Q: 2011 was a busy year for Sterling Bank. After the abortion of acquisition talks with First Rand of South Africa, Sterling wasted no time in the rebound play to woo ETB. No-one saw that coming although in hindsight the combination makes logical sense, two mid-players with complementary strengths. Question is this ‘why was this not obvious from the beginning, seeming as it does that Sterling was a late suitor for ETB?’

A: You may recall that our discussions with FirstRand were discontinued at the end of Q2, 2011 as a result of an inability on the part of the parties to agree a price. Prior to that, the bank was involved in exploratory discussions with Ecobank on the possibility of a business combination. I mention this to highlight the fact that a merger with the right partner had been on the cards for some time. We were also mindful of the need for speedy execution to avoid undermining the market position of the institution from the client, investor or employee perspectives.

Our initial restraint was also informed by the need for clarity on the legal framework underpinning the entire CBN process, the standing of a subsequent sale and the need for the deal to gain the backing of ETB shareholders given its private and closely held nature.

Some say that our conclusion of the merger with ETB is a case of third time lucky. This is only half true. Sterling Bank itself is the product of a merger of five institutions where none was the overwhelmingly dominant partner. Therefore, M&A is an elemental part of our DNA. In spite of the limitations of M&A as a basis for sustained growth in this market, we are comfortable including it as a legitimate option in our growth strategy.

Q: Could you enumerate some of the added competitive capacity that ETB has brought to the Sterling Bank franchise?

A: ETB brings a lot of good baggage to the mix. It essentially doubles the size of business we do in terms of the balance sheet size, headcount, branch network, deposit generating capacity, and these are all critical success factors in this market.

We spent a lot of time looking at the assets of ETB before the start of the merger process but as you know, what I call ‘the people quality’ is not easily captured in the books. What has impressed me the most has been the high quality of the average ETB employee.

We view the strength of the franchise not only from the size of our balance sheet but also from the diversity of the customer base. Our aim is not to have the largest balance sheet with a few customers representing a major chunk as this has its own risks. We are aiming for a balance sheet distributed over hundreds of thousands of customers. A larger balance sheet creates the right economics to drop the unit cost per customer for our products and customer transactions. These savings from reducing expenses as a direct result of increased scale go right back to our customers and improves the competitive appeal of banking with Sterling Bank.

Q: It is not unusual for business combinations to throw up surprises, both good and not-so-good. Have you had any?

A: Every day comes with its bundle of surprises. But I can assure you that 90% of the surprises that I have had since I resumed have been pleasant ones. The biggest surprise has been the quality of human capital at ETB. Normally, one would assume that an institution, which has been taken over by the banking regulator, would not have such sterling employees, no pun intended. We have also been satisfied with the quality of customers we met on the ground after the merger. As you can imagine, we are devoting resources to nurturing and building those relationships to become better. On the knotty issues, the most prominent ones have been those to do with ex-employees of ETB. This is normal when one institution assumes the liabilities of another. We have not had any staff rationalization exercise due to the merger, and whatever ex-staff member issues we are dealing with now are inherited ones.

Q: You sit atop the Integration Office, responsible for the day-to-day management of this sensitive project. What is a typical day like?

A: 'Totally unpredictable' is how I would describe it. It is not unusual to find that 90% of the things I do are unscheduled. Fortunately, because I work with a competent integration team we do very little firefighting. Still there are events that appear from left-field and demand precedence on my agenda. External events impact on my day and I do not have the luxury of pulling down the blinds. I have to deal with those. An Integration Office has a definite lifespan during which it is expected that a lot of ad hoc events will rear their heads as a matter of course. It can be a pressure cooker environment at times but the results are mostly satisfying.

I would say that decision-making under all circumstances will always come down to a binary choice made in a spilt-second. The tension and stress related to my previous work experience in trading and treasury has prepared me adequately for the demands of coordinating the integration of the two banks. Both environments share certain traits such as being bound by budget and time constraints plus the recognition that a lot is riding on your performance. The ability to remain calm under pressure and to hold your nerves when things are not going according to plan is one skill set from the dealing room that has proved quite useful in the project implementation phase. You also have to multi-task because the job of managing the business for acceptable returns while designing and implementing a time and budget sensitive programme can be daunting.

Q: As the year 2012 takes off, what should customers expect from the bigger Sterling Bank?

A: Sterling Bank has been positioned as the number one service centre for customers. When we launched our ‘One Customer’ campaign we meant to create an institution that would leap to mind when customers think of ‘service’. We have made good progress over the years and will continue to do so. We are re-energizing the campaign and significantly too, the engine that would empower us to deliver on its brand promise. Sterling Bank will remain the ‘One Customer’ Bank in 2012.