The Chief Executive Officer of Standard Chartered Bank Botswana, Mr. Moatlhodi Lekaukau, on Wednesday resigned from the troubled bank, leaving more questions than answer.

The resignation of Mr. Lekaukau comes amid allegations of improper behaviour by the bank in handling one of their client’s accounts, possible investigation by the regulator and falling profits. However the board chairman, Prof. Bojosi Botlhogile, and Mr. Lekaukau have denied insinuations that the CEO was pushed out in the face of the emerging scandal. Instead they offered that Mr. Lekaukau, a chartered accountant and former partner at PriceWater House Coopers, will be pursuing other interests.

Mr. Lekaukau’s departure marks five years since he walked through the banking corridors in early 2012 at the time when the economy was recovering following a slump in diamond production caused by subdued global demand. The bank that year recorded a 0.9% decline in profit despite strong set of results that showed slight increase in net interest income and a reduction in bad debt impairment charge. Also contained in the 2012 final year results is a small clue that offers a rare view in what has come to haunt the bank, its obsession with strengthening the balance sheet and its affinity for the risky yet lucrative mining sector.

Standard Chartered Bank Botswana under Mr. Moatlhodi continued with its plans and risky appetite to be the choice financier for the mining industry.  It seemed to have been working out for them as the bank’s corporate segment recorded an impressive growth of about 21%. Furthermore, during that period the bank opened two branches (Gaborone and Francistown) and also introduced the first of its kind in the local banking industry, a 24-hour full service call centre. Despite the 0.9% decline in profit that year, the bank paid P200 million in dividends.

The year 2013 was definitely a good one for the Bank and its CEO. In that period, for the first time ever, the bank exceeded the P1 billion revenue mark. And not only that, the bank was hitting good numbers: profit before tax increased by 28%, total impairment decreased by 57%, and of course the bank emphasised that the balance sheet continues to strengthen with loans to customers increasing by 26% and deposits from non-bank customers increasing  by 8%. For that period, the bank paid P192.9 million in dividends.

The momentum slowed in 2014 when Standard Chartered Botswana recorded profit after tax of P319.184, a decline of o.74% from the previous period. However the bank was satisfied with growth in total income that was 7% above that of 2013, with the balance sheet growing by 28% on the back of advances to customers that grew by 29%. The bank also managed to reduce impairment by 94%. The bank was once more generous with the dividend payout that amounted to P213 million.

Now this is where things started going downhill for the bank. In 2015 delivered its worst set of results in terms of bottom line. The bank’s profit after tax declined from P319.1 million to P47.3 million. The group’s performance in 2015 was impacted by the challenging trading environment characterised by subdued macroeconomic conditions, low interest rates and significant decline in market liquidity. Operating income was down by 18% from 2014 reflecting the challenging market conditions.

In 2014, Bank of Botswana had imposed a two year moratorium on banking fees and charges, effectively starving off banks from increasing their revenues through hiking charges and fees. In what shocked shareholders and investors, the oldest bank in the country announced that the shocking decline in profit should not be much of concern. In fact, the bank said part of the reason operating income went down was because they took a strategic management decisions to strengthen the balance sheet at the expense of short term performance. And for all those efforts the balance sheet only grew by 3%.

While the shocking drop in profit was downplayed, the pressure in the bank was becoming more palpable. Other banks were posting declining profits but not as steep as Standard Chartered Bank Botswana. Then details started to emerge, painting a picture of a bank caught off guard by the commodity slump in 2015. The commodity slump in 2015 was a result of waning global demand that resulted in lower productions and lower prices.

The bank which has set out to be a financier of choice in the mining industry found itself in a vulnerable position. The bank was later to admit that part of the fall in profit was a result of one of their top corporate client that was having a difficult time financing its loan following the slump in diamond production and sales. As a sign of pressure mounted for the bank, they announced that to maintain capital resilience of the bank and to manage growth expectations in the near future, the Board will consider a dividend declaration in 2016.

In the last know financial performance, the bank’s interim profit for the half year ended June 2016 dropped by 5% from the corresponding period, sparking fresh fears that the bank’s 2016 year end results might be as dismal as the previous year if not worse. The results were once more impacted by a 42% surge on net impairments losses  that resulted in the bank posting profit before tax of P80.1 million, while the profit after tax fell to P63 million.

Despite the fall in profit, the bank remained bullish: they had grown the balance sheet by 3% and they were bolstered by a significant earnings recovery in the first half of the year culminating in first half earnings exceeding total earnings for 2015. However, the optimism was now tampered with caution. The bank announced that it has further strengthened its capital position, tightened risk tolerance and established more robust controls as it continues to focus on driving initiatives to realise long term sustainable gains. During the period, P90 million dividends were declared and paid.

With recovery in sight, the bank had the rug pulled under their feet when the government announced that BCL Group will be put under provisional liquidation. The announcement created a flurry of chatter and confusion, with no doubt that this liquidation is going to have a serious impact on the economy. As it is normally the case, the financial services industry soon found itself affected by the contagion.

When the noise settled and calm returned, Standard Charted Bank Botswana dropped a bombshell: they had significant exposure to the BCL group and it was likely to impact their financial performance for 2016. With the hopes of a quick recovery up in smoke, the company’s stock took a drubbing at the Botswana Stock Exchange (BSE).

The shareholders who were used to large and consistent payouts were rattled and they acted. When 2015 came to an end, Standard Chartered Bank Botswana’s stock plunged by 11%. The selloff extended to 2016 as the stock became one of the worst performers, plummeting by as much as 30%. The stock is now trading at P7.60 after losing 1.92% in the past two months.

Mr. Lekaukau’s exit could not have come at a worse time, prompting analyst to ask questions if he was pushed out over dismal results or the man is simply pursuing greener pastures. Those who contend he is pushed out point to the bank’s past performances and the falling stock price while those who are convinced he is jumping shipping are saying he actually took longer than expected given the frustrations of the job. Industry insiders and those familiar with the matter say the banking industry in Botswana is controlled from outside by parent companies (Botswana has no indigenous commercial bank).

While banking heavyweights like First National Bank Botswana and Barclays Bank Botswana also answer to superiors outside the country, Mr. Lekaukau was in different circumstances altogether. FNBB and Barclays Botswana are owned by parent companies that are based in South Africa hence understand the African business dynamics and can respond quickly to opportunities and threats.

As for Standard Chartered Bank Botswana, despite being the oldest bank in Botswana, the shots came from Kenya to Dubai, Singapore and London. Standard Chartered Bank Plc, the global banking group, has most of the time treated its Botswana operations as an extension of the Kenya operations. This has made it difficult for the Botswana operations to be innovative and responsive.

But for now, Mr. Lekaukau’s resignation will be the least of the bank’s worries after the bank found itself embroiled in a scandal that is expected to unveil the shadowy operations of the banking sector. The bank is being accused by Mr. Majakathata Pheko of Oseg Group for playing fast and loose with his businesses accounts. Mr. Pheko has made damning allegations that the bank was negligent and gave unauthorised overdrafts.

Furthermore, the businessman says the bank’s handling of the issue bordered on clear violations of the bank’s own internal controls and runs afoul of the regulations set by the regulatory body. Still on that, Mr. Pheko has written to the central bank to intervene while in the meantime he has lodged a lawsuit against the bank.