As the Managing Director and CFO of Gulf International Bank, Stephen Williams will go down in history as the leader who transformed the bank from a struggling institution to a fully diversified wholesale commercial and investment giant that it is today
VISIONARY: Stephen Williams, Managing Director and Chief Financial Officer of Gulf International Bank, Bahrain
TWENTY-SIX YEARS ago, Stephen Williams decided to leave his post as an audit manager at Peat, Marwick, Mitchell & Co – the renowned accounting firm that was founded in London in 1870 and that would go on to form the ‘P’ in KPMG.
He had no idea that he was about to become what people used to call a ‘company man’. He certainly had no idea that he was destined to become the central player in an astonishing corporate disaster.
He joined Gulf International Bank (GIB) when it was essentially an investment vehicle for the GCC government’s petro-dollars in the emerging markets of Latin America. That company bears little resemblance to the giant it is today, managing assets worth in excess of $18 billion.
Tackling new challenges
Many people would wonder why somebody would remain with the same firm for twenty-six years. Surely you’d hit a ceiling? Surely you’d get bored? Surely you’d benefit from tackling new challenges?
For Williams, his journey at GIB has been anything but a smooth ride and it has never failed to present him with the kind of challenges that occasionally leave him lying awake at night. He has seen the business change entirely, from a small investment vehicle to a fully diversified wholesale commercial and investment bank.
As the Managing Director and Chief Financial Officer of GIB – and with twenty-six years under his belt – Williams has a depth of understanding that very few CFO’s have of the firms they work for. He speaks in a youthful tone and still seems to be very excited about his role.
He’s proud of the journey he has been on and defiantly bullish about the benefits of remaining with the same company for so long.
“I’ve seen this bank and the entire region evolve over more than two decades. I’ve had four different jobs within this company and have been a key part of the management team through very good times and some pretty appalling ones too,” he says, adding “Frankly, I don’t feel as if I have been with the same company at all. The name above the door is the same but that is pretty much where it ends.”
Opportunities in the Gulf
Back in 1984, the economies of the Gulf hardly registered on the global economic radar. For a young audit trainee from London to accept the offer of a move to a place that few people were familiar with – and to leave the London boom of the 1980’s behind – was unusual. For Williams, it was a no-brainer.
“I knew that there was money in the Gulf and I sensed – instinctively I guess – that there would be huge opportunities for me to move in to the kind of job that I really wanted. I was also keen to explore the wider world and when my bosses at Peat, Marwick, Mitchell & Co asked me to move to Bahrain, I didn’t think twice,” the CFO says.
So, with only four years experience under his belt, the Institute of Chartered Accountants in England and Wales (ICAEW)-qualified accountant jumped on a plane and headed to Bahrain.
Since then he has never looked back. When asked what his greatest achievement has been at GIB, he doesn’t hesitate to start talking about his team. This says a lot about a man who turned this company around in the aftermath of the Great Recession and pulled it back from the brink of bankruptcy. He talks warmly and fondly of the large team of seventy young professionals that he has put together.
“It gives me enormous pleasure to work with intelligent and ambitious young people. They will be, after all, the people who will fill my shoes once I have gone. The finance team is made up primarily of Bahraini nationals, who are all without question, ambitious, dedicated and passionate people. I am genuinely thrilled to have brought all of these people together over the past ten years.”
Near financial meltdown
Managing a finance team is, of course, one of the most important parts of a CFO’s job. But many view it as a soft skill. Williams has steered GIB through major acquisitions and a near financial meltdown but without a team that he could believe in, he isn’t so sure that he and the wider company could have pulled through.
At the time of the recession, GIB came very close to becoming another Lehman Brothers. It had a portfolio of $5 billion of toxic assets and securities, bad debts that promised to destroy the company.
“We had a business model that was completely broken. We were over-leveraged. We were unable to fund ourselves without assistance, our cost base was unsustainable and we had become reliant on short-term wholesale funding. The whole model was totally and utterly broken. It was, frankly, a disaster. Let me tell you, it’s not pleasant sitting in the CFO’s chair when the world falls apart and you realise that your assets are essentially worthless.”
The bank was ultimately saved by its shareholders, who purchased the banks toxic debts, wiping the slate clean. The biggest buyer of these debts was the government of Saudi Arabia. These were turbulent times for the global economy and times during which it became incredibly important for Williams to keep his cool and steer the company through some very difficult changes.
“We had a new board of directors, a new CEO – and this was all at the beginning of 2009. Prior to this the firm was owned by various GCC governments (each owning various chunks) but when Saudi stepped in, it increased its share from 56 per cent to 97 per cent.”
“In a very short space of time, the company’s entire management, ownership and financial position were turned upside down. Having your hands on the wheel during those weeks and months was incredibly exhilarating – occasionally terrifying – but exhilarating all the same. It was a moment in history.”
Saving bank from ruin
It may seem strange in a hard capitalist environment such as investment banking to see a huge bank saved by a friendly regional government. The truth is, it’s exactly the same kind of action that has been used time and again all over the world since the crisis began. It’s certainly not dissimilar to the nationalisation of RBS by the UK’s former Prime Minister Gordon Brown, a move that shocked the business world.
Williams was almost the only member of the executive management team to stay with the bank throughout the recession. This is perhaps because he was the man who developed the very idea of selling the toxic debts, thus recapitalising the bank and saving it from ruin. The challenge then of course, became perhaps even greater.
