Tuesday, December 4, 2018: We have utmost respect and regard for Pascal Dozie and his achievements within the Nigerian business environment and the way he conducts himself without craving for visibility and adulation.
The bank he founded is now a publicly listed corporation with over one hundred thousand shareholders who have invested in the bank and expect the bank's executive management to align their interests with that of the shareholders and act in their fiduciary interest. The desire of ONE should not destroy the financial investment of MANY. While I expect Pascal to be happy that his son is now the CEO of the bank he founded, I doubt he will be happy that the bank he founded is huffing and puffing (under the leadership of his son, Uzoma) when it should be rising and shining given the bank's compelling strategy, customer base and goodwill.
Investors understand that equity investments are risky and all funds may be lost just the same way a woman understands that she can die during childbirth/labor. This does not mean that either party should tolerate avoidable actions by the CEO or Doctor that significantly increases the likelihood of the undesired and unexpected becoming reality. The SINS of ONE become the PAIN of MANY and a family name brings JEERS for LIFE instead of CHEERS because destruction was deemed easier than walking away due to drunken ambition. This is the danger when a family member of the founding family takes over the reins of a bank. The family member always knows how to spell ENTER (five letters) and forgets at the most inopportune of times how to spell EXIT (four letters).
This is a clarion call to Pascal Dozie to ask your son (Uzoma Dozie) to step down from the position of CEO of Diamond Bank effective December 31, 2018 for the sake of the family name, the successful bank you founded and the millions of shareholders being run roughshod by a man who has been the leader of Diamond Bank for four years without taking a POSITIVE lead. I have never liked family in leadership roles within PUBLIC companies because they never tune into the reality around them and do not know when to go.
Oceanic Bank was founded by the Ibru Family; Cecilia Ibru was flying high, speaking a lot without saying much. She did not know when to EXIT and took the bank down with her as an ambition deemed a birthright reigned supreme over business realities. Even Ecobank Transnational Incorporated (ETI) that acquired Oceanic Bank is still reeling from the mess it acquired and has taken multiple steps backward to try and right the ship. ETI has not been normal since it acquired Oceanic Bank. Fact!
The solution is simple; force Uzoma Dozie to resign to save Diamond Bank and avoid an Oceanic Bank scenario. He has achieved his goal and yours; he led the bank for four years. If he is gunning for the ten years regulatory maximum, Diamond Bank may not be around come the end of fiscal year 2024 for this personal ambition to be achieved. Let's delve into the numbers that show without prejudice that Uzoma Dozie is sinking Diamond Bank and the ship is taking in water from multiple orifices. Pascal SAVE the Dozie family name, SAVE Diamond Bank and SAVE shareholders from a nightmare that should never be, by telling Uzoma Dozie to resign as the CEO of Diamond Bank effective December 31, 2018. Posterity will have NO mercy otherwise.
1. Alex Otti came on board in March 2011; I listened in on his first conference call in April 2011 with A. Yinusa (CFO) discussing the FY 2010 and Q1 2011 earnings in a poignant mood. The bank was in dire straits but I could see the light at the end of the tunnel. After leading the bank for nine months out of twelve months in fiscal year 2011, the bank declared a loss of N11.3B. (Correction from my last article: after the Sanusi tsunami in 2009, Diamond Bank has declared a fiscal year loss on two other occasions and not one as earlier mentioned.) This loss occurred within the first year of Alex Otti's tenure. Uzoma Dozie's loss occurred three full years into his tenure.
2. What happened three quarters into the fiscal year after declaring the loss? Alex Otti declared a loss before tax of N16.3B for FY2011 while Uzoma Dozie delcared a loss before tax of N11.5B for FY 2017. Alex Otti declared Q3 2012 pre-tax income of N23.2B while Uzoma Dozie declared Q3 2018 pre-tax income of N3.1B. The former took Diamond Bank away from the guillotine while the latter appears content to let Diamond Bank dance around the guillotine while he relishes his dream of being the CEO of the bank his father founded that he waited for sixteen (16) years to become the CEO and is expectant of another six years or maybe even sixteen years if he picks a page from the book of Ladi Balogun of FCMB and changes the structure of Diamond Bank to a holding company in 2024.
3. One year into Alex Otti's tenure (2012), the International Finance Corporation invested $70m in Tier 2 Capital in Diamond Bank after thorough due diligence. In 2013, Alex opened Diamond Bank, UK which Uzoma has now sold. In 2014, the bank raised a $200m Eurobond and successfully concluded a rights issue generating $310m in fresh equity before resigning from the bank in October 2014 to pursue politics. Uzoma was supposedly left with about $500m in fresh capital to take the bank to greater heights. What a nice platform to stand on when coming in as the CEO of a bank! Uzoma's tenure has been inundated with board upheavals and resignations never before seen in the bank's history; within such a short span of time, as the battle of wits for control of the 'soul' of the bank gathers momentum. Uzoma predecessor's last quarter was Q3 2014; the last earnings release from Diamond Bank was Q3 2018.
Both CEO's had been at the helm of Diamond Bank for at least three-and-a-half years at the end of the quarters in question above. Uzoma Dozie has had four years (4) at the helm from the end of Alex Otti's tenure until the last quarter ended September 30, 2018. He has had four years to improve on the situation he met; he has clearly done the opposite.
The numbers speak for themselves but we will discuss a couple. Banks love demand deposits as these typically do not come at a cost and banks thrive on this. Demand deposits declined by 38% while savings deposits (expensive) rose by 87% from the last quarter of Alex Otti in September 2014 to the last quarter of Uzoma Dozie in September 2018.
Deposits have declined by N 190B and gross loans have risen by by only 5% over a four-year period. Despite this, impairments have risen by 71% over the four-year period from point to point.
Uzoma Dozie has only succeeded thus far in reducing major expenses as he seeks to boost the bottom-line. He has reduced the bank's headcount and in my opinion reduced some cadre of salaries; this led to a 40% reduction in personnel expenses and other operating expenses have decreased by approximately N 1B.
We have a serious problem here with a direct solution; the shoes left behind by Alex Otti are clearly too big for Uzoma Dozie and he needs to take his EXIT immediately. A rare gem of a bank is about to turn into a juicy case study for Harvard and Darden Business Schools on how not to run an emerging market bank.
Pascal Dozie, posterity is watching over you; DO NOT be prejudiced. Tell your son to resign. Posterity is never prejudiced and will have no mercy. The die is cast and the time to act is NOW.
Reporting for EasyKobo on Tuesday , 04 December 2018 in Lagos, Nigeria
Source: Jude F
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