Kenya Commercial Bank Executives Reorganization

By VICTOR JUMA

Kenya Commercial Bank (KCB) has confirmed three new senior appointments in a reorganization of its executive team meant to cut reporting layers and increase efficiency in the business.

Peter Munyiri, who was the group’s deputy chief executive in charge of group businesses, is the new Chief Business Officer, for Kenya while James Agin, who has been serving as the bank’s regional director will oversee the bank’s international operations as the new Chief Business Officer, International.

Mr Paul Tikani, who was director of operations, has been appointed the Chief Operating Officer. The position of Chief Financial Officer was left vacant until an external recruitment is done. The role was previously held by Stanley Towett as the director (Finance).

The four positions have combined duties that were previously handled by 21 directors, some of whom chief executive Martin Oduor-Otieno confirmed had left the company.

Those who have left under a voluntary retirement scheme are Sam Kimani who served as the deputy CEO (group controls), Catherine Njoroge (special projects) and Kefa Bosire (corporate communications).

The directors who are leaving will get a send off of one and a half month’s salary for every year worked.

KCB, however, said Mary Ann Kirubi (marketing director), Tony Githuku (IT director), Caroline Kariuki (mortgages) and Tim Kabiru (retail banking) were still employees of the bank, contrary to reports that they had resigned.

Mr Oduor-Otieno said the changes marked the first line of senior management appointments and promised further announcements in the next two weeks.

“The bank will over the next fortnight make further announcements on the second level senior management roles in line with the new structure. These will cover roles reporting into those that have been announced today,” he said.

The re-organisation is a first step towards reducing the bank’s operational expenses following the recent hiring of global consultancy firm McKinsey & Company to lead the exercise.

In the next two years, KCB is expected to cut down on its middle level management, following in the footsteps of other top banks like Barclays who have made similar moves after an aggressive hiring in 2007 aimed at capturing market share.

“We intend to reduce our cost to income ratio to about 50 per cent in the next two years and this will be achieved by growth in income and reduction of costs,” Mr Oduor-Otieno said when the lean executive structure was unveiled.

The current re-structuring is expected to trim the bank’s executive team down to seven from 22 in a move that is expected to reign in its staff costs that rose from Sh4 billion in 2006 to Sh9.3 billion last year, stifling profit growth.

his pushed its cost to income ratio to 67.9 per cent, only rivalled by Co-op Bank’s 80.7 per cent.

KCB has pursued an aggressive local and regional expansion in the past few years that saw it nearly double its staff count from 2,921 in 2007 to 5,639 last year.

KCB’s pay roll trimming is in line with that of other top banks that are coming off an aggressive hiring phase started in 2007 that was aimed at capturing market share.

Early this year, Barclays Bank laid off 200 middle level managers to cut payroll costs that grew to Sh8.3 billion last year from Sh7.2 billion the year before. The exercise has saved Barclays –whose loan book shrunk last year– hundreds of millions of shillings in fixed expenses.

Rival Equity and Co-operative banks have slowed down on new hiring, opting to spread out existing staff to meet their needs across the country. Corporate segment focused Standard Chartered Bank has the lowest staff count (1554) and wage bill (Sh23.4 billion) among the top five banks.

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