Michel Accad has resigned as CEO of Gulf Bank, one of Kuwaits biggest banks, saying that his work on the previously troubled banks turnaround is complete. He says it is time for someone else to help it to grow afresh.
"I came here to Kuwait with a very specific mission," Accad tells Euromoney. "The mission was to turn around the bank and rebuild trust with our key constituencies. And this has, essentially, been achieved."
That is true. Gulf Bank suffered more than most of the regions financial institutions during the global financial crisis. In 2008, it appeared to be close to going under, following disastrous derivative trades, soaring impairments and a loss for the year of KD359.5 million ($1.28 billion).
The Kuwait Investment Authority came in as a temporary saviour later that year, subscribing to most of a KD375 million emergency rights issue in December 2008 and becoming a 16% shareholder. Accad was the most visible member of a new management team brought in by the board thereafter in August 2009, in his case to put the bank back on an even keel.
No easy task
It was not any easy task. "You may recall at one point in 2009 our NPL ratio was 30%," he says. "Thats close to a world record for a bank that still survives." When Gulf Bank reported its first-half results in July, that figure had dropped to 7.6%. And that was only one of several metrics under which Gulf Bank had shown considerable revival.
Michel Accad has resigned as CEO of Gulf Bank
Accad identified four pillars for the turnaround: a fortress balance sheet, ring-fencing legacy problems into a good-bank and bad-bank model reminiscent of Accads former employer, Citi; a refocusing on core competencies in retail and commercial banking instead of the proprietary trading and derivatives in which the bank had become mired; and a model of differentiation on customer service, particularly in retail.
In the latest report, the bank could point to a 12% year-on-year increase in net profit to KD14.3 million, a KD150 million increase in precautionary provisions, a total asset position of KD5,01 billion, and recent upgrades from all three rating agencies, with two from Standard & Poors in the past two years.
So why not stay? "I have thought a lot about it," says Accad. "But I believe my position is the right one. When we were doing the turnaround strategy, one of the key things I mentioned was refocusing on our core banking competencies and exiting all peripheral activities. We achieved what we said we would; now we can draw a line and say weve cleaned up everything."
Now, he says, it is time for Gulf Bank to start to be more ambitious again, to grow, and to diversify into new businesses. "But imagine the same person who said three years ago that my strategy is to cut the unnecessary staff and focus on what we do very well, to come back and say I want to bring things back. Its not entirely credible."