2013 | World Finance

Ahmed Kalej on mining in DRC | Gecamines | Video

Posted on October 11, 2013October 7, 2013 by World Finance

The Democratic Republic of Congo is not the easiest place to do business. But, its state owned mining company Gecamines is experiencing a reawakening of sorts. Ahmed Kalej, CEO of Gecamines, talks about some of the challenges that Gecamines has faced, as well as his role in restoring the former giant to its position as one of the most important mining companies in Africa.

World Finance: First, tell us about some of the challenges that Gecamines has faced in the past.

Ahmed Kalej: Gécamines has overcome many challenges in the past, right up to the recent past. But let us summarise some of them.

First, there is the delay in the research and exploration programme. In normal mining activity, exploration precedes exploitation. But what we find at Gécamines is that there was a significant delay in exploration, which forced Gécamines to exploit while exploration was going on. That’s like flying by instinct.

The second challenge concerns the age of the production unit. The plants are out of date; most of them date from the 60s. And in that state they cause a lot of losses, lots of down-time and ore lost, as a result of the down-time.

The third obstacle – the third challenge – is debt. Gécamines is heavily indebted, which prevents it
from floating finance on the international markets in order to secure funds for its own operations, to restart production.

And the last challenge, but not the least, is the size of the workforce. Gécamines employs more than 11,000 workers for an activity which only requires 4-5,000. There’s therefore a correspondence between the size of the workforce and the level of activity today.

“Why not? It’s an interesting challenge. Yes, there are difficulties, but it’s not impossible.”

World Finance: And what attracted you to the role of CEO at Gecamines?

Ahmed Kalej: I’d say what attracted me was the difficulty. I was born in the region where Gécamines is based, so as a child I saw it in its heyday, and I saw it founder over the course of the years. At the same time I’ve seen other mining companies establish themselves in the area, and they have developed and made money.

When I was asked to take the role I thought, “Why not? It’s an interesting challenge. Yes, there are difficulties, but it’s not impossible.” So, I accepted the challenge.

World Finance: What would you say made your approach to reviving Gecamines different, and more successful?

Ahmed Kalej: First of all, I don’t come from the mining sector. It’s a purely technical undertaking. I trained in finance and worked in the banking sector for a long time. I therefore imagined that the first thing to do was to inform myself.

That’s why, since my arrival, I’ve been engaged in discussions, speaking with the company executives at managerial level, and also with the foremen and those on the factory floor, to try to understand what happened to the company. What made this company, which was so successful, decline to such a level? And that has enabled me to establish a sort of diagnosis, which allows me to delegate, to propose solutions, in order to relaunch production and all its functions.

“A completely restored Gécamines could be a positive influence on the reputation of the Democratic Republic of Congo”

World Finance: As you say, you have a completely different background, so how do you feel your experience informed your approach?

Ahmed Kalej: My past in banking means that I think very analytically, and it has equipped me with rigorous, results-focused management principles. And this background has allowed me to tackle the great challenge at the level of the business, has allowed me to approach it with a style that goes straight to the problem, and to find the solutions that are needed in order for us to relaunch production.

World Finance: So how do you see the future of Gecamines, and what are some of your key objectives?

Ahmed Kalej: Of course I see a successful future for Geecamines, otherwise I wouldn’t have been accepted as CEO. The main objectives are to rapidly grow production, and, according to our strategic development plan, we should reach 100,000 tonnes of copper a year by 2015, and go beyond that, to reach 200,000 tonnes of copper a year in the medium term.

And the other key objective is to maximise profits while minimising exploitation costs, and increasing profit margins in order to be able to deliver shareholder dividends.

“We should reach 100,000 tonnes of copper a year by 2015”

World Finance: And finally, what impact do you think a fully restored Gecamines would have on the reputation of the Democratic Republic of Congo?

Ahmed Kalej: A completely rehabilitated and restored Gécamines could be a positive influence on the reputation of the Democratic Republic of Congo. In the sense that it will allow the country to regain its position among the world-leading producers of copper.

By increasing its production like this, it will also raise revenues and increase its contribution to the country’s growth rate. And if the growth rate increases, it will also allow the country to be classed among the great countries, even among the emerging economies. Why not? And that is something positive for the country’s reputation.

World Finance: Mr Kalej, thank you very much for your time.

Ahmed Kalej: Thnk you very much.

Yannick Archambault on client education | BMO Harris Private Banking | Video

Posted on October 10, 2013October 7, 2013 by World Finance

BMO Harris Private Bank has been offering high-net-worth families a full range of financial solutions for over 100 years. Yannick Archambault, COO of BMO Harris Private Banking, discusses the bank’s core values of honesty and fair dealing, and its latest programmes helping to better educate and serve its customers.

World Finance: Introduce us to BMO Harris Private Banking, and the services you offer to your clients.

Yannick Archambault: At BMO Harris Private Banking, we recognise that while wealth creates a lot of opportunities and advantages, it also brings additional responsibilities, complexities, and often some challenges. What we do at BMO Harris Private Banking, is work with families to simplify their wealth affair and their wealth plans. Every family that we work with has access to what we call a client strategy team. At the core of that team is a dedicated private banker, investment counsellor, trust offer, and also a private wealth consultant.

In addition to these four specialists, we can also bring in what we call a private wealth advisor, or one of the specialised planners to bring wealth planning to the next level.

