After years of a laid-back approach to the business of banking, GCB Bank Limited is now putting up a spirited effort that can help redefine banking and cement its role as a leader in the financial sector.
Beyond energising staff to compete fiercely for business, the bank is expanding its roots into adjoining areas to help boost non-funded income and keep growth in top and bottom lines strong.
For starters, the bank is making an impressive entry into the investment banking space, where it had long remained passive despite possessing enormous goodwill that could have earned it most of the blue-chip government transactions.
Its Managing Director, Mr Ray Sowah, told the Daily Graphic that the bank was at the verge of starting an investment banking service that would enable it to also pluck that “low hanging fruit”.
“GCB is close to the heart of government. Why should government always be doing its investment banking business through other banks? Why?”
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“The truth of the matter is that over the years, these things have not been looked at,” he said, and indicated that his outfit was injecting a new sense of agility into the bank, which is the largest bank in terms of assets and branches.
He mentioned mortgage financing and digital banking as the other areas where it would be making impressive entries .
The bank will also strengthen its presence in foreign exchange trading as part of efforts to help plug a revenue hole created by the current decline in treasury bill rates.
Treasury single account
Since August last year, the government has been moving public funds with banks to the Treasury Single Account (TSA) at the Bank of Ghana (BoG).
The policy is to help synchronise public funds for easy tracking and utilisation.
Although a plus for the government, the implementation of the policy denies banks, including the GCB Bank, access to cheap deposits that they, hitherto, relied on for short-term transactions.
Since the implementation of the policy, Mr Sowah said, public sector deposits “no longer stay in the banking sector”.
“They stay within two to three days and they go to the BoG. So, cheap deposits, which were coming in, no longer come in.
“Secondly, you can see that T-bill rates are on the decline and it is hurting the banks.
“Now, GCB was largely focused on government securities in different time bands and so as the rates have come down, our profits have also come down.
How do we deal with these two issues of cheap deposits going away and declining interest rates?” he asked.
“The first thing is what prompted us to go into the purchase and assumption (P&A) agreement because there, you are going to get a bond or cash, which will immediately give you deposits,” he said.
Following the taking over of the UT and Capital banks by the GCB Bank in August last year, the bank’s total assets rose to GH¢9.62 billion.
The bank was also issued a GH¢2.2 billion bond that is amortised over 10 years.
Consequently, Mr Sowah said, “every six months, we get some of the cash up front, which, of course, helps our operations, but the notional amount of money is always there and if we are in difficulty, we can go and ask them to give us cash in return for part of the money.”
Mr Sowah further explained that the bank was currently boosting service delivery in electronic banking to help make up for the drop in earnings from treasury securities.
“We have begun a process of digitalisation and by September, we will have a product for the market,” he said, declining to give details.
Despite its huge presence, the GCB Bank is insignificant in the mobile money space, where comparatively lower banks are having the bigger pie.
The GCB Bank MD said his outfit was looking to reverse that trend with the introduction of a specialised product.
“The thing is because we have not been that vigorous, instead of going at par with the market, we have to leapfrog the market in a special way.
“I am hoping that by September 1, we will start getting a lot of cheap money going through our system,” he said.
The bank currently has 183 branches nationwide, and Mr Sowah said each branch had now been directed to offer foreign exchange services as part of efforts to help boost non-funded income.