KCB Group chief executive Paul Russo has initiated a restructuring of the business to accelerate bad loans recovery and improve the group’s asset quality.
This includes selecting a new team which will oversee the collection of Non-Performing Loans (NPL) of up to a tune of Ksh.120 billion.
“Relationship teams are designed to grow business, they are not necessarily competent in matters regarding recoveries, restructuring and nursing struggling borrowers.
Also, they are conflicted because they were involved in building the relations and are, therefore, not able to make tough calls on recoveries. So, I have separated these two teams and created a special assets team reporting directly to me,” said Russo.
Part of the restructuring includes separating the role of the Group and its subsidiaries which include the National Bank of Kenya (NBK) and other units outside the country.
KCB Group’s subsidiaries account for 27 percent of its Ksh.1.21 trillion asset base, according to its financial statement.
“I am passionate about separating the role of the group and subsidiaries. So, I split the Group CEO and managing director Kenya role because you have got to hold KCB Kenya, which is a critical entity, to account like any other business.”
The lender’s NPL went up by 54 percent 54.3 percent in nine months to September 2022 to Ksh.149.3 billion.
NBK has a lion’s share of 24.5 percent of NPL in the Group – and the special team is tasked to collect constituting debt from NBK, government agencies and corporate entities.