Over the years, we’ve continued to develop and evolve the platform. In addition to credit solutions, investment solutions, and trust and SA solutions, we now have been offering I would say for the last year or two in some cases, family governance, business succession planning, philanthropy, tax consulting. We’re also looking at business planning and business succession planning, estate planning. And we also include insurance planning.

“The two key things for us are to continue to be thought leaders, and to continue to challenge the status quo”

World Finance: And private banking is a relatively competitive market, so how does BMO differentiate itself?

Yannick Archambault: Yeah, we believe that there’s two key things that we need to focus on to be able to differentiate ourselves. The first one would be challenging the status quo. And the second one would be thought leadership.

When we look at the business that we’re in, there’s three key areas that we like to focus on to understand better the macro trends. And also to gain a better understanding into the goals and objectives of our clients.

The first one would be complexity, the second one would be gaining a better understanding of demographics and the changes of demographics, and the third one would be globalisation.

So if we take the first theme of complexity. There is an abundance of choice, an abundance of information, and abundance also of providers and solutions. So working with the families to demystify, to simplify, that complexity, would be one of the key themes.

Second one would be the changing demographics. So, for us to have a better understanding and a very good understanding of our clients. And our target segment. You know, understanding the evolution of the demographics.

The third theme would be globalisation. More and more clients have access to financial assets that are cross-border. They also have personal affairs that are cross-border. So it’s helping and working with clients to have access to diversification by market, by currency, by jurisdiction, and also by asset class.

World Finance: You’ve talked in the past about your commitment to educating clients on wealth management – have there been any new additions to the programmes that you offer?

Yannick Archambault: So, seven years ago we launched financial fluency and financial focus. Which was focused on demystifying and simplifying credit investment and basic planning solutions.

In the last year or two we’ve continued to develop and increase the offering in terms of education series. We’ve added the art series. And that’s basically a workshop that enables and helps clients better understand the business of collecting art collections and managing art collections, and the auction process that goes with that.

The second addition in terms of seminars would be the creating good will. And that’s working with families in terms of will planning, identifying key values with regards to money. Also talking to them about legacy. And what that might represent for them.

And then the third one would be our product Wealth Group Education seminars, which is catered more to the ultra-high-net-worth. So, working with those families in terms of workshops, bringing in some guest speakers. And we attempt to look at family governance, managing a family business, and the multi-dimensions that are required there.

“We have focused on demystifying and simplifying credit investment and basic planning solutions”

World Finance: So tell us about the other recent developments at BMO.

Yannick Archambault: Sure! And there’s probably like, five, that I’d like to highlight. One would be… call it the creation, or evolution, of what we call BMO Global Private Banking. And that’s essentially a stronger partnership and collaboration between Canada, the US, and Asia, where we’re looking to leverage the capabilities, leverage the knowledge and leverage the ideas that would be found in each of the markets.

The second one would be the new cane strategy. So, working with BMO China, and some of our other partners over in Asia, identifying and working with families that have an intent on moving to Canada, or to the US. And helping them better plan the move.

The third one would be linked to open architecture. So continuing to work with BMO Global Asset Management, to look for top class money managers.

And the fourth one would be client segmentation. I mentioned the client strategy teams a little earlier on, so it’s taking the client strategy teams and adapting them to different client segments, creating client strategy teams that can go a mile deep in terms of the understanding of each of those segments.

And then finally the last one would be continuing to leverage the partnership that we have within BMO Financial Group, to leverage the entire capabilities. So, working closely with our partners and commercial, corporate finance, call it, capital markets, and also asset management. And that’s to be able to provide clients with the entire capabilities of BMO Financial Group.

World Finance: And finally, give us your outlook for the private banking division at BMO.

Yannick Archambault: I think the outlook is very positive. I think we’ve built a very strong business model, we’ve also built a strong brand, and we have a very strong reputation. I also look at the work we’ve done on our client experience programme, client surveys on a yearly basis come out very favourably, so very strong from that perspective. And also from the employee experience. Every year we survey our employees to make sure that the environment is a challenging environment, and also an interesting and fun environment, and the surveys come out positive.

So if you look at the work that we’ve been doing, I think the two key things for us, for the future, are to continue to be thought leaders, and to continue to challenge the status quo.

World Finance: Yannick, thank you.

Yannick Archambault: Thank you.

Carlos Hank González on Mexico | Banco Interacciones

Posted on October 7, 2013October 9, 2013 by World Finance

Mexico President Enrique Peña Nieto’s ‘Pacto por Mexico’ means the country should see faster and easier reforms in the next few years that it has for decades. Carlos Hank González, President of Banco Interacciones, outlines the three key reforms that have been made, the impact they have had on the economy, and the business case for the $300bn programme of infrastructure spending that has been promised over the next six years.

World Finance: Tell us about the reforms, and how they’ve affected Mexico’s economic performance.

Carlos Hank González: The recent reforms… well, first of all, let me tell you that the reforms are now creating a lot of excitement in Mexico, because they can really make a big break through for the country.

The recent reforms that have been made already, two of them are the most important.

First, the education reform, which can be a big change for Mexico in the long run. We needed that for a long time, and I think it was a very good choice by President Peña, so I think it will be a big game changer in the long run.

And the second reform which will have results very fast is the banking reform. And it’s mainly focused into having better credits, better loans for the people, for the businesses, and at cheaper prices. And as you know, if banks are lending, it means growth for the country. So we’re expecting big things, and we should also have other reforms passed during the year, which should really set a bigger growth rate for Mexico.

“The Mexican banking industry is still growing at a very aggressive rate. We’re ready for Basel III”

World Finance: And if we look at the banking reform in some more detail, what is this hoping to achieve?

