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Monday, 31 March 2014 00:00 - - {{hitsCtrl.values.hits}}
The response from Vignarajah was following the Daily FT interview with Commercial Bank Chairman Dinesh Weerakkody on 26 March.
Following are excerpts of Vignarajah’s letter to Commercial Bank Chairman and Board of Directors:
Let me congratulate you all, the key management, personnel (KMP) staff and the employees of this magnificent bank for the splendid achievement once again. It has been a wonderful case of each year handsomely bettering the preceding year, due to the dedication and unwavering commitment of the above and professionals defending and/or enhancing the integrity and reputation of the bank.
No other bank in Sri Lanka has achieved such a position and attained similar heights in range of innovative products and quality of services. Mr. Dinesh Weerakkody, (of “In the Best Interests of my Country” book fame), the Chairman in a wide ranging interview with the Daily FT of 26 March instant has rightly stated, inter alia:
The foundation for this strong performance was “the passion and contribution of all employees, our loyal and valued customer base and all our valued partners, both state and private”.
“The competitive advantage comes from the people in the organisation, the culture and finally leadership.”
The bank was well on the way to stay ahead of competition. He highlighted inter-alia “putting innovation into the spotlight, increasing productivity, delivering great experiences across all customer touch points and delivering 24/7 customer services.
“The Loan Origination System has been a big success not only with streamlining the loan approval process but also to free time at the counter to improve service delivery and customer acquisition.”
With regard to employee development, the bank’s strategy to “deepen the bank’s talent pool by investing in training and development and by fostering their leadership abilities to build a leadership brand that reflects the expectations of the customers outside the bank”.
It is clearly evident that Commercial Bank has identified and enhances all the core areas to sustain unparalleled success. It is the paramount duty of all the shareholders and stakeholders of the bank to reward those who have served the bank with outstanding success and continuous dedication for long periods of time. The natural promotion to the posts of Executive Director on the Board is the ultimate reward for them and satisfaction to the stakeholders. I had advocated for many years that at least three working Directors or one third should be appointed from those who have been employed who have served the bank directly and indirectly as professionals for a long period of time.
The role of the Central Bank/the Regulator is to assess honestly whether a candidate suggested by the shareholders and nominated by the Board of Directors is a “fit and proper person”. The final choice must be with the shareholders who bear the maximum risk in case of failure of banks and companies are ultimate losers. The jobs of employees and funds of customers and shareholders have to be protected. There must be no conflicts of interest whatsoever. Regulators must not eye plum jobs in the banking sector particularly as their colleagues in the Central Bank would tend to be lax on implementation of necessary safeguards.
The unbelievably excessive issue of licenses to Non-Banking Financial Institutions (NBFI’s) and their compulsory mergers and acquisitions (M&A) are cases of the reckless behaviour of the regulators and the consolidation exercise may again be a lucrative exercise for the same unholy clan.
The Central Bank has had some outstanding regulators but many say that it appears that they are overwhelmed by those who would submit to political and some corporates’ agendas, rather than focus on the critically important economic agenda.
The back door entry to directorate of banks has been made a fine art by the politicians and regulators acting in concert. Thus the importance of long term commitment and service in core areas of providing customer satisfaction, deposit mobilisation, lending, recoveries and legal matters which enhances revenue and protects funds.
With proposed M&A and increase in competition there is even greater need for those who had long been committed to fill in positions on the board. There must be sturdy independence in handling pressures to bailout sick or failed NBFIs which may be hastily thrust on well performing banks.
NBFIs were approved by regulators very unwisely and hastily. They gave out licenses to all and sundry; now even more hastily are seeking to compel M&A’s without diligently and patiently finding the correct fit.
Consolidation is always good if done properly and the synergies could make it a win-win situation for all parties. Unfortunately in the Sri Lankan situation M&A seems to be a dangerous bailout situation where allegedly those who brought about the situation, making further deals!
It is also important for independent shareholders who have 10% or more stake of the share capital to hold positions on the board as they identify their interest with the progress of the institution. In recent times there has been a tendency for banks to deny shareholder choice and approval by election of the Directors at the AGM. The political establishments and the regulators with serious conflicting interests tended to effect back door entries after the end of an AGM. This practice should not only be discouraged but also condemned in the interest of the banking sector and the country.
The front page of the Daily FT also carried the news item of an independent director moving on to a diplomatic assignment. It would have been healthy if he had resigned earlier and made room for true choices by the real stakeholders.
The management, employees and shareholders in unison of interest have shown dissatisfaction by many such appointments in the recent past. However, it’s the robust management team and shareholder activism that has ensured no great harm has been caused to the unblemished image of Commercial Bank.
The promotion to the Board of Directors will boost management and staff morale, while reducing the number of positions/persons with interests other than the total concentration and commitment to the welfare and wellbeing of the bank and its customers, employees and stakeholders.
Thanking you for your attention, and action to further enhance the best bank.
With Warm Best Regards,
K.C. Vignarajah - Acting in the best interests of the shareholders, customers and the investing public.
Goodwill to all, malice to none,
The courage to always do the correct thing,
Fairness and equity in all thought, deed and expression.
