UPDATE 2-Ecobank CEO Tanoh has 'failed', top shareholder says

Wed Feb 26, 2014 1:10pm EST

Related Topics

* PIC says would possibly support changing CEO

* Shareholders vote on governance reforms on March 3

* Ecobank profits up 56 pct in first 9 months of 2013 (Adds quotes, context)

By Tiisetso Motsoeneng and Matthew Mpoke Bigg

JOHANNESBURG/ACCRA, Feb 26 (Reuters) - Ecobank's top shareholder piled pressure on chief executive Thierry Tanoh on Wednesday, saying he had failed to bolster the bank's capital and stabilize one of sub-Saharan Africa's largest financial institutions.

Daniel Matjila, the chief investment officer of South Africa's Public Investment Corporation (PIC), said it supported reconstituting Ecobank's board and might back a change of chief executive.

His comments renewed scrutiny of Tanoh two weeks after the executives on Tanoh's leadership team called on Feb. 13 for him to step down because of what they said was a long-standing crisis of leadership.

Ecobank is in the spotlight over its corporate governance, but profits in the first nine months of 2013 jumped 56 percent and costs were down at the bank, which is listed in Nigeria, Ghana and on the West African regional bourse BRVM.

Officials at Ecobank said that strong performance should encourage shareholders to give the lender's management time to pursue planned reforms.

Yet prospects for an end to Ecobank's internal disputes still appeared dim on Wednesday.

"Tanoh came in to stabilise, extract efficiencies, cut costs and all other things to extract value from the business. We believe he has failed to do so," said Matjila, who sits on Ecobank's 12-member board along with Tanoh.

He said PIC's investment was doing well but Tanoh, a former vice president of the World Bank's International Finance Corporation, has not raised "a single cent" of capital since he took office in January 2013.

"We need to change and reconstitute the board to put the bank on a growth path, including possibly changing the CEO," he said, accusing Tanoh of playing politics.

A bank spokesman said Ecobank did not comment on shareholder issues. Tanoh was unavailable for comment.

PIC holds 18.35 percent of Ecobank's shares, making it the biggest shareholder ahead of the Asset Management Corporation of Nigeria, which holds 8.09 percent.

AFRICAN FOOTPRINT

Ecobank is based in Togo and operates in 33 African countries, giving it an unusually broad footprint and a significant role in financing economic expansion on a fast-growing continent.

Shareholders are due to vote on March 3 on reforms that follow criticism of the bank's corporate governance by Nigeria's Securities and Exchange Commission (SEC).

Critics of Tanoh hold him responsible for any governance flaws. Other executives say he is working to rectify problems that predated his tenure.

Matjila did not say what action, if any, PIC planned to take. One smaller institutional shareholder said it was unclear how PIC could translate its concerns over the CEO into action.

"The question is: who is going to bring that outcome about? If nobody raises the matter, the status quo will continue," said a representative of the shareholder, who declined to be named. It was not possible to reach other institutional shareholders.

A court injunction filed in Togo by an individual shareholder blocked a board meeting that was due to have taken place at the bank's headquarters in Lome on Tuesday and could have considered Tanoh's tenure.

The shareholder filed the suit alleging that a board meeting so soon before the March 3 extraordinary general meeting would prejudice the interests of the bank's 600,000 shareholders.

The shareholders will vote on reforms including the creation of a seven-member interim board featuring Tanoh and Matjila but not the four members of the bank's Group Executive Committee who called on Feb. 13 for the chief executive to step down.

It will also consider a plan for governance reforms to answer SEC criticism and adopt recommendations contained in two external reports commissioned by the bank to improve governance.

Adopting that plan could help assuage the concerns of the SEC, which last week said Ecobank must reinstate its former finance director, Laurence do Rego, whose allegations last year of abuse of corporate governance triggered the SEC's probe.

The bank denies do Rego's allegations. It says it suspended her in a row over her qualifications before she went to the SEC. (Additional reporting by Chijioke Ohuocha in Lagos; editing by Tom Pfeiffer)

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