Carlos Hank González: What it’s hoping to achieve is what I was telling you, it’s to achieve more loans at a cheaper price. And what the government is doing is, through the government, what they’re trying or proposing to is to give guarantees to the banks in order for the banks to make safer loans.

And we have to make those credits cheaper. So, the result, what we’re looking for, is for the businesses, for the people, to be able to get better choices of loans, better choices of credits, and at better prices.

World Finance: So what other challenges are Mexico’s banks facing today?

Carlos Hank González: We’re facing many challenges – as you know, the Mexican banking industry is still growing at a very aggressive rate. We have very safe banks; for example we’re ready to go into Basel III, we have very good balance sheets at most of the banks, and I think the biggest challenges are that we need to give more access to the people and to our services.

Not more than 10 percent of our population has access to banking services, so we don’t only face a lot of challenges, but we face a lot of opportunities in order for the banks to keep growing in Mexico.

“Infrastructure is the key for a country to stay competitive. $300bn in investments will do a lot.”

World Finance: The president has also announced a $300bn programme of infrastructure investment over the next six years, so why is this needed?

Carlos Hank González: Very important. I think infrastructure is the key for a country to stay competitive. If we don’t have the infrastructure: airports, ports, highways, dams, whatever; if we don’t have the infrastructure in order to compete with the world’s countries, we’re going to stay behind. And that’s something that’s been happening to Mexico.

If we look at Mexico: the position that it holds in the world economically, we’re way far behind in the position that we hold in infrastructure investments. So, I think the announcement that the president made is something that has us very excited in Mexico. $300bn in investments will do a lot. He talked about airports, about new ports, about getting better highways, and that should make Mexico more competitive for sure.

World Finance: Finally, Interacciones has a history of working with the government on these projects, so you are expecting the phone call pretty soon, I guess?

Carlos Hank González: We have a lot of experience in infrastructure, that’s for sure. This year Banco Interacciones is 20 years old, and one of our main niches that we have specialised in since the first year was infrastructure. We have developed a very specific strategy in financing and investing in infrastructure projects as I mentioned, all types of projects, and mainly the private projects that are partnered with the government.

We did for example, last year, we financed the first PPP project, which is private and government projects, which financed a museum for example. Which is the first time that has been done in Latin America. So, we’re very excited about what the president has announced. We are ready for the challenge, and we’re ready to work with Mexico on that.

World Finance: Carlos, thank you.

Carlos Hank González: Thank you very much Nick, it’s been a pleasure.

Barry McQuain and Kobi Dorenbush on offshore services | Caledonian Group | Video

Posted on October 4, 2013January 30, 2014 by World Finance

Headquartered in the Cayman Islands, with locations around the Americas, Caledonian Group offers a breadth of financial services to both high-net-worth individuals and institutional clients. Barry McQuain and Kobi Dorenbush, joint CEOs of Caledonian Group, discuss the services they offer, the benefits and challenges of operating in the Cayman Islands, and the outlook for offshore financial service centres.

World Finance: Kobi, introduce us to Caledonian Group and the services you offer to your clients.

Kobi Dorenbush: Caledonian was founded in 1970, and over the years it’s grown substantially. Today we’re over 120 employees in four countries around the world. If you look at all the assets that we work with, based on deposit custody, trust and administration, we’re working with about $30bn in assets today.

About two years ago, our partnership group acquired Caledonian Group from its founding family, and since that time we’ve been refocusing the business to four key areas.

The first is fiduciary services, which include incorporations both in the British Virgin Islands and the Cayman Islands, trust services and directorship services. We also provide securities brokerage and custody. We provide welath management services ot our high net-worth clients around the world. But our core business is banking. Caledonian Bank is the only privately-owned Class A bank in the Cayman Islands, that focuses exclusively on high-net-worth individuals, international business and institutional clients.

“The Cayman Islands is the same as any other global financial centre. It’s just our weather is a little bit better”

World Finance: You’re based in the Cayman Islands, so what challenges does this present?

Berry McQuain: Well, I think many jurisdictions have challenges, particularly after the crisis in 2008. All financial centres. Actually, Cayman has quite a few strengths. We’re in the eastern timezone, close to quite a bit of wealth, and quite a bit of business in the US. Geographically we’re an easy plane flight from about 12 other cities on a daily basis. In terms of assets, the Cayman Islands is the fifth-largest financial centre in the world. And that is due primarily to the expertise and the experience that has developed in the Cayman Islands over the last 40 years.

I think perception is one of the challenges that we face, in that, in the Cayman Islands we’re all out with our feet in the sand, doing business in-between surfing and good waves and diving. Which – is true sometimes. But the reality is, we run a global, conservative business. Banking, accounting, financial needs. The same as any other global financial centre. It’s just our weather is a little bit better.

World Finance: Kobi, but there are benefits you’re able to take advantage of as well.

Kobi Dorenbush: Sure, I mean, first of all, it’s very easy to get clients to come and visit us in the Cayman Islands around December, January, February. But really, the Cayman Islands has a number of advantages that we look to. Cayman is well known for its tax neutrality of course, but there’s also the advantage of being regulatory neutral.

What I mean by that is that, the Cayman Islands does not impose any personal or corporate income tax. There’s no capital gains tax, there’s no inheritance tax, there’s no property tax. Also, the Cayman Islands doesn’t impose any significant regulatory hurdles on doing business, both within the Cayman Islands and from the Cayman Islands.

