Reporting by the Banking Insight Editorial Team

This issue, we switch gears with Rizleen Mokhtar, CB, whose vigour and insights mark our most candid interview to date. From her views on ‘credit as an art’ to discussing Impostor Syndrome, the former Executive Vice President of Credit Risk at AmBank Group is seemingly unfazed by challenges or a forthright question. She exemplifies the fighting spirit that keeps the engine of finance going and banking reinventing itself.

Q: Rising from the frontlines of banking to helming the Wholesale Credit Risk division at AmBank, could you set the stage for us and talk about some turning points in your career?

I joined AmBank in the late 1980s as an executive trainee in the Corporate Banking (CB) division, and in those days there was no dedicated client relationship unit, credit evaluation unit, credit risk units, etc.

Banking officers did everything practically end-to-end, from engaging customers to sniffing out potential deals or offering financial solutions; conducting credit evaluation and running sensitivity scenarios on cash flow models; preparing submissions for credit approval; right through to preparation of offer letters, reviewing facility documentation, and ensuring conditions are in order for loan disbursement. This gave me a holistic learning experience, and enabled me to understand the building blocks and appreciate each facet of the corporate banking process flow.

In those early days, I was fortunate to have been given the opportunity to tackle a wide range of customer profiles, starting with both private- and public-owned midsized firms to eventually the larger top-tier corporate entities, covering businesses in the manufacturing, trading, construction, property development, and energy sectors.

In between, I was also given the opportunity to handle financial institution groups, which gave me a totally different credit experience. One of the turning points in my career came sometime in 2000 when the CB division was restructured into separate, dedicated functions – the ‘frontliners’ and the credit specialists. I was assigned to the latter (known at the time as credit risk management unit or CRMU) which initially was still under the purview of the business line managing director. Eventually, CRMU was hived off and became part of Group Risk Management (GRM) under the purview of a chief risk officer. This came on the heels of the Asian Financial Crisis, at a time when regulators, both global and domestic, were strengthening risk management practices in financial institutions.

Now a risk manager, I came to have better understanding of the intent of the recommendations under the Basel Accords, in particular the relationship between credit and capital adequacy in ensuring sustainability of the financial institution. This gave me a different perspective when analysing credit proposals. It was no longer just about short-term gratification, it had to also be about long-term sustainable growth.

The other character-shaping event was when I was assigned to handle derivatives documentation. A major component of the International Swaps and Derivatives Association (ISDA) master agreements was negotiating credit and credit-related terms, and the foremost thing to bear in mind was that this was not a lender-borrower relationship. This was a negotiation between two counterparties (in most cases at the time, between two financial institutions in swap transactions) and the one with the better credit standing had stronger bargaining power.

I learnt very quickly that the big, foreign banks thought very highly of themselves, had experienced ISDA negotiators, and there was great disparity between the terms applicable to each side. It was a personal victory for me when I managed to negotiate with two large foreign banks through their teams out of Hong Kong for equal footing on some very crucial close-out terms. This experience really honed my critical thinking skills and made me ‘tougher’.

Q: Delving a little deeper, you’ve said that your experience in managing customer relationships helped shape your unique perspective on risk. What’s your thought process when balancing credit risk against the need to grow client relationships – your secret sauce, if you will.

When I review a credit, whether as an analyst or approver, my first thought would be whether the client profile or proposition suits the bank’s risk appetite and if not, what would have to be addressed to make the transaction bankable and equitable from a risk-return perspective to both the bank and the customer. Credit risk managers tend to make the mistake of trying to eliminate or avoid risks.

There is a quote from French writer, Luc de Clapiers: “There are those who are so scrupulously afraid of doing wrong that they seldom venture to do anything.” In essence, risk managers in their zeal to protect the bank’s position are often guilty of trying to tighten the terms of the transaction to the extent that it may not make sense for a customer to accept the offer.

It is therefore important for credit evaluators to understand the risk profile of the customer, determine the acceptable level of risk that the bank is prepared to take and ultimately craft the structure, terms and pricing that would make sense for both lender and borrower.

In any type of business, hazards are always present. A good credit risk manager would be able to identify the hazards or risks that can be controlled and offer appropriate mitigation solutions; while for those risks that cannot be controlled, whether such risks can be rationally accepted and the contingency plan if all hell breaks loose!

Credit is obviously an art – not a science – and there is no ‘one size fits all’ formula. The ideal credit risk managers are those who (i) have strong credit fundamentals; (ii) can balance risk mitigation with sound commercial understanding of the customer and transaction; (iii) can spot opportunities which the relationship manager, or even the customer, overlooked; and (iv) have the flexibility to adapt to constantly evolving circumstances.

