Land Bank is the largest agri-financing institution in South Africa. It is a para-statal company with its Head Office in Pretoria and has 27 branches spread across the country. The bank employs about 1,000 people in the Head Office and branches.
The bank had been coming under extreme pressure from some of the major commercial banks, such as ABSA, Nedbank and Standard Bank, who had also started investing in agricultural financing. As a result the Retail loan book was decreasing as clients were moving their loans to other commercial banks.
Arrears were also increasing at a rate faster than new loans were being processed and the overall result of this was that the loan book was decreasing.
The project designed to arrest these problems was structured into 3 phases; Phase I of 52 weeks, Phase II of 26 weeks, Phase III of 50 weeks. The key objectives and changes were as follows:
The existing structure within a branch of six departments, each with their own Head was altered and reduced to two departments,
to increase efficiency, improve communication and reduce costs.
The new branch structure clearly separated the functions into a front and back office with the front office responsible for direct contact with the client in terms of sales, marketing and client relations and the back office responsible for the approval and registration of the loan.
The 27 branches were then divided into regions allowing for the appointment of new Regional Managers who would each be responsible for between 2 and 4 branches. Once the branches were structured the Head Office was then also re-aligned according to the needs of the branches.
Gaining control of arrears was key to the Programme and “The 4-Step-Recovery- Process” was quickly introduced to speed up the recovery process. This also resulted in the formation of a new data base for the control, reporting and collection of arrears and the bank was able to consolidate all its arrears and loans at risk.
For the first time it was possible to measure the exact arrears, loans at risk, loans at legal and delinquent loans. Recovery targets were then set for every branch to achieve on a weekly basis.
An Insolvency team was created at Head Office with responsibility to follow the required legal steps prior to a loan being written-off as unrecoverable debt and to ensure that that the maximum Rand value owed to the bank was recovered as per the S.A legal system.
The most fundamental change which took place was the introduction of a new role; the Sales and Account Manager (SAM) into the branches.
The SAM’s had the responsibility to pro-actively source new business for the branches and to maintain relationships with their existing clients. Activity levels and results were planned and new presentation material prepared.
The bank historically had a very low fees and service charges policy believing that this provided a competitive edge. However, in-depth analysis showed that the bank was losing revenue on many transactions.
Following a client feedback session a new set of fees and service charges were introduced to all products.
Even after implementation the bank was still the lowest in the market for their fees and service charges.
Across all three-phases benefits were achieved and agreed of R505 million per annum.