What that means for our clients is that they can come to the Cayman Islands, set up their businesses, and then go forth throughout the rest of the world and engage in international commerce without being hampered or restricted by the regulations or taxes from the Cayman Islands.

“Lawyers, bankers, dealmakers, investment managers, all choose the Cayman Islands because the experience and the expertise is there”

World Finance: And Barry, the Cayman Islands is known as a domicile for hedge funds; tell us about this.

Berry McQuain: That’s right. There are over 10,000 hedge funds which are domiciled in the Cayman Islands, making the Cayman Islands larger than all other jurisdictions combined. The primary reason for this is the availability of a professional body of expertise. These are the lawyers, the bankers, the dealmakers, and the hedge fund investment managers, who have all chosen the Cayman Islands because the experience and the expertise is there.

World Finance: And the captive insurance industry has been particularly successful, why do you think this is?

Berry McQuain: The growth is great. In the past year, the growth is probably in the range of almost 30 percent year over year. The Cayman Islands is the second-largest globally, but the largest in terms of healthcare captives. Last year’s premiums were about $12bn on $88bn of assets, so it’s a sizeable business.

The primary reason for choosing an offshore jurisdiction such as the Cayman Islands has to do with the experts that are available, and the regulatory framework which allows flexibility when guiding and managing a captive.

World Finance: And finally, Kobi, there are questions over the sustainability of offshore financial services centres, so what’s the outlook as you see it?

Kobi Dorenbush: The question of sustainability really comes up largely due to what I think is the popular media presenting a very stylised impression of the Cayman Islands to sell a novel, or to sell tickets to a movie. The truth about the Cayman Islands is that doing business there is very much like doing business anywhere else, with the exception of the good weather and the beach.

In reality, the sustainability of the Cayman Islands is very positive. We’re very bullish on the future of the industry, and the offshore markets generally. We’ve seen a significant increase in business over the last few years. I think that’s largely due to the major economies around the world slowly coming out of recession. And I think that what you can see, or what we expect to see, is that as the onshore markets tend to put more restrictions on doing business, and put up more barriers to doing business, capital will find its way to that place that is more neutral, that place that is more willing to accept investment and they will… more business will find its way to the offshore centres.

World Finance: Kobi, Barry, thank you

Barry McQuain: Thank you.

Kobi Dorenbush: Thank you.

Rohan Courtney on UCG energy | Clean Coal Ltd | Video

Posted on October 2, 2013October 4, 2013 by World Finance

Coal mining is a messy and expensive business to dig out something that we’re simply going to burn. So why bother? Can’t we just burn it where it is? Well, we can: it’s called underground coal gasification (UCG), and it’s not a new idea. But it is the new panacea for Britain’s energy needs. Rohan Courtney from Clean Coal Ltd discusses the technology and economics of underground coal gasification, the potential for UCG reserves in the UK and around the world, and addresses the environmental concerns around the technology.

World Finance: Let’s start if you would with a brief explanation of how the technology works for underground coal gasification.

Rohan Courtney: It’s all done underground. 500m, 1km down, a long way underground. So, from the surface, a long way. So, you’ve got a coal seam, a lovely coal seam. It’s probably surrounded by rock, okay? You drill two wells. The first well is to ignite – everyone gets so frightened about ignite, but you’re talking about converting, you know, by pressure, this coal into gas.

The other well has the synthetic gas coming up the other well. So, what you’re doing is, everything underground. So it’s very simple, a very simple process.

“UCG has the potential to provide energy for hundreds of years”

World Finance: I mentioned that it’s not a new idea, what is it recently that’s made it an economically viable energy solution?

Rohan Courtney: The high cost of oil – oil has increased and increased and increased in terms of the problem that all oil companies have in finding more oil. So therefore they go from the low-hanging fruit to the most difficult.

UCG on the other hand, of course, is quite the opposite. We’re starting this now – even though it’s been around for 100 years – the real activity is now. So actually, what you’re finding is you’re going for the low-hanging fruit. It’s unmineable coal that you’re looking for. And also it’s security of supply, it’s all those things that you really want in terms of the activity for energy.

I know people are very concerned about, you know, the way that their planet should be used. But at the same time we need energy.

World Finance: It’s not just the energy industry that’s interested in this synthetic gas, it does have other uses?

Rohan Courtney: Well it’s not just power, it’s not just electricity. It’s also used for fertiliser, it’s used for liquid fuels, there’s many other reasons that you use syngas.

“Our job, my job, is to explain it. What we do at Clean Coal is to have public exhibitions, we explain everything we do.”

World Finance: So as you say, oil prices are going up. Your operational costs and your capital costs as well are cheaper. What are the challenges that you face?

Rohan Courtney: Public perception. We’ve lost confidence in government, we’ve lost confidence in energy companies. And so rightly, the man in the street thinks – what are you doing? You know, burning coal underground? Our job, my job, is to explain it. What we do at Clean Coal is to have public exhibitions, we explain everything we do. And why wouldn’t you want to explain? I mean, we don’t do it under people’s houses, that’s a different thing. But it’s quite right that they ask these questions.

World Finance: One of the public perception problems that UCG has is its environmental impact, what do you say to those criticisms?

Rohan Courtney: The CO2 we capture; it stays underground. If it doesn’t stay underground then you can transport it in pipeline elsewhere. So, nothing actually goes into the atmosphere. So, environmentally, you know, the CO2 issue is dealt with, but also, more importantly, all the rubbish – all the ash and toxics and all that stuff – stays underground where it should be. So it’s a pretty clean, it’s a very clean, fuel.

