Capital Bank: A strategic reinvention of RMB

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IT has been a full six months since Capital Bank (Formerly Renaissance Merchant Bank) emerged successfully from recuperative curatorship.

In the period, the bank has rebranded and made strides in repaying depositors, amongst other achievements. Zimbabwe Independent Senior Business Reporter Clive Mphambela recently had an interview with Capital Bank CEO Lawrence Tamayi. Below are some excerpts:

CM: Mr Tamayi, may you briefly tell us what Capital Bank stands for?
LT: Just by way of background, it is important to highlight that Capital Bank is a strategic reinvention of RMB, following a financial bailout by the National Social Security Authority (NSSA) and supported by various regulatory authorities, and (the bank) is on a journey to transformation. The new bank therefore stands for an institution which is committed to a high level of integrity as we value our fiduciary responsibility. We would like to build strong relationships, provide service with excellence. Being agile and innovative in this environment is also key.

CM: How well has the new bank been able to handle the pressure and legacy issues relating to depositors who had their funds frozen while Renaissance was under recuperative curatorship? Have all depositors been paid in full?
LT: It’s easy to destroy anything; it’s a challenge to rebuild! It requires a lot of tenacity, team work, focus, dedication, commitment and a high level of integrity. We committed ourselves to repay our clients over an agreed period of time i.e. 12 months. To date, we have religiously paid back our clients in seven instalments and we still have another five remaining. We paid off vulnerable social groups in the first three months such as individuals, schools, hospitals and churches, with corporates being paid over 12 months as already stated above. The challenge obviously has been to strike the balance between collection of non-performing loans and repayment of the old depositors. We have to repay the old depositors from the old loan book repayments, hence the reason why we have gone tough on collections from any defaulters. We are making meaningful progress, hence the reason why we have so far been able to honour our commitments to the depositors.

CM: How are you repositioning the bank for long term survival?
LT: Currently, the bank is licensed to operate as an investment bank. This current model, I believe, is not ideal for the long term survival of the bank, otherwise it will be like throwing ourselves in a snake pit. The new Reserve Bank capital requirements of US$100 million by June 2014 will also place a lot of demands on the return on investment from the banks. We are therefore reviewing our business model in order to create a more vibrant business which will have a wider outreach in terms of customer base, more preferably through the use of technology. This is important, as we have to increase our volumes in order to mitigate costs and provide viable and affordable banking solutions to our clients.

CM: How has the rebranding and repositioning of the bank as Capital Bank helped the institution?
LT: The rebranding exercise is a process. We believe that rebranding is not about just producing pretty pictures in the media. It’s much deeper than that. It has helped us to refocus on critical issues which will reshape our business in terms of the way we do business, our customer focus proposition, how we serve our customers, how we relate with other stakeholders, how we treat our staff and developing a culture which will define our DNA. I must say that the feedback and the support we have been receiving from our clients (both existing and new) has been encouraging and we are excited. We have also taken advantage of our size, which has lean structures, to allow faster decision- making in order to give our clients prompt decisions.

CM: What gaps do you see in the offerings of your competitors and what new products are you therefore coming up with to respond to the demands of your clients?
LT: We are strong in advisory services, treasury, trade finance and corporate banking. We are focused on providing a more personalised customer experience. I believe that when customers deal with us, they experience that precision to detail and good turnaround. We have a young and agile team which is committed to customer care. As we develop our model, customer relationship management will be central to our business.
We have recently launched an enhanced call account which gives customers the flexibility to use their transitory deposits while earning interest at the same time. This is our response to the concern being levelled against the banks, that we don’t pay interest on current accounts. In addition, we don’t charge ledger fees on this account. I would like to encourage the banking public to take advantage of this product.

CM: What are the emerging trends that your bank will capitalise on?
LT: There is clearly a demand for a more personalised customer service, a need for fair returns on customer deposits and reasonable charges, which encourages the banking public to consider banking with us. There is a high demand for working capital requirements and also capital funds for retooling. These funding requirements are critical if the country is to defend its position in terms of viability in all sectors of the economy. As a country, we are vulnerable to the increased cheaper imports particularly from the East. Some industries are closing down, particularly in Bulawayo where most of the textile industries have either gone into liquidation or closed down. Long term funding is required in order to support various sectors of the economy and the current liquidity challenges will continue to negatively affect the recovery and growth of our economy. Our exports are not competitive and this is affecting our exports in-flows, which is not good for our balance of payments and our foreign currency liquidity.

CM: How have you responded to the new capital thresholds recently set by the Reserve Bank? What are your banks prospects of meeting the thresholds by the set deadlines?
LT: Perhaps let me start by mentioning that increased capital requirements are a positive development as this increases the capacity of the banks to do more business. This will also help in supporting the Medium Term Plan (MTP). The challenge is obviously when one considers the liquidity challenges currently prevailing on the market, which will either result in banks merging or considering to invite other partners particularly foreigners. Capital Bank has made its proposals to the regulator and with the support of our major principals NSSA, we will ensure that the requirements are met.

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