Co-op Bank hires consultant for makeover

COOP BANK CEO MURIUKI

Nairobi; Kenya: Co-operative Bank Group has procured the services of a global advisory firm McKinsey & Company to advice on the reorganisation of its business model.

This is in a bid to improve efficiency, manage costs and lift the bank to a higher growth trajectory.

The makeover comes as the country’s third largest lender by asset base embarks on a new growth phase, with a keen eye on regional markets.

McKinsey’s recommendations are expected to form a key plank of the bank’s five-year (2015-2019) strategic plan under consideration by its board. The audit, described by the bank’s management as ‘Growth and Efficiency Review’ is also expected to shore up shareholders’ value.

Group Chief Executive Gideon Muriuki (pictured) said the review will enhance the bank’s growth momentum, improve the group’s organisational structure, operating business models and enhance operational efficiency.

“This has come at a good time when the bank has achieved significant growth over the last few years and as we focus on regional expansion and growth in the next five years,” said Muriuki in a statement.

NEW opportunities

The listed lender, which already has presence in South Sudan is angling for more investment opportunities in the region, with key focus on the Ugandan, Ethiopian and Rwandan markets.

The bank entered South Sudan through a joint venture with the co-operative movement of the country, and is keen on replicating a similar model in other markets within the East African Community.

McKinsey, a management consultancy firm has been contracted to assess the bank’s functions and processes for three months.

They are expected to carry out an audit of the bank’s business model, organisational structure and operational efficiency and advice on ways of accelerating its growth momentum both locally and in the region.

Muriuki said the appraisal will benchmark the bank with industry best practices locally and globally - giving it the much-needed impetus for the next growth phase.

“It is an opportune time to take stock of where we are and strategise for growth and compete effectively in the increasingly challenging banking environment.”

Co-op bank has over the last few years invested heavily in ICT systems, branch network expansion, ATMs, agency banking and electronic banking platforms. The Group’s profitability has more than tripled over the last six years, rising by 223.51 per cent to Sh10.87 billion in 2013 from Sh3.36 billion in 2008. For the six months to June 30 2014 the bank posted a profit before tax of Sh6.76 billion.

The performance is attributed to investment in ICT, human capital and adoption of prudent risk management framework that has reduced non-performing loans.