World Finance: And if those perception problems can be overcome, what is the potential for UCG in the UK and around the world?

Rohan Courtney: You know, this is unmineable coal. Unmineable coal around the world is the biggest resource of the world. If you add oil, gas, solar, whatever you name it – put them all together, it still doesn’t get to coal. Unmineable coal. So, there’s no reason why anybody would want to pick a site that’s the wrong site, for example, you just have this great resource.

In the UK, as it happens, we have a huge amount under our land. We have a huge amount under the North Sea, and we have a huge amount under the Irish Sea. So, there’s a lot of potential.

Maybe the potential for energy – if you want to do it that way, in UCG – for hundreds of years.

World Finance: Rohan, thank you very much.

Rohan Courtney: My pleasure.

Dr Alex Otti on banking in Nigeria | Diamond Bank | Video

Posted on September 27, 2013January 29, 2014 by World Finance

“Must do better” was the IMF’s recent verdict on the Nigerian banking system. Many reforms were “highly commendable”, it said, but more still needs to be done to strengthen the central bank’s oversight. Dr Alex Otti, CEO of Nigeria’s Diamond Bank, discusses the challenges for Nigeria’s banking sector, the impact of the country’s dependence on oil, and his hopes for the Nigerian economy.

World Finance: What challenges still remain for Nigeria’s banking sector?

The challenges that we face today are more in line with the socioeconomic challenges that the country faces generally

Dr. Alex Otti: The challenges that we face today are more in line with the socioeconomic challenges that the country faces generally. Here we are talking about power, we are talking about order infrastructure, we are talking about challenges with data capturing, reliable data, that is not that valuable. We also have challenges with the security situation. We have challenges with the very long drawn out judicial process and we also have challenges with the security situation. We have challenges with the re-emergence of challenged-risk assets. That’s bad loads. Even though the establishment of the bad bank, AMCON, helped a great deal in soaking up the bad debts of most of the banks. As things stand today, there are chances that banks are going to face hard times again with respect to very poor quality risk assets.

World Finance: And how does Diamond Bank work to minimise the impact of these challenges?

Dr. Alex Otti: Diamond Bank has always tried to navigate the challenges irrespective of the problems that face them. One of the ways we’ve done that is, in terms of power, we’ve tried to create alternative sources like the solar and the water, and we power some of our branches without necessarily relying on public power supply or generic generators that are expensive. In terms of security, we try to partner the police and the military to ensure that our branches are secured and that our customers are also secured. In terms of data, data-ing, we, because we play very heavily in the small and medium scale enterprises and in retail banking generally, the importance of data can not be over emphasised, so what we’ve done is to partner other organisations, international organisations, like the IFC and EFInA, to help us generate data and research and analytics that will help us in taking decisions that we believe are reliable so that we can avoid bad loans, creating bad loans. We have also tried to set up a system where we also help entrepreneurs and people who play int he retail segment of the market in terms of training, in terms of providing them with other advice for services, so that’s what we’ve done and we’ve done that well.

Diamond Bank has always tried to navigate the challenges irrespective of the problems that face them

World Finance: Nigeria’s dependence on it’s energy sector leaves it highly vulnerable to oil price volatility. So how are banks protected from this?

Dr. Alex Otti: The only way to go for a bank is to also begin to think of diversification. Because the Nigerian economy itself and the managers of the economy are working very hard towards diversifying the base of the economy and this is more so where our alternative sources have developed by the US and other importers of oil today. So that they have reduced, the importer for US for instance, which used to be the largest importer of oil from Nigeria, has developed a share gas and today India has become the largest importer of oil. So for the banks, looking at funding the other parts of the economy other than oil and gas is one of the ways to protect itself.

World Finance: So the need to diversify the economy is a real one. Which sectors do you see driving this change?

Dr. Alex Otti: Nigeria is blessed with a lot of economic activities, think of agriculture and statistics has it that seventy percent of the population is employed in the agriculture segment of the economy. Even though a large chunk of that is in subsistence level. But then it has manufacturing, there is solid minerals, and transport, power also, there are so many things to find in Nigeria. I think the problem was that oil and gas took it from the oil and gas took a prominent space because of the higher oil prices. So like you rightly said, if oil prices go down then the economy will suffer so banks like ours are looking at all the sectors other than oil and gas.

[I]f oil prices go down then the economy will suffer

World Finance: What is Diamond Bank doing to support these businesses?

Dr. Alex Otti: The loan book of the bank is properly diversified. What we are doing is now to put some energy in supporting the micro and small scale enterprises to reduce the level of unemployment in the country. And also to ensure that the bank is running on on a healthy balance sheet footing.

World Finance: Finally, how do you see the economy developing over the next few years and the vision for Diamond Bank within the economy?

Dr. Alex Otti: The economy has been growing at the rate of over six percent in the last five years so in terms of GDP growth inflation has come down to single digits as of last month and it is believed that it will continue in that frame for the rest of the year. The economy has witnessed foreign revenue of about forty-eight billion dollars and that covers some eleven months of imports so we can safely say that the economy is quite healthy. What is left today is now to link the growth in the economy with developments and that is why we are encouraging support of infrastructure, agriculture, manufacturing, and other areas. So for Diamond Bank we are well positioned to take advantage of the growth that we are expecting to see over the next couple of years. Our strategy is centred on people, and we pride ourselves as having one of the best people in the economy in the bank industry today. And we have strong propositions and processes, technologically driven, that would support the growth that we aspire to see in the next couple of years. So Diamond Bank is very well positioned to take advantage of that and also to support the economy as it grows and becomes one of the power houses by the year 2020.

