CONVERSATIONS ON THE CBN / AMCON BANK TAKE-OVER - WITHER THE SAFETY NET FOR THE DEPOSITOR?
by Bolaji Okusaga on Monday, August 8, 2011 at 5:03pm
1.What are the brand and PR implications of the take over of the three banks by CBN.
There are indeed grave implications for the brands involved as customer confidence will be greatly affected. This is essentially because, a brand is an identifiable entity that makes specific promises of value. What "value" means here is the safety and security of depositors funds and I reckon that this action threatens depositor's "value" and creates the urge on the part of the frightened depositor, for a flight to safety, more so, given the fact that the route out of this quagmire remains unknown.
Having said that, it must be noted that the action is actually regulatory intervention, driven by a legal mandate and borne out of the need to mitigate value attrition but that part must be played up in future communication in order to re-instate "trust" because "value" will naturally go where "trust" resides. So I reckon, that from a Brand and PR perspective, the CBN, SEC and AMCON will need to explain that regulatory intervention had become a necessity in order to stave-off a market driven liquidation of the banks as was the case for Lehman Brothers. One would expect regulation, i.e CBN, and SEC to have done their Scenario Analysis and Crisis Drill on how to navigate this difficult terrain and this is apparent given the fact that AMCON immediately came forward as the vehicle through which the nationalisation of the banks will be done. But it remains to be seen if AMCON has the needed competence in terms of managing brand value attrition and stakeholder expectations especially given the urgency for a palliative action in order to retain value in these acquired banks. I reckon, that AMCON should immediately be talking to Consultants who are competent in this area.
2. Is it new wine in old skin?
Certain your guess is as good as mine, the public are now more discerning. While it may be said that the reconstitution of the Boards and Management of the Banks are in sync with legal requirements, the regulator has got to come to the court-of-public-opinion with a cogent and concise plan on the way-forward and you've got to make this acceptable to the value-centre, otherwise, you'll be nationalising mere shells.
I reckon, without meaning to sound like an alarmist, that the CBN and the SEC need to roll-up their sleeves and start talking and talking right, to the Investing and the Banking publics as to why this was done, how they will re-instate sanity into these banks and get the system rolling again. If they fail to do this immediately, like what happened to the United States when the Congress failed to agree with the U.S President on how best to manage the debt crisis, they got the hit , lost money and got a down-grade in terms of Sovereign Rating, something similar may play-out if the CBN prevaricates on this matter, because the market has taken too much hits in the recent past and are short in terms of patience.
Having said that, I'm sure the CBN, SEC and AMCON are not just going to stop at name-change for these banks, they would ensure, as responsible organs, that the right things are done.
3. About how much will it cost AMCON to change the banks signages and documents to new names.
I am not thinking about the cost of changing signages at this point but it will certainly be enormous and needless to state that this will be mere purple-patching as it will not address the issue of "trust". You forget that from the day the Depositor filled an Account Opening Form, He/She entered into a contract with the legacy institution for the purpose of value delivery and if the spirit of that contract seem to be failing, you'll need to re-instate trust to secure the contract. It wont matter how beautiful the new names and signages may seem, it would not compensate for the loss of trust already incured by the announcement of the technical insolvency of these institutions, the placing of these institutions under interim management and now their nationalisation with AMCON as new owner. While this shows a regulator that takes its role seriously, it certainly leaves gaps in terms of the restoration of trust in the new institutions and the entire financial system. So before proceeding to changing the names and signages of these institutions, there must be a dialogue with the enterprise public in order to build trust and stability.
4.There appears to be too many names in the Nigeria's banking industry
That appears to be the bandwagon effect that kicked-in since the beginning of Soludo's Banking Industry Consolidation and the Public is indeed getting fatigued and seeking stability. Having said that, names like nomenclatures would not mean much if the emotional value which names and logos command is not matched with the utilitarian role of banking, which is about financial intermediation, financial safety and security and wealth creation, because as you well know, in branding, you've got to merge the extrinsic and the intrinsic values to create a robust experience.
5.What type of communication are Nigerians expecting from both CBN and AMCON to assure depositors that their money is safe with the new banks
Simple. The CBN needs to explain in an engaging and empathetic manner, the following - What went wrong? How are we dealing with the issues? Where are we heading?
Furthermore, the CBN and AMCON need to engender better understanding of their position on the issues resulting in the take-over of the banks. They need to turn the present situation into an opportunity to show-case the news governance frame-work and business principles of the acquired banks in preparation for another capital raising or out-right sale to new and more competent owners and attract the general public’s empathy in the enterprise transformation initiative they are seeking to berth. Above all, the CBN and AMCON need to engender better perception of their activities in order to obtain the cooperation of the constituencies needed to make this regulatory move work.
