McSharry: The change agent leading First Capital

NDAMU SANDU

Ciaran McSharry (pictured), the First Capital Bank Zimbabwe MD, says change has been part of his professional career which laid a solid foundation in his quest to take the Zimbabwe Stock Exchange-listed entity to dizzy heights

From Barclays to Merrill Lynch then Bank of America and back to Barclays, is an experience any banker yearns for to lead First Capital, five years after multinational banking group Barclays Plc sold its Zimbabwe unit.

“The one that is constant throughout my career is change. When you come to First Capital and the change we have experienced in the last 5 years have been huge. I guess the experience of change in my career has sharpened me and given me the experience. I always look at change in a positive way. Change to me is an opportunity to do something differently, an opportunity to learn new things. You have to have a positive attitude,” McSharry told Business Times.

McSharry worked at Merrill Lynch until 2009 when it was sold to Bank of America. Before the sale, the banker had a stint in asset management and investment banking. He would work at Barclays in investment banking.

The banker joined First Capital as FD in April 2018. He became acting MD when Sam Matsekete retraced his steps to Old Mutual, eventually taking a substantive role in June 2020.

How did he manage the transition to First Capital from Barclays?

“I crossed my fingers and hoped,” McSharry said with a burst of laughter.

There were huge amounts of work to be done to navigate through the transition—IT systems, branding, customers, the banker said.

“We were lucky that we had continuity at that stage. I came in as FD. Sam [Matsekete] was here and has been with Barclays Bank Zimbabwe. He helped us to navigate through that transition. I don’t think we could have done what we did without his hard work. I was lucky to have support during the first year before I came into this [MD] office,” McSharry said.

“We managed through as a team with support from the management team locally but also from the group team. I could be naïve to say there were no challenges.”

It has not been easy to change the culture.

“I always say you can take the man/lady out of Barclays but taking Barclays out of that is always difficult,” the banker said, adding, “We have people here who have been with the bank a lifetime.”

McSharry said the transition is a journey, which cannot be changed overnight and has to be gradual to avoid failure.

“We started with the branding. The first two years we were changing the programme before we became First Capital. The whole group was rebranded to First Capital. It wasn’t just Zimbabwe but the whole group. We have gone through by working as a team,” the banker said.

He said the company’s values are core and are not “actually that different to what they were at Barclays” but decision making in First Capital was quicker than in Barclays.

“Right now if I need a decision to be made, which is not within my remit, I can pick up a phone and I can get the right person to make up the decision within 24 hours. There are major decisions we have made here; very fast which would never happen before. Decision making process, speed of action is core,” McSharry said.

First Capital Bank, he said, had to start from scratch, as it could not use Barclays as a correspondent bank. The multinational bank does not share the service with other banks.

To its credit, First Capital has secured a primary correspondent bank in the UK and has onboarded two other institutions to try and broaden “because one of the key things in any business is you don’t want single supplier risk”, according to McSharry.

He said the perceived country risk always puts correspondent banking on alert “when you talk about Zimbabwe” adding that the relationship with a correspondent bank has to be nurtured.

“The primary relationship manager was here last week [three weeks ago]. Some of our board of directors had lunch with him. Whenever I am in the UK, I will make it a point to go and see them,” the banker said.

“The point is that to make sure there is continued understanding of the market situation, how we view it, what’s happening on the ground, what’s the business doing, what’s the risks etc. we are keeping them abreast of all the developments.”

The banker said the relationship has changed from one which was very strict in the first couple of years and “if we put a foot out of line we were desperately scared that we were going to lose the whole correspondent banking relationship”.

“Now it is a much more relaxed relationship. Not that we aren’t careful. We are 100% careful, very vigilant in what we do.  But we have a great understanding from current agents. They understand our business and we have built relationships and trust over the years. So that has to continue to be worked at,” McSharry said.

First Capital Bank also had to change the system, as the Barclays structure was “pretty much global”.

“Every single system at the bank had to change; the customer facing but also the interest structure had to change. That was one of the biggest challenges,” McSharry said.

The bank went live on a new core banking system in March 2019; three weeks after Zimbabwe undertook currency reforms.

