Stanbic Bank Zambia's MD Larry F Kalala: Prudence is the key

Larry F Kalala is the MD of Stanbic Bank Zambia Ltd, chair of the Bankers Association of Zambia and also sits as a trustee on Zambia's Privatisation Trust that oversees the government's privatisation process. Stephen Williams reports.

Larry Kalala started his baoking career with Grindlays which was taken over by the Australia New Zealand Bank (ANZ) in 1985; but it would appear that ANZ was principally interested in Grindlays' India and Pacific region. The sad fact was that, back in the mid1980s, few saw the potential that Africa's financial sector represented. The ANZ group, more or less, left its newly acquired Africa division to fend for itself. In Kalala's words, they treated Africa "like an orphaned child or a poor relation".

Things changed in 1991 when South Africa attained its democratic dispensation and Zambia's then president, Frederick Chiluba, liberalised the country's economy.

That allowed Standard Bank of South Africa to buy ANZ's Africa division in 1992 - including its Zambian operations - and Kalala found himself employed by Standard Bank Group. At that time he was working in the UK, looking after ANZ's corporate clients headquartered in the UK with operations in Africa, but the new owners soon recalled him from London to Lusaka since there was no longer any connection between ANZ and Standard Bank. Moreover, Standard Bank was already established in London.

That represented something of a shock - suddenly his salary reverted to local conditions of service, something like one tenth of his remuneration in the UK. "You know, it's easy to adjust to a salary increase," Kalala observes with a laugh, "but when it falls so quickly, that's a different matter."

It was these circumstances that made an offer from the Lusaka-headquartered Meridien International Bank to join them as director of marketing and credit almost too good to turn down. "They gave me a forex salary that went straight into my London account to cover the children's school fees and gave me a nice car as well as covering my expenses in Zambia, so it was extremely attractive," he says.

But barely had he got his feet under his new desk in 1993 when there was a run on the bank, in 1995, and the bank had to be liquidated, amidst allegations of high level fraud involving some $9501 in misappropriated deposits.

Following Meridien's closure, and after Kalala completed a two year interlude at First Alliance and Cavmont Merchant Bank, Standard Bank's Africa division head, Tony Wright, asked him to rejoin Stanbic Zambia. Offering Kalala the post of deputy MD, Wright said "you've been naughty and left us, but we don't want you working for any more funny banks. Come back home ..."

The prodigal son returned and was promoted to become Stanbic Zambia's MD in 2003. Kalala's clearly ambitious nature, twinned with a pragmatic and prudent approach to banking, has seen him guide Stanbic Zambia's performance ever higher.

One of Africa's most buoyant economies

Today, Stanbic Zambia offers universal banking services through 11 locations across the country. With total assets of about $38001, Stanbic Zambia is one of the country's largest private sector banks. Zambia is an extremely challenging territory that many even consider over-banked. There are 13 banks currently operating in the country but the top five compete fiercely for market share and collectively account for 80% of Zambia's banking assets.

Nevertheless, Zambia is one of SSA's most buoyant economies, recording a 7% GDP growth rate last year thanks to a mining boom driven by the commodity 'super-cycle' that has seen copper rise to record prices. Zambia holds Africa's biggest reserves of the metal.

Even though Stanbic Zambia is a subsidiary of Africa's biggest bank - Standard Bank Group operates in 19 African countries, trading under the name Stanbic Bank in Botswana, the DR Congo, Ghana, Kenya, Malawi, Nigeria, Tanzania, Uganda, Zambia and Zimbabwe and as Standard Bank in Namibia, Swaziland, South Africa, Lesotho, Mauritius and Mozambique - it was only ranked number five in Zambia, in asset terms, when Kalala took charge.

Now Stanbic Zambia ranks as the country's joint-third largest bank in asset terms, behind Barclays Zambia, valued at $600m and Standard Chartered Zambia at $45010. It is joint-third with the government majority-owned Zambia National Commercial Bank (Zanaco), whose assets, like Stanbic Zambia's, are valued $380m. Finance Bank, a local bank, is placed fifth.

Zanaco is currently co-owned by the goveroment which still holds a 51% stake alongside the Dutch owned Rabo Bank with 49% - but the Zambian government intends to offer a 25% tranche to the Zambian public later this year (retaining a 26% holding). Kalala sits as a trustee on the Zambia Privatisation Trust that is providing the oversight for this IPO exercise.

As with assets, Stanbic Zambia's profit track record has been similarly impressive under Kalala's watch.

Last September, Stanbic Zambia reported an after-tax operating profit of $1701, comfortably outstripping the competition. Kalala says this was due to others having continuing problems with provisions and bad debts. "Over the past five years, touch wood, we have largely managed to avoid the problems afflicting other banks in Zambia," Kalala explains.