There are indeed grave implications for the brands involved as customer confidence will be greatly affected. This is essentially because, a brand is an identifiable entity that makes specific promises of value. What "value" means here is the safety and security of depositors funds and I reckon that this action threatens depositor's "value" and creates the urge on the part of the frightened depositor, for a flight to safety, more so, given the fact that the route out of this quagmire remains unknown.
Having said that, it must be noted that the action is actually regulatory intervention, driven by a legal mandate and borne out of the need to mitigate value attrition but that part must be played up in future communication in order to re-instate "trust" because "value" will naturally go where "trust" resides. So I reckon, that from a Brand and PR perspective, the CBN, SEC and AMCON will need to explain that regulatory intervention had become a necessity in order to stave-off a market driven liquidation of the banks as was the case for Lehman Brothers. One would expect regulation, i.e CBN, and SEC to have done their Scenario Analysis and Crisis Drill on how to navigate this difficult terrain and this is apparent given the fact that AMCON immediately came forward as the vehicle through which the nationalisation of the banks will be done. But it remains to be seen if AMCON has the needed competence in terms of managing brand value attrition and stakeholder expectations especially given the urgency for a palliative action in order to retain value in these acquired banks. I reckon, that AMCON should immediately be talking to Consultants who are competent in this area.
2. Is it new wine in old skin?
Certain your guess is as good as mine, the public are now more discerning. While it may be said that the reconstitution of the Boards and Management of the Banks are in sync with legal requirements, the regulator has got to come to the court-of-public-opinion with a cogent and concise plan on the way-forward and you've got to make this acceptable to the value-centre, otherwise, you'll be nationalising mere shells.
I reckon, without meaning to sound like an alarmist, that the CBN and the SEC need to roll-up their sleeves and start talking and talking right, to the Investing and the Banking publics as to why this was done, how they will re-instate sanity into these banks and get the system rolling again. If they fail to do this immediately, like what happened to the United States when the Congress failed to agree with the U.S President on how best to manage the debt crisis, they got the hit , lost money and got a down-grade in terms of Sovereign Rating, something similar may play-out if the CBN prevaricates on this matter, because the market has taken too much hits in the recent past and are short in terms of patience.
Having said that, I'm sure the CBN, SEC and AMCON are not just going to stop at name-change for these banks, they would ensure, as responsible organs, that the right things are done.
3. About how much will it cost AMCON to change the banks signages and documents to new names.
I am not thinking about the cost of changing signages at this point but it will certainly be enormous and needless to state that this will be mere purple-patching as it will not address the issue of "trust". You forget that from the day the Depositor filled an Account Opening Form, He/She entered into a contract with the legacy institution for the purpose of value delivery and if the spirit of that contract seem to be failing, you'll need to re-instate trust to secure the contract. It wont matter how beautiful the new names and signages may seem, it would not compensate for the loss of trust already incured by the announcement of the technical insolvency of these institutions, the placing of these institutions under interim management and now their nationalisation with AMCON as new owner. While this shows a regulator that takes its role seriously, it certainly leaves gaps in terms of the restoration of trust in the new institutions and the entire financial system. So before proceeding to changing the names and signages of these institutions, there must be a dialogue with the enterprise public in order to build trust and stability.
4.There appears to be too many names in the Nigeria's banking industry
That appears to be the bandwagon effect that kicked-in since the beginning of Soludo's Banking Industry Consolidation and the Public is indeed getting fatigued and seeking stability. Having said that, names like nomenclatures would not mean much if the emotional value which names and logos command is not matched with the utilitarian role of banking, which is about financial intermediation, financial safety and security and wealth creation, because as you well know, in branding, you've got to merge the extrinsic and the intrinsic values to create a robust experience.
5.What type of communication are Nigerians expecting from both CBN and AMCON to assure depositors that their money is safe with the new banks
Simple. The CBN needs to explain in an engaging and empathetic manner, the following - What went wrong? How are we dealing with the issues? Where are we heading?
Furthermore, the CBN and AMCON need to engender better understanding of their position on the issues resulting in the take-over of the banks. They need to turn the present situation into an opportunity to show-case the news governance frame-work and business principles of the acquired banks in preparation for another capital raising or out-right sale to new and more competent owners and attract the general public’s empathy in the enterprise transformation initiative they are seeking to berth. Above all, the CBN and AMCON need to engender better perception of their activities in order to obtain the cooperation of the constituencies needed to make this regulatory move work.
