TRANSFORMING PUBLIC SECTOR BANKS

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TRANSFORMING PUBLIC SECTOR BANKS

• An Investors Perspective -

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TOPICS

• WHY INVEST
• WHAT AN INVESTOR WANTS TO GET -
  Transformation Concerns
• WHAT CAN HAPPEN IN PRACTICE
• LESSONS GOING FORWARD

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WHY INVEST

• A Variety Of Motives
• Open New Markets
• Add Value - Build Shareholder Funds and
  Profitability
• Early Mover Jump Start On Value Creation
• Support Infrastructure Development
• Complement Commercial Interests

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WHAT THE INVESTOR WANTS TO GET

• A Clear Definition Of The Served Market
• Geographic Focus
• Sectoral Focus
• Ring-Fenced Public Sector Lendings
• Choice of Distribution Channels

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WHAT AN INVESTOR WANTS TO GET

• A Strong Management Team
• An Experienced CEO
• Balanced Team of Professionals
• Recognition of Benefits of Outside Experience

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WHAT AN INVESTOR WANTS TO GET

• A Clear Business Plan
• The Importance of the Strategic Planning Process
• The Conflict Between Operational and Strategic
  Priorities
• Competitor Analysis

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WHAT AN INVESTOR WANTS TO GET

• Capability Building
• Distribution Channels
• Internal Systems and Procedures
• MIS
• People Strengths and Weaknesses

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WHAT AN INVESTOR WANTS TO GET

• Governance and Regulation
• Independent Chairman and Board
• Role of the Regulator
• Commercial and Legal Framework
• Auditing and Inspection

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WHAT AN INVESTOR WANTS TO GET

• Strong Investor and Capital Base
• Spread of Investors
• Government Role
• Risk Weighted Capital Adequacy
• Properly Structured Balance Sheet

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WHAT AN INVESTOR WANTS TO GET

• Change Management Skills
• Defined New Roles
• Implementation Planning
• Proper Communication with Customers and Staff
• Ongoing Capability Assessment

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WHAT AN INVESTOR WANTS TO GET

• A Clear Definition of the Served Market
• A Strong Management Team
• A Clear Business Plan
• Capability Building
• Governance and Regulation
• Strong Investor and Capital Base
• Change Management Skills

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WHAT CAN HAPPEN IN PRACTICE

• Problems, Mistakes and Mishaps

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WHAT CAN HAPPEN IN PRACTICE

• Failure to Tackle Necessary Management Changes
• Autocratic Management Teams
• Skill Imbalances
• Conflicts of Interests

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WHAT CAN HAPPEN IN PRACTICE

• Governance or Regulatory Weaknesses
• Overbearing Chairperson
• Unduly Weak or Strong Boards
• Political Interference
• Inconsistent Central Bank Supervision
• Lack of Proper Legal Framework

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WHAT CAN HAPPEN IN PRACTICE

• Misunderstanding/Mispricing of Risk
• Asset Quality
• Institutional Loans
• Foreign Exchange and Treasury Risk
• Mismatching of Equity Base

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WHAT CAN HAPPEN IN PRACTICE

• Conflicting Investor Roles
• Short versus - Long Term Goals
• Passive Investors
• Conflicts of Interests

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WHAT CAN HAPPEN IN PRACTICE

• Poor or Non-Existent Business Planning
• Lack of Focus If You Dont Know Where Youre
  Going, All Roads Lead There
• Technology Waste/Overkill
• The Price of Poor MIS
• The Triumph of Bureaucracy

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WHAT CAN GO WRONG

• Cultural Myopia
• Ignoring Local Business and Banking Practices.
• Failing to Communicate Change to Customers and
  Staff
• Not Recognising the Gradual Pragmatic Nature of
  Change Management.

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LESSONS GOING FORWARD

• The Need to Recognise the Holistic Nature of Bank
  Transformation
• The Importance of the Integrity of the Local
  Banking Systems
• The Critical Roles of Governance, Regulation,
  Supervision and Review
• Changing Global Context
• Why External Investors Matter
• How The World Bank and the IFIs Can Help