Has the ‘God Factor’ vanished in our financial services industry? (2) – the loans saga

Even if everyone is doing it, wrong is never right”

Russel M. Nelson

Interesting Feedback

Dear Reader, I am grateful for the feedback received through social media. Let me repeat a quote from Rick Warren:

Experience is not what happens to you. It is what you do with what happens to you. Waste your pain. Use it to help others”.

What am I saying? The main reason certain job roles demand some years of experience is that, as human beings, we are expected to learn from history and improve upon our future. Some of the examples I use in my articles are either from my own experiences or encounters, or from listening to or observing others, or reading from global cases and various other sources of information.

Sometimes I add a little twist to the details to make it more interesting. The most important thing is sharing information for young bank executives to realise that most of their encounters are not new. Although you cannot use old solutions to solve new problems, you can customise your solutions by adding the ‘God factor’ in everything we do.

This week, my concentration is on loans, advances, credits, facilities or whatever term you decide to use.

Loans – “The Necessary Evil”

Banks are licensed to accept deposits and grant loans……collecting money from surplus units and sending it to deficit units. If banks don’t grant loans, they cannot make a margin and pay the promised interest on depositors’ funds. However, anybody working in a bank knows that the success of every bank relies heavily on how loans are administered. The function of the Loans or Credits department of every bank is therefore heavily monitored, because it can make and unmake the bank.

In my opinion, the Credits or Loans Department is one of the most sensitive, difficult, interesting and craziest places to work in. It is a place of mixed emotions because you meet or process applications from all types of account holders, each with their own account track record. Loan officers have to try and understand the customers’ business operations to appreciate their needs and determine whether they should be granted the loans, and some can be followed by pressure. The recent sanitisation of the banking sector had a lot to do with not just corporate governance, but also the high rate of non-performing loans.

The Personalities behind Loan applications

No two customer applications are the same: some of the personalities behind the loan applications are awesome while others can pose a challenge. In all cases, loan officers need to be tactful and truthful with them to prevent them receiving a “No” and closing their accounts. Let us look at some examples of various loan applicants.

  • The Visionary: These customers have focused entrepreneurial visions, relevant experiences and dedication, good credit history and realizable delivery channels. They make loan processing a delightful exercise and loan officers feel happy when their applications are approved. Monitoring their operations is easy and the feeling about the success of the enterprise is mutual-the bank as well as the customer.
  • The Dreamers: They conceive a business idea and without conducting the relevant research or starting on a small scale with funds from family and friends, then jump onto the bandwagon of lobbying the branch manager for a loan. Many of them don’t take no for an answer, and take declined applications personally and emotionally. They expect everybody to be excited about their ideas. Others are not even prepared to listen to any business counselling and are already set in their ways.
  • The ‘Connected’ accounts: This is a group that encompasses various account holders who by their relationship with some executive or board members sometimes take advantage to put pressure on managers and credit officers to grant them loans.
  • The Wilful Defaulters: There are a few customers – which one’s experience and watchful eyes show – who from day-one will not be repaying any facility granted them. They sometimes behave as if bank loans are Christmas gifts.
  • The ‘Player’: These can be either male and female, with a hidden agenda to befriend you and take undue advantage of the relationship by benefitting from loans they have no plans of repaying in future. They tempt bankers to mix business with pleasure.
See Also:  Bills, Bills, Bills!

I cannot stop here without mentioning the most dangerous group of borrowing customers:

The Politically Exposed Persons (PEPs)

Personally I believe this is one of the most difficult group of borrowers that many state banks have to contend with. They can make or unmake a bank! You may be wondering why I am saying so. Hmm. Let’s first define who a PEP is:

PEPs are individuals who are or have been entrusted with prominent public functions, both in Ghana and foreign countries, and those associated with them. Examples of PEPs include but are not limited to:

Heads of State or government, Ministers of State, Politicians, High-ranking political party officials, Senior public officials, Senior military officials, Chief Executives of state-owned companies/corporations – such a long list! Can you believe that the list includes family members or close associates of the listed PEPs?

Wikipedia goes on to describe it further: A ‘Politically Exposed Person’ (PEP) is a term describing someone who has been entrusted with a prominent public function.

A PEP generally presents a higher risk for potential involvement in bribery and corruption by virtue of their position and the influence that they may hold.

I used to believe that PEPs were more credit-worthy, because when the loan is called in or their names come up in the banks’ non-performing portfolio they would be embarrassed. Far from it…hey! Let me hold my tongue before I am summoned to…you know what. In my three decades of banking, I have seen some PEPs address press conferences condemning banks’ high lending rates, while at the same time directing the Chief Executive of a bank to grant some ‘crazy’ facilities to cronies and family-members who also happen to be PEPs by their association with them! What happened to the God factor?

The Dilemma of Bank CEOs

To many people, the position of Chief Executive of a bank is one of the “hottest, awesome, most rewarding and enjoyable position in the financial services industry”. It is the icing on the cake and a reward for hard work. My candid opinion is that this is far from the truth. I have observed many hardworking and illustrious men and women who, at the Executive level, were at their peak performance. Then, what happens? When they become the CEOs they become very ‘malleable” to PEPs and renege on some principles they have set for themselves. Some find themselves under pressure, taking indirect orders from all sorts of places; or rather, from persons who should know better.

See Also:  Restoring confidence in the banking sector

Of course the stresses result in ill-health. Whatever happened to the ‘God factor’ they had relied on throughout their banking career? The worst part is being sent home through radio announcements! One annoying and unforgettable episode, I witnessed twenty years ago: I entered the office of a no-nonsense fearful-looking bank CEO taking telephone instructions from a PEP – standing and saluting the unseen person over the telephone! You can imagine what the ‘directives’ were.

I see so many illustrious bankers being pressured by irregular external persons. I wish they would be left alone to do the business of banking within the proper context of corporate governance. Dear CEOs, I pray that you will either stand firm to withstand the shocks or leave honourably.

The Power and Benefits of saying “No” in a Professional Way

  • An elder gentleman in his sixties, who was the close friend of a bank CEO, pressured a branch manager to process a loan application. The branch manager faced a dilemma: the senior citizen had offered his residence as security for a loan that had all the signs of non-performance. The manager mustered courage to be honest about the transaction and refused to be intimidated by the CEO. Six months after the manager left to work at another bank, the customer visited him at his new office to thank him for his decision not to process the loan. He had realised it was not a feasible project.


  • A branch manager verbally asked a Teller to pay funds to a customer whose account had been flagged against further withdrawals. The Operations manager authorised the transaction to go through the system without sighting an approval. Some months later, the customers’ loan account was in default because standing orders did not go through. Other Tellers in the same branch who insisted on signed instructions from the manager were absolved. This is a difficult one, but we must use tact in saying “no” to superior officers.

There is a long list of ways of saying “no” without offence, but let me pause here for another day.



Alberta Quarcoopome is a Fellow of the Institute of Bankers, and CEO of ALKAN Business Consult Ltd. She is the Author of two books: “The 21st Century Bank Teller: A Strategic Partner” and “My Front Desk Experience: A Young Banker’s Story”. She uses her experience and practical case studies for training young bankers in operational risk management, sales, customer service, banking operations ethics and fraud.


Website www.alkanbiz.com

Email: alberta@alkanbiz.com or albique@yahoo.com

Tel: +233-0244333051/+233-0244611343

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