“We had problems after we went live but they were mainly customer facing systems. Our critical core system was robust. We never had a problem with the core banking system. We had to work like any major migration, which has, go-live issues, post live issues, which you have to work through. We did that successfully,” said the Irishman who cut his professional teeth in banking at Barclays in the UK.

Banks are reaping from digital channels. McSharry said the bank had a good 2022, thanks to the existence of the right products and the right channels.

“We delivered a new mobile banking application, a new internet banking platform, integration with major corporate customers, we are in the process of launching a new point of sale…Last year, we delivered a huge amount,” he said, adding the bank would leverage on the platforms for growth.

The banker was headhunted by First Capital Bank after leaving Barclays in 2017. One of the directors approached First Capital to consider McSharry after its acquisition of Barclays Bank Zimbabwe, he said.

“I got a phone call from First Capital and they said would you be interested. I said why not. I thought it would be a great opportunity and experience to come here. I remember that time the country was full of optimism; it was a time of change in terms of the Second Republic,” the banker said, adding he has no regrets for taking up the position.

“It has been a fantastic experience, working with great people and great customers in a great country.”

The bank declared a dividend in 2021, HY2022 and FY2022, signalling that the good times are back for shareholders.

“…If I am right before 2021 I am not sure we paid a dividend for about 20 years,” McSharry said.

He said the bank’s focus over the past three years was to make sure that it completes the migration to First Capital from Barclays and establishes itself as a robust brand in the market.

The second task, McSharry said, was to make sure the bank surpassed the US$30m regulatory core capital requirement. This was accomplished as the bank has a core capital of US$46m, which leaves it in a position to reward shareholders through a dividend payout.

“What is important to note also is if you look at our shareholder structure, the biggest shareholder is FMB Capital Group (52%). The second biggest shareholder is our staff with 15%.  That is an important point for our staff to remember that as we grow this business, staff will directly benefit because if we don’t grow the profitability, we don’t pay dividends.”

But the dividend cover was down at 2.3 in 2022 from 3.6 in the previous year.

McSharry said the bottom line for 2022, on the face of it, was down.

This, he said, was that property valuations were down after the bank changed the valuation method in 2021.

Property valuations are important from a capital perspective, for the future but do not generate cash and pay the bills, the banker said.

“But the core point is our customer assets are up over 80% inflation-adjusted. Customer deposits are up over 60% inflation adjusted. My operating profit inflation adjusted is up over 50% and our capital is at US$46m above the required US$30m. That is a strong business. We have to maintain that growth going forward. They are the key metrics I would look at in terms of where we are,” McSharry said.

The bank has recorded a growth in foreign currency loans and deposits. The growth in foreign currency deposits is a result of a shift in the market away from the local currency to the United States dollar, which is a macro phenomenon, the banker said.

“On the back of that growth, we have used more of those to lend to the core corporates primarily in the export sector and agriculture sector,” McSharry said.

The banker said values and principles are important to him.

“I believe in integrity and honesty. I talk pretty straight.  If there is a problem, let’s put it on the table and let’s move forward. To me that is the best way of moving forward,” he said.

McSharry reads history, business and sport books. Clive Woodward’s How to Win has given him insights to lead a team.

“How you have 15 men on a rugby pitch with different skills, roles but with the same objective. You have to train them, giving them core skills. As a leader you have to bring them together to achieve a common goal. You can apply that to business,” the banker said, adding, “I am a rugby man. Life is all about rugby.”

The transition to CEO or MD has vexed a number of CFOs. A qualified accountant, McSharry has worked in finance for most of working life until he stepped into the MD’s office in an acting capacity four years ago.

“You are running the business at the end of the day. All that is required is understanding each other, where you are in the cycle. You have to balance between what the business needs and keeping control of the business and making sure it is a sustainable business going forward.  That is the same if you are the CE or the finance director,” he said.

The CE, the banker said, needs some kind of finance or they need the finance director who understands the business.

“Being a CFO is not just saying no to spending. It’s about saying no to the wrong type of spending and making sure you spend the money wisely and efficiently,” said the banker who began his career in the oil and gas sector in the UK, becoming the first group financial accountant at Total.