World Finance: Dr. Otti, Thank You

Dr. Alex Otti: Thank you very much, Nick

Alain Schmid on treasury services | Fides Treasury Services

Posted on September 25, 2013June 1, 2016 by World Finance

Fides Treasury Services is a wholly-owned subsidiary of the Credit Suisse Group, which acts as an intermediary between corporate treasurers and their banks. Alain Schmid, CEO of Fides Treasury Services, discusses the company’s ethos, the services it offers, and the impact initiatives like the Single Euro Payments Area are having on the market.

World Finance: Fides Treasury Services is a wholly-owned subsidiary of Credit Suisse Group, which acts as an intermediary between corporate treasurers and their banks. Here to discuss their company ethos and the services they offer is Alain Schmid. Alain, welcome.

Alain Schmid: Thank you.

World Finance: What kind of challenges do your clients face?

Alain Schmid: It’s important to understand what kind of clients Fides serves. We are targeting the mid- to large-sized corporates, and there are several studies that say 40-50 percent of corporate treasurers work the following way.

When they go into the office, the first task they do is get visibility on their bank accounts. So when they work with 30 banks, they have to log in to 30 internet banking tools. And then they usually use an Excel spreadsheet – they copy and paste the balances into it – and then they have to decide which cashflows have to transfer into which accounts. Then obviously they have to log in to the accounts and tools again.

At the end of the day it’s all about controlling. And you say that these processes are inefficient. It’s also prone to mistakes. And last but not least, from an audit perspective, there’s just too much manual interaction in it.

World Finance: And how can Fides help with these challenges?

Alain Schmid: Our goal at Fides is not just to improve the processes. It’s to render them obsolete. You know, connectivity is what we can do, what we’re best in.

I like to compare it a little bit to Facebook. Facebook is so important, because you have that many friends on Facebook. At Fides, our friends are the banks. We work together with almost 1,500 banks all over the world – and that’s where the leverage for the client comes in too.

World Finance: Tell us the impact that the economic downturn has had on your business.

Alain Schmid: The financial crisis hit almost every institution, all over the world. So in our business there are mostly two strategies. It’s a little bit black-and-white, but: mostly two strategies.

The first one is the one-bank strategy. You work with everything in your core bank, your absolute core bank. So the services are generally very cheap, but they are subsidised by other banking services.

Multi-banking, on the other side, is about risk-aversion, risk-diversification. And the answer provided to your first question shows there is some inefficiency to this multi-banking strategy. But Fides helps to overcome this inefficiency, and make it as efficient as the first strategy – but you can manage your risk.

World Finance: Speaking of efficiency, how do standardisation initiatives like SEPA affect your business model?

Alain Schmid: In theory, SEPA should be a very bad thing for Fides. We should be very unhappy.

Three to five years ago, everybody thought with SEPA there would be just one global – or at least one European – standard. One format in place. And it makes life so much easier for corporate treasurers.

But what we see today is that there are counter-specific flavours in place; as well as the banks, they have their own specifications. And this situation, connected with a regulatory thing, for example – in Europe you have to use SEPA by February 2014 – this combination means a huge business potential for Fides.

World Finance: Why have you decided not to offer a treasury software management tool?

Alain Schmid: As I mentioned before, we are doing what we really do best – and that’s all about connectivity. We work very closely with treasury software management providers, because it’s important to serve our clients on a full scale. And we also have some little software in place – for example, for clients to get first process efficiency gains, on a really first hand. So it’s not at all comparable to a full-fledged treasury software management system.

World Finance: And finally, what principles guide your client relationships?

Alain Schmid: It’s important to understand that a client usually implements the whole operation over several phases. And if you look into one of these phases, which could consist of first of all implementing in European banks, it’s starting with a project. And then it’s going into that project. It’s very important that Fides brings its experience into the project. Because what you usually see – just for one example – is that the project is placed within corporate treasury. And important stakeholders within the company are not involved. For example HR, regarding payments on payrolls, compensation, and also financial accounting. So we bring these topics onto the table.

After the project, you implement the solution. And obviously our relationship managers are very close to the client, to ensure that the services help to meet the goals. But obviously we want to start the second phase, because this means additional business for Fides.

World Finance: Alain, thank you.

Alain Schmid: You’re welcome, thank you as well.

Saruhan Dogan on Turkey’s capital markets | Finansinvest

Posted on September 23, 2013April 11, 2016 by World Finance

Finansinvest was incorporated in 1996, and remains a wholly-owned subsidiary of Finansbank, with its headquarters in Istanbul. One of its board members, Saruhan Dogan, discusses the recent changes in Turkey’s capital markets, the ways that Finansinvest is responding, and the future for investments in Turkey.

World Finance: So how have the capital markets in Turkey evolved over the last few years?

Saruhan Dogan: Well there has been a very significant change. Turkish capital markets have been very equity throughout the last twenty years. That’s basically because we had very high inflation, very high interest rates and debt market growth donate by the government borrowing. But in the last two years inflation and interest rates fell below to single digits. Investors started to look for better returns than treasuries in the fixed income market, and this led to a demand for corporate bonds and our house and our competitors who have been looking for corporates to raise debts in which they were interested switching from bank borrowing to capital markets. And this is creating a new market, a capital market for corporate borrowing which I believe is going to be one of the biggest and most interesting markets in Turkey, and this is going to be leading to a significant shift in short term corporate working capital borrowing. Shifting from plain vanilla bank short term loans to one to three maybe up to five years Lira corporate bonds, which is going to be a very interesting opportunity for us.

