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Major restructuring at KCB

NAIROBI, Kenya Jan 27- The Kenya Commercial Bank (KCB) Group has said it is implementing a Transformation Program for the bank as it seeks to reposition itself for growth.

The program includes a host of key projects that seek to enhance the group\’s productivity and enhance shareholder value.

The program that is expected to run for up to two years, aims at reviewing the current corporate governance structures suitable for its regional operation.

Briefing investors on the bank\’s plans, KCB Group Chairman Peter Muthoka said one of the areas the bank would be operational changes that would result in efficiency and cost reduction.

"We want to move KCB from being a good business into becoming a great business. We are implementing the program that will accelerate growth and enhance productivity, Mr Muthoka said.

The transformation program is being implemented on recommendation of McKinney Rogers, a global business consultancy firm, which was engaged to restructure the bank.

The board of directors has set up a Transformation Committee that will implement the program.

Also under review is staff roles within the group that raised fears of layoffs.

Group CEO Martin Oduor-Otieno however downplayed any radical staff layoffs only saying that they would review job roles and people placement within the group in a way that best suited the bank.

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"All parts of the business are going to be affected. However, we are trying to position the exercise that is targeted at creating value for KCB\’s stakeholders, Mr Oduor-Otieno said.
KCB is the largest bank by assets which currently stand at Sh195 billion. It is also the region\’s largest commercial bank with 2,173 branches with operations in Kenya, Tanzania, Uganda, Rwanda and Southern Sudan.

During the period when the bank was expanding, KCB\’s wage bill increased from Sh3.8 billion in 2005 to Sh7.1 billion in 2009.

The bank\’s expansive operations have put pressure on the cost income ratio. Transformation Committee Chairman Sunil Shah said the bank would be looking to reduce operational costs by 20 percent.

Another area of focus for the regional bank will be its customer service, as it seeks to boost its customer base.

"From the close to 1.5 million customers we have we are targeting between two-three million new customers during the period," Mr Shah said.

Mr Muthoka said the bank expects the project to result in operational changes that will lead to efficiency, increase its market share and deliver improved returns on investment.

"We have put in place modalities that will minimise disruptions to the business during the period of the project," Mr Muthoka said.

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