“Securing the bank’s future not only rested on getting rid of bad debts, recapitalisation and bringing in a new management team but it also meant persuading the bank’s new owners that there was value in keeping GIB as a going concern, rather than folding it in to the Saudi government’s other portfolio of banks.”
Williams and his new CEO were tasked with the job of developing a platform that could take the bank forward.
“The government of Saudi clearly needed to know that there was a strategic advantage in keeping GIB and for us that meant ripping everything up and starting from scratch. It meant drilling down in to the DNA of the bank to investigate how it could give value back to the government of Saudi and – crucially – give them the confidence we all needed for them to continue to invest in GIB’s future.”
Stable funding programme
This all sounds like pretty scary stuff but for Williams it meant getting back to the basics of what makes an investment bank profitable. He and his new colleagues set about stripping the bank down.
“First of all we had to try to get the bank on a stable footing – that meant reducing leverage, ending our proprietary trading activity, we had to reduce our loan portfolio (reducing lending) and also address the funding of the bank – we put in place a long term borrowing programme and then addressed the cost base. That was difficult of course; it meant we had to make redundancies. This was a complete shock to the system for the bank – the company had always had a family atmosphere and it was very difficult to manage that kind of change. Maintaining morale was obviously tough. Sadly, it had to be done.”
By the end of 2010, everything was in place.
“We had a bank that had a more acceptable leverage, a stable funding programme, we had a good quality loan business and we were also reducing the poor quality loans out of the portfolio. Crucially, we identified a new strategic direction for the organisation and were able to re-position the bank with a new USP, giving it a unique place in the market.”
These moves are all crucial to the stabilisation of any bank that is undergoing such major transformations. Williams seems very relaxed when talking about each step of this difficult process and clearly understands the importance of managing change internally.
Stronger financial place
PASSING THE BATON: “It gives me enormous pleasure to work with intelligent and ambitious young people. They will be, after all, the people who will fill my shoes once I have gone.”
Moreover, his decisions have enabled the bank to secure the support and confidence of external stakeholders. At the beginning of 2012 the bank’s Fitch Viability rating was upgraded, in recognition that it was in a stronger financial place.
“The bank was, by 2011, returning profit. In the background we were working on a sustainable growth (and survival) strategy that rested on a stable and cost-effective funding base – largely because our profits were being terribly affected by the cost of long-term borrowing. Essentially, we had worked tirelessly to drive forward a root and branch reform of the bank’s operational structure. I’m grateful that we were given the breathing space to make such moves and obviously delighted that they have paid off.”
The unique position that the bank’s new ownership gave it was the ability to open unlimited retail banks inside Saudi Arabia – a privilege not open to non-Saudi banks. Crucially, unlike Saudi-only banks (banks that are based in Saudi) – because GIB is based in Bahrain – it has the unusual ability to also operate freely outside of Saudi, thus opening up new opportunities for growth right across the region. It is the only Saudi-backed, pan-GCC bank with a growing presence across the entire market, including within Saudi Arabia.
Working in such close alliance with the new CEO has given Williams great satisfaction and enormous strategic experience. He has, quite literally, been at the very fore of saving the bank’s skin – a rare feat for any CFO.
Investing time in training
When asked how his health suffered during this period, Williams laughs. He describes himself as a ‘glass half full kind of person’ with a positive outlook. It seems almost too good to be true – almost unreal that a CFO should experience such an extreme professional experience – without having an emotional breakdown.
When pressed on whether or not there was ever a day when he thought of throwing it in, or that the bank might not survive, he is characteristically chirpy.
“When you’re in the middle of it – when you’re so busy, there’s just no time to look around to second-guess outcomes. You’re knee deep in sorting it out, motivating the team and working with your stakeholders. And as I say, I’m just one of those people who tend to see the positive. It never crossed my mind that things could go wrong.”
Williams talks in great depth about leadership and the importance of investing time and effort in training and supporting his team. He also talks with genuine emotion about how difficult it was to make redundancies during the tough times. He’s clearly a man who is able to make those tough calls – for the survival of the business and the confidence of shareholders and other key stakeholders.
“I look back at those times and I recall explaining to people how important it was to make redundancies – it’s hard. But I look back and I know it was the right thing to do. I am still in touch with many of those people and lots of them have gone on to achieve success elsewhere. The fact is, it’s all part of being an effective leader. I didn’t enjoy it but I know it was the right thing to do, for everybody involved.”
Think the unthinkable
He’s somebody who talks rather easily about being a visionary. Although I suspect he is somebody who stumbled across the need to be a visionary by accident.
“When you’re in the middle of a major crisis, you sink or swim. I have learnt that in those times – perhaps in all times – there is no idea, no matter how insane it may seem, that should be immediately dismissed. We had to make some extraordinary suggestions in order to make this business survive. I never thought I’d find myself making these decisions – but this was a moment in history that taught me that most valuable of lessons: to think the unthinkable. It’s a great lesson.”
“Deciding to off-load $5 billion of toxic debts to a government shareholder has not only allowed us to survive but it has taken us down a path that would otherwise not have appeared before us. We now sit in a truly unique space in the market. That gives me and every single stakeholder great confidence in our company’s future.”