I believe is going to be one of the biggest and most interesting markets in Turkey

World Finance: These changes that have happened in the last two years. How important are they?

Saruhan Dogan: Well, they have been very important because first of all as investment banks this is really shifting our focus and our social P&L. Furthermore, equity markets have been working well in Turkey, but they also have been very volatile and our local investors, especially, have suffered from this volatility a lot. Fixed income offers a much less volatile and certain return, which our investors have so far been very happy with. So I believe that this is going to be very important new door opening for Turkish capital markets.

World Finance: So how did Finansinvest respond and position itself throughout these changes?

Saruhan Dogan: Well, they’ve been lucky enough because in 2012 we had two major deals. We’ve done the live ceremony of the year and we’ve done the largest capital market shares action in the history of our capital markets which was the secondary public offering of Halkbank, one of the very large public banks. But throughout the year our main focus has been in the dept markets and we’ve been pitching lines to raise debts in different forms and it’s been a very successful year so yes we’re still working a lot on additional products, M&A and IPOs but our focus now is definitely on the debt markets because banks are under pressure; capital, liquidity, risk. So, we believe that they will be pulling out of our less lucrative markets which is first to fall, the short term corporate landing market. This is going to be creating further opportunities for us because we will be replacing what the, sort of, the fields they are living free. So our focus has been the debt markets.

[O]ur focus now is definitely on the debt markets because banks are under pressure

World Finance: Now 2012 was a successful year for your. Talk us through some of the developments at the bank.

Saruhan Dogan: We are a very consumer retail oriented institution. Furthermore as we grow up we also focussed on SMEs. For capital markets our perspective is definitely to grow on smaller climbs. As we go smaller, you need to be a more sophisticated house, you need to have more man power to handle larger amount of tickets for smaller size but larger amounts. And that’s where our institution have been focussing as for Finansbank, now, my intention is to be one of the three largest banking institutions in Turkey by 2020. Hopefully we’ll be there. We are trying to catch up to our competition who traditionally have been larger than we are, but with our focus on the SME and commercial clients, we believe we will be there.

World Finance: So you mention your strategic vision there, also how do you see the Turkish market evolving over the next few years?

Saruhan Dogan: Next couple of years are not going to be very easy for Turkish markets, and definitely not the capital markets. Global liquidity is going to definitely be an issue and we are entering a period of elections and politics have been traditionally significant noise in Turkish markets. So the uncertainty about what’s going to happen in the political area is going to be one factor added to the uncertainties of what is going to happen to the global economic environment and sentiment. It’s not going to be easy but this is always an opportunity for us because as times get rougher clients will need more sophisticated support from their investment banks and we believe that we are well positioned to serve them. We are currently nesting because we believe that when times are tougher, it’s going to be a much less easy to go to our bank and borrow whatever you can but you will need to be more sophisticated to be able to protect yourself from the volatility in the market and to access the liquidity you need to run a business.

Next couple of years are not going to be very easy for Turkish markets

World Finance: So in the context of the global macro environment there are still opportunities?

Saruhan Dogan: It is going to be a difficult time, but you can’t just sit down and say it’s going to be difficult what are we going to do? I believe that all difficult times present significant opportunities in Turkey and FInansbank was set up in 1987, as a sort of one floor twenty-four people small bank, and now we are the fifth largest private bank in Turkey. Because we’ve managed to benefit from opportunities and Turkey presented lots of opportunities because we had many crisis. Once again we believe that we are well geared and prepared to be with our clients during these difficult days because I don’t think there is any way out of it. We are going to have a difficult time. Turkey has been one of the countries who benefited most from the abundance of liquidity in the last couple of years which also means that when liquidity goes away, we are going to be suffering. Times will be tough, but tough times call for good partnership between banks and their clients.

World Finance: Saruhan Dogan, Thank you

Saruhan Dogan: Thank you, Nick

John O’Rourke on PPPs | Plenary Group | Video

Posted on September 20, 2013September 26, 2013 by Ashton Wenborn

Taking pride in adopting a holistic approach to delivering projects, Plenary Group is an international infrastructure business with large, experienced management teams in the Americas and Asia Pacific region. John O’Rourke, Principal of Plenary Group, discusses some of their ongoing developments.

World Finance: Let’s begin with an overview if you would of the PPP markets in Australia, Canada, and the US.

John O’Rourke: Well, let’s start with Australia, which is where Plenary kind of grew up. It’s a very sophisticated, aggressive bidding market for PPPs, it always has been on both the consortia side and from a government perspective. And it probably really punches above its weight in terms of competition for a relatively small number of projects that come to the market.

Canada has been a fabulous market for us, it’s got all the same characteristics around infrastructure and the way infrastructure is procured. I think what they’ve done particularly well in Canada is that the policy commitment to PPPs has been strong, and that’s led to a very consistent pipeline of projects, and that’s allowed industry to really develop up around it. So you’re now seeing the first of the Canadian projects come into operation, and really seeing some outstanding outcomes I think coming from those projects.

The US is still prospective, we’ve followed it for a long time, but I think my North American colleagues are much more optimistic that its time is coming and there’s some momentum building around some jurisdictions, and we are keen to selectively pursue opportunities in the US market.

