The Nations Trust Bank (NTB) is trying to get its act together after the infamous treasury loss the bank suffered last year and is not an aggressive trader anymore, its new CEO Saliya Rajakaruna said.
“We have addressed all concerns put to us by the regulators and the accountants (bank accountants), because we had to get it under control," he told the Business Times explaining how they arrested the situation with regard to the Rs 800 million foreign exchange loss in NTB’s dealing room last June.
NTB at the time said it has discovered a breach of procedure in its Treasury Department which saw two top officials along with senior members of this department quit.
Mr. Rajakaruna said three big changes with regard to Governance, Risk Management and Compliance (GRC) from last September (from the time Mr. Rajakaruna took up this position) were implemented at the NTB to apprehend this situation. “One of the big changes done from September was to get a grip on GRC,
it was not enough at the time. The GRC was inadequate and not very visible,” he added.
He said presently the Treasury Department has three structures - Treasury Front Office, Treasury Middle Office and Treasury Back end. “On a daily basis the Department has to report to me,” he noted, saying that this daily reporting mechanism together with the chain of command that is in place ensures that rules are adhered to.
The main strategies of the bank are to make it compliant and ensure whatever that is being done will be within the framework of governance. “What we do (now) is anchored to tried and tested policies of other banks and not done in a cavalier attitude.” He also noted that risk monitoring at NTB is tightened as opposed to before and that the bank is not an aggressive trader anymore. “We do trade but within strict guidelines and framework that is now intact,” he said.
NTB made a lot of money in the money markets, before this issue cropped up last year. When asked how NTB was offsetting the cash from revenue it got from the Treasury Department now that this department is not aggressive anymore in this business, Mr. Rajakaruna said that all other segments in the bank were looked at to bring in the (lost) revenue. “We are looking at expanding all businesses at NTB and bring equal revenue from all these businesses. We do not want to rely on any one business. This was what happened with the treasury business.
There was over reliance on it,” he explained.
He noted that unlike earlier NTB will not rely on ‘only’ deposit mobilization from its 38 branches. “Instead of the branches wholly generating these liabilities, now we want them to do loan businesses as well. Our credit card business is also promoted quite heavily and we are getting in to the pawning business,” he said, adding that pawning for NTB has already started in Vavuniya.
“We will also do a focused expansion on Small and Medium Enterprise (SME) business credits. Through this we want to explore some cross selling, leveraging the existing leasing and factoring businesses," he said, adding that since some 70% of the country’s Gross Domestic Product is attributable to the SME sector, there are many opportunities in this line of business.
NTB is also looking to get into syndicated businesses. “Our balance sheet is not big enough to do this, so we will be looking for partners to get into this business,” he said, adding that as the country’s infrastructure and construction are stated to expand, NTB will also be interested in LC (Letter of Credit) openings and participating in these projects.
He said that equity margin trading of NTB, which is now within the Treasury Department, will be transferred to the corporate banking arm of the bank in a bid to add value to this business. “NTB may be the biggest margin provider in the market and we want to invest a bit more in this business,” he added. He said NTB will be increasing its penetration of its parent company John Keells Holdings’ (JKH) Keells Supermarket customer base. “There is so much potential in JKH which we can exploit,” he said. He also said that NTB will be aggressively selling bancassuranace with JKH subsidiary, Union Assurance Ltd. |
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