Q: As a member of the AICB Industry Curriculum Committee’s (ICC) Business Credit module, you share the responsibility of ensuring the Chartered Banker programme is continuously and rigorously enhanced to reflect current industry priorities. Could you share some of the Committee’s work thus far?

The ICC’s mandate is to review the existing curriculum for relevance with current regulatory environment and best practices. As an example, old-school banking placed great importance on collateral whereas in today’s world, regulators require that emphasis be given to repayment capacity under various stress scenarios.

With this in mind, the ICC members had robust discussions and debates on the weightages assigned to the various topics in the syllabus, both in terms of the study material content as well as the examination questions. There was the need to incorporate more recent financial accounting standards, particularly those that pertain to risk identification, risk measurement, and classification of impairment, as well as remove references to regulations which were obsolete and update with new directives, standards, and guidelines issued by the regulatory authorities.

We also looked at the relevance of the case studies presented in the curriculum and suggested inclusion of lessons learnt from more recent events in the banking and financial sector, both global and domestic.

Q: European Central Bank President Christine Lagarde has said, “There are still too few women in management worldwide, particularly in the economic and financial spheres, including central banks.” How do we broaden support for more women leaders in the sector?

I was actually surprised to find that among the G20 countries, there was only one female central bank governor. Same can be said of the EU, where all the heads of central banks are men except for Mdm Lagarde who is President of the European Central Bank. Among the 10 ASEAN nations, only two central banks – Malaysia and Vietnam – are currently helmed by a woman. In Malaysia, there is no lack of strong, competent, visionary women in the banking sector. The fact that we have had central bankers (twice, in fact), chairpersons, and members of the board of directors as well as chief executive officers who are women attest to this. So, I am of the view that the structural support and opportunities for women to elevate to leadership positions exist in the industry, although there is always room for improvement.

Sometimes a woman can be her own worst enemy – not for lack of ambition or expertise but lack of confidence in her own potential. You may have heard of ‘Impostor Syndrome’, the internalised fear or self-doubt of one’s own skills and accomplishments. More women than men tend to have this problem, preventing them from seizing the possibility of progress. Incidentally, I was made to understand that some women are able to thrive in leadership positions despite having Impostor Syndrome. What it took for them to overcome this and be effective leaders is something I really want to read and learn more about!

There is also something to be said about forming effective informal networks, a ‘sisterhood’ if you will, of like-minded, progressive women – providing a support system to boost morale, overcome insecurities and open doors to new horizons. Like this phrase made famous by US Vice President Kamala Harris, “..standing on the shoulders of those that came before..”.

Men also have a role to play. You know that saying, “Behind every successful man, there is a strong woman.” I believe the converse is also true. It takes a strong man to recognise a woman’s potential for advancement and not be insecure of it. It takes an even stronger man to influence changes in the culture of the workplace, tear down the walls of ‘boys clubs’, and give a woman not only a seat at the table but the right to have her views heard and respected. It is disheartening when male colleagues chide a woman who puts forth a contrarian view as ‘being difficult’, whereas when a man does so, he is merely ‘speaking his mind’. I conclude this by quoting the late and infamous US Supreme Court Justice Ruth Bader Ginsburg: “Women belong in all places where decisions are made.”

Q: Each era celebrates its own leadership archetype – there was Lee Iacocca in the 80s and we’ve Elon Musk today. But in reality, building a team calls for authenticity – it isn’t about who you aspire to be, it’s shaped by who you are. What does your style of leadership look like?

This is a difficult one for me to answer, simply because I believe I am still evolving and have not yet found that one distinct leadership style that I can call my own. I do agree that building a team calls for authenticity – without it, a leader will only get people who follow out of duty or obligation; not because they are inspired, motivated or influenced by you.

When I was first thrust into the position to head a department, I found myself in the awkward situation of having to lead my peers, some even a whole generation older! I established early on that the ‘boss-subordinate’ dynamic was not going to work. Realising that some of them had more experience and depth than I did in certain areas of banking, I decided to go the ‘captain of the team’ route, i.e leverage on their strengths, learn from them, and have rigorous discussion on the merits and demerits of a case to arrive at a consensus.

I was honest with them – I didn’t profess to know everything nor have a solution to every problem. I engaged my team to bounce off ideas and held brainstorming sessions so that we can put everything on the table for consideration. I also made sure that they know I had their backs, would not ‘throw them under the bus’, and was frank with them on matters on which we disagreed.

As a result, I had this camaraderie with my direct reports and I really believe there was trust and mutual respect on both sides.

Having said this, I am of the view there is no one optimal leadership style. When I have to deal with a more junior, less-experienced team/staff, my style and how I interact with them would be different.

It doesn’t make me less authentic. It’s about knowing the right tool to use in the appropriate situation.