says Lets Go
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EXPECTATIONS OF THE FOLLOWERS
Team members look up to the Leader to provide the following: FOCUS/PURPOSE: effective leaders bring passion, significance to the process of
defining organizational purpose.
GENERATING & SUSTAINING TRUST; trust is the emotional glue
that can bond people to an organization.
In building trust, the Leader must deliver competence, consistency,caring, candor and congruity at the work place.
FOSTERING HOPE: a Leader anticipates positive outcomes he
believes that things will work out well.
GETTING RESULTS: Leaders will provide meaning, build trust and foster hope; but all of
that counts for little unless Results are produced.
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THE LEADERS MOOD
The Leaders Mood drives performance!!! TheLeaders Mood & behaviours drive the Moods &
behaviour of everyone else. A cranky
and ruthless Boss creates a toxic organisation filled
with negative under achievers who ignore
opportunities
- Goleman, Boyatis & Mckee
Primal Leadership
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THE BANKING INDUSTRY PRIOR TO SOLUDO
The period 2004/2005 was a watershed era with the appointment of ChukwumaSoludo as CBN Governor.
Soludo introduced an industry-wide consolidation programme which required banksto raise their capital base (shareholders funds) from a minimum of N2billion toN25billion
The exercise recorded mass corporate actions of unprecedented scale involvingstrings of capital raising exercises, mergers, acquisitions and take-overs
Consequently, the Nos of Players sector shrank from 89 to 25 in separatemerger/acquisition processes while 13 banks were liquidated.
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..and the Bubble Burst
The new capital threshold created an industry of players of equal sizes as opposed to the era of the super powers (the
then Big 4) and the Floor members (the rest)
This heralded a new regime of Competition with banks struggling for every available space on the performance tableeven in areas that are not in line with their founding vision
and then the bandwagon began (Capital raising, product offering, branch network, E-business, international expansion,subsidiary developments)
Between 2004 and 2007, banks raised over N2.5 trillion in capital with over 35 appearances
Naturally, these developments created pressure points along the Income lines as banks became desperate to service thenew legion of stakeholders and investors
This provided the anchor for the Liquidity bubble and urgent search for investment outlets as income expansion becamean imperative
..and the Stock and Property markets became the unfortunate victims.
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CRITICAL ISSUES AFFECTING THE LEADERSHIP OF
BANKS
As the sector expanded, structural weaknesses began to emerge in such areas as:
Blindfolded competition premised on ego and personality contests
Quest for short-term profitability even at the expense of long-term results Asset/Liability Mismatch
Rise in speculation, rent taking and arbitrage business
Absence of clear-cut and functional management plan
Failure of Corporate Governance Insider Abuse and unhealthy use of privileges
Regulatory Circumvention and application of street-wise practice models
Defiance of sound risk management principles in asset creation
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CRITICAL ISSUES AFFECTING THE LEADERSHIP OF
BANKS(Contd)
Skill gap and human capacity challenge motivated by poor understanding of thepeculiar nature of the Nigerian business environment and the needs of the customer
Absence of enabling allied institutional support to accommodate the growing profile ofthe sector.
Lack of effective technological support to detect effective deployment of bankingsolutions across different product and market spectra.
Resource Management:
Availability Vs Allocation
Strategic Management Vs Change Management
Performance Management:
Motivation & Rewards
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ISSUES THAT AFFECTED THE BANKING INDUSTRY PRE 2009
Absence of Effective regulatory framework & structure todetect infractions
Corporate Governance/Insider Abuses
Poor Risk management practices
Short term focus & approach in Business development Skill gaps in Project/Development Financing
Recent Changes Global Financial Crisis, Niger Delta issues,Declining Government Revenues, etc.
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.And what have been the Effects?
