This article first appeared in The Edge Malaysia Weekly, on March 7 - 13, 2016.

STEERING a bank through some of the toughest times Malaysia has seen in a while can be daunting. But it’s a challenge that Alliance Financial Group Bhd (AFG) CEO Joel Kornreich relishes.

The 49-year-old Belgian is not one to be easily ruffled, having had his banking skills tested in far more tumultuous markets like Greece and Spain post the 2008/09 global financial crisis.

“There are markets where it’s much harder to operate than Malaysia,” Kornreich divulges in his first media interview since taking the helm about a year ago.

“You know, it’s easy to see things in a very short term and to be worried by the turbulence. But if you see the longer term, this is not a very sharp [down] cycle. This is not 1997 or 2008. I’m reasonably optimistic but I do recognise that this is going to be a tough year because [the turbulence] just has to work its way through the system.”

Kornreich has notched up over 24 years of banking experience in a host of diverse and sometimes difficult markets, mostly in the area of consumer banking. It is probably this experience that makes him the best man for the job now, analysts say.

The bulk of Kornreich’s banking career has been with US banking giant Citigroup. Prior to taking on the top job at AFG, he was the country business manager for Citi’s global consumer group in South Korea. And before that, he managed Citi’s consumer businesses in Indonesia, Russia, Spain, Belgium and Greece. He was once Citi’s retail banking head in Singapore as well as its Asia-Pacific marketing director.

“Malaysia is actually a good market. It’s got good balance — rational regulators that have clear, open dialogue [with the banks]. The economy, frankly, is quite resilient. Yes, there are ups and downs but I’ve seen real crises and this is not anywhere near what you can go through. I was in Spain in 2009 and I can tell you this is a very different environment. I was responsible for Greece at the same time and it was very, very different,” he says.

He recalls his days in Spain — a time when the unemployment rate in the country was a jarring 26%.

“I was with Citibank and I was tasked with turning around the bank in Spain, Belgium and Greece. At the time, Citi had split into Citi Corp and Citi Holdings. Citi Holdings was the part that was being either wound down or sold or managed through the cycle so that it would get better and then subsequently be sold. This was the case for Belgium and Spain and, to some extent, Greece as well. That was the mission for two years.”

Having completed the mission, he was then sent to Indonesia.

“I was in Indonesia from 2011 to 2013, where we faced a different set of problems. Then I went to Korea.

“Russia was also very interesting because I was there between 2006 and 2009. In 2008, Russia went through a crisis not too dissimilar to what it’s going through now, and with a very rapid devaluation of the currency and a very high outflow of local currency. What we’ve seen in Malaysia is actually a very mild version of the same thing.”

So, what has he learnt from the various markets he has worked in?

“For one, the value of risk management and compliance. Basically, you need to make sure that you have a stable platform to work from.

“And two, as part of risk management, you have to be a bit paranoid. Everybody’s a genius in good times but what differentiates quality is when you go through tough times. You need to constantly evaluate the possibility that things will get tougher and how to deal with that. You do this with stress-testing, make sure that you are efficient, and that your balance sheet works well.

“Third, is the importance of quality in people. You need to aim for the highest quality possible. The cost is less important than the quality.

“Finally, of paramount importance, are facts — that is, research and analytics. Do your homework. There’s a huge difference between implementing an idea ‘kind of’ or ‘in principle’ and hope that it will go well, and really doing your homework. There’s a huge difference in the outcome.”

On the third lesson — quality in people — Kornreich goes on to elaborate that he is keen on employees who embrace the group’s strategy, work well together and are excited by change. When he came on board, AFG had lost several key management people for various reasons. They included head of business banking Steve Miller, who had to go back to the US; head of consumer banking Aaron Loo, who moved on to a rival bank; and head of group corporate strategy and development Amarjeet Kaur, who Kornreich says decided to retire.

He has since hired, among others, Jeff Tham as corporate and commercial head, and Suparman Kusuma as consumer banking head.

“Personally, I view it as positive when people come in with new perspective and question things. It’s always good to have a balance between stability with teams that like to work together and to have, from time to time, some renewal.”

With his team in place, Kornreich is looking forward to AFG gaining traction in Malaysia. He is confident that Malaysia’s economy, while slowing, will not crash.

“It’s not a crash but a turbulence. I wouldn’t get alarmed. The currency is stable. The commodity cycle is horrible but we can’t be too far from the bottom. People talk about China in sometimes worried tones but at the end of the day, the Chinese economy is adding Malaysia and Singapore every day to its size, and that’s not small. That’s pretty big.”

“By the way, no one can predict correctly how things will pan out. This is why you need to be as well equipped as possible. It’s always better to test while you’re wrong than to test while you’re right.”

Does he think Malaysia is close to reaching bottom?

“My sense is, during the course of this year, we’ll get to the bottom. I don’t think it’s very severe. It’s not completely benign like it was in 2011, 2012 or 2013, but I don’t think it’s really severe. Malaysia has a lot of opportunities and means to come out of it.

“It’s easy to talk about things in aggregate, at a higher level and with long-time horizons because you can dismiss issues by saying, ‘well, it’s a mild dip’, but at a macro level, it will resolve itself and everything will be fine.”

“For individuals, it’s not always that easy. If you’re in the middle of something and you’ve just lost your job, it doesn’t feel like a mild dip. It feels like a big issue. So, the best we can do is to try and help people through this, and to try and make sure that we’re also well equipped to deal with the bumps,” he says.

On a personal note, Kornreich has taken well to Malaysia. “My wife and I love it here,” he says, adding that it is also a good place to cultivate one of his passions. “I know it’s very unfashionable these days but I’m a stamp collector. And, actually, Malaysia is a paradise for that because there’re quite a few shops [to browse for stamps] still, which is quite rare. Most large cities don’t as everything is done over the internet.”

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