Confidence crisis which was last noticeable in the early 2000 has returned. Many depositors,
particularly offshore institutions, are presently cautious of placing their funds in Nigerianbanks and accepting their Guarantees in view of the present crisis
The Credit market has virtually become Comatose while the Economy groans under the yokeof debilitating capital
High incidence of Non-performing loans and massive diminution in Asset base
Falling return on investment as demonstrated by declining share price, dissipating dividendsand bonus issues
Industry-wide capital stress
Increased Job Losses
h f h ki d h
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The Present state of the Banking Industry..the
Sanusi Era
Following the expiration of the tenure of Professor Charles Soludo, the Federal Government
appointed Sanusi Lamido Sanusi, the then Managing Director of First Bank of Nigeria Plc, asCBN Governor
The new CBN leadership in an industry wide audit exercise, in two separate reports,pronounced 10 banks as being in grave conditions and urgently in need of capital injection
Consequently the CEOs of eight of the banks were removed by the apex bank while a total of
N620 billion was injected into the banks to relieve them of their precarious liquidityconditions
The dire liquidity status of the banks, according to the CBN report, was essentially motivatedby huge exposure to of the banks to the capital market and petroleum marketing sectors
Th P f h B ki I d h
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The Present state of the Banking Industry..the
Sanusi Era (Contd)
The liquidity challenge has begun to show up in the balance sheets of the banks as recent published
results reflect huge provisionings arising from Non-performing loans (NPLs)
The development has compelled a Fresh round of Capital raising exercises as banks attempt tobridge the shortfall in their asset positions through new offerings for tier 2 capital. As at the time ofthis report, banks have announced plans to raise N2.7 trillion.
The Regulator in its response has also announced its plans to rework the entire gamut ofsupervisory framework in the industry. Under the new arrangement, the CBN will focus onCorporate Governance, Enterprise Risk Management as well as Liquidity/capital adequacy.
The Apex bank has also indicated plans to dump the Universal Banking model for a New system thatwill allow banks operate either as a Holding company or a Single purpose Commercial bank.
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Defining Features of the Present Era
Regulations have become tighter
Disclosure requirements have become stringent
Profits have become smaller
Capital has become scarcer
International alliances have become fewer
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The NEW LEADER.
will be defined by the Ability
To manage Cost
To operate outside the Bandwagon & Think outside the box
To see beyond the Immediate & Execute Strategies
To match the Facts with the Figures & Demonstrate Success
To build Sustainable alliances
To Take advantage of Opportunities & Mitigate the Risks
To take the Hard decisions
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IBMS CEO SEARCH SELECTION CRITERIA
- Creative Visionary
- Inspire and Motivates the Executive Teams
- A Strategic thinker
- Customer Orientation
- Immediate Credibility
- Record of Success as a Chief Executive
- International Experience (Exposure)
- High technological experience
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Selection Criteria
- Analytical Ability- Makes it happen
- Infallible
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FAMOUS QUOTES ON LEADERSHIP
Management is doing things right; Leadership is doing the right things.
Peter F. Drucker
Dont tell people how to do things; tell them what to do and let themsurprise you with their results.
George S. Patton
Leadership is the art of getting someone else to do something youwant done because he wants to do it.
Dwight Eisenhower
FAMOUS QUOTES ON LEADERSHIP
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FAMOUS QUOTES ON LEADERSHIP
............Continued
A Leader should have the ability to inspire, get into theTrenches and show How it is done.Jonathan Feuer, CVC
The very essence of Leadership is that you have a vision. You
can blow an uncertain trumpet.Theodore M. Hesburgh
Delegating work works, provided the one delegating workstoo. Robert Half
FAMOUS QUOTES ON LEADERSHIP
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FAMOUS QUOTES ON LEADERSHIP
............Continued
Only One man in a Thousand is a Leader of menthe other 999 follow women.
Groucho Marx
The Best Executive is the one who has sense enoughto pick Good men to do what he wants done and selfrestraint to keep from meddling with them whilethey do it.
Theodore Roosevelt
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OTHER QUOTES
The Person who gets ahead is the one who does more than i
necessary and keeps on doing it.
- Richard Denny
The Winners in life think constantly in terms of I can, I will and I am
Losers on the other hand concentrate their waking thoughts on
what they should have done or what they dont do.- Dennis Waitley
There is No Substitute for Hard Work. Do not talk about it, Do it
- Gerald Ronson
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THANK YOU
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