“In Canada, bond markets were quick to take advantage of the long duration, senior debt, lower risk opportunities that were available”

World Finance: You mentioned the similarities between the Australian and Canadian models, what are the differences in the debt and equity project finance markets there, and what lessons, if any, can they learn from each other?

John O’Rourke: I think probably a key difference that we’re seeing is around debt and the bond markets.

The Canadian market recovered very strongly post-GFC, and bond markets were quick to come back to the infrastructure space and take advantage of the long duration, senior debt, lower risk opportunities that were available. We haven’t seen the bond market come back into PPP in Australia, and at the moment there doesn’t appear to be that appetite. So we’re reliant on the bank debt market, which is OK, but it’s a market that’s limited by tenure, and therefore there’s additional risks for equity in refinancing.

So if you said what’s a key lesson, I think it’s well, what are the factors that have led to the bond market being rejuvenated in Canada, and can we apply some of those incentives and learnings in Australia and reactivate that market? I think it’s very important for the pipeline coming forward.

World Finance: So what challenges do project sponsors face in these markets?

John O’Rourke: As a project sponsor at Plenary, I think the biggest challenge is just the unrelenting commitment that’s needed to hard work across these processes. They are very complex projects, long lead times, lots of different risk issues: through the bidding phase, construction and into operations. And as a sponsor I think it’s moved way beyond the days of saying we’re here to arrange a transaction. As a sponsor your role is to provide leadership and support to a whole array of consortium partners.

But to be able to pull all that together and deliver to government in a coherent way, a single value for money bid, we invest equity in every project that we participate in. And therefore it’s not just about winning projects, it’s about making them sustainable, and making them work in the long term to deliver the investment returns. So there’s a lot of rolling up of the sleeves to bring all of that together.

“They set a bar of saying they want this facility to be ranked top 10 in the world. That is a high bar in Australian terms”

World Finance: Let’s talk about one of your actual projects then, the Victorian Comprehensive Cancer Centre. A very exciting project, very interesting; what did the state want from it, and how did Plenary Group work to achieve that?

John O’Rourke: Yeah it is a very exciting project, it was born out of the state government saying that Melbourne, the City of Melbourne, has particular strengths in healthcare and medical research, and how could it leverage those into a single cancer facility? And they had a very high aspiration, they set a bar of saying they want this facility to be ranked top 10 in the world.

That is a high bar in Australian terms. We came at that in saying well, we needed a consortium that first and foremost is going to be robust across all of the disciplines, so financially strong but also technically capable across all of the elements that are required to bring a project like that together. And I think the other important thing that we did was to bring in some creative thinking into the consortium, including people that hadn’t necessarily been involved in PPPs before, to give the project that spark that met the aspiration of the state.

World Finance: The theme of collaboration was very important for this project, how did that influence your approach?

John O’Rourke: Yeah absolutely, from the government’s perspective it is all about collaboration. They were relocating six public institutes into one facility, so the task on the consortium side was to say, how are we going to integrate that in a functional, efficient, cost-effective way? So the focus on teamwork around that, and then applying that to the government client, was really crucial.

And then I think you look at the whole and then say, again, the aspiration is high and it needs to be a really significant architectural statement. There’s a budget, we have to meet the budget, and have a finance structure around it, but the building needs to look beautiful. And I think that’s what we’ve achieved, it’s a really significant site and it’s a project that I think is going to win a lot of awards, beyond finance and PPP.

World Finance: Where is the project right now, how far down the timeline are you?

John O’Rourke: We have a target completion date at the end of 2016, so we’re about a year and a half into construction, and so far so good. It’s all on track, on time, and on budget.

“We’re very keen to see whether our skills as a sponsor can be translated into those technically challenging projects”

World Finance: And finally, looking to the future: what innovations, what projects, do you have to look forward to?

John O’Rourke: Around innovations I think an exciting development has been governments – both in Australia, and in our North American markets – looking to see whether the availability model that has been successfully applied in social infrastructure projects like the cancer centre, can also be applied in the civil space around major transport projects. Rail particularly, and road. So we’re very keen to see whether our skills as a sponsor can be translated into those technically challenging projects, but very large volume opportunities, so we’re very excited about that. And probably lastly the US, as I mentioned, our North American colleagues; the next 3-5 years is going to see some real momentum and we’re excited to pursue those.

World Finance: John, thank you very much.

John O’Rourke: Thanks Paul.

Conor McEnroy on banking in Latin America | Sudameris

Posted on September 19, 2013April 14, 2016 by World Finance

Sudameris Bank was acquired by the Abbeyfield Group in 2004, and is now the fifth-largest bank in Paraguay. With a specialism in restructuring banks post-systemic crisis, CEO Conor McEnroy shares his view on banking in Latin America: the challenges for banks, the differences between the LatAm and European models, and the outlook for Paraguay’s economy.

World Finance: So, first, tell us about your background and how you got started in banking?

Conor McEnroy: I started work for Swiss Bank Corporation which was my Alma Mater. I worked for them in all for twelve years. Wonderful training ground, comprehensive training, worked on the tutor and the mentor system and I worked with them in London, in Milan and in New York. Specifically on repairing broken banks, that experience is based out of South America. So for ten years post hyper inflation in South America banks die. They die what’s called the death of a thousand cuts, and you have to go in deep and cut almost to the bone to repair them. That’s what I did first bank by bank, and then finally system by system.

They die what’s called the death of a thousand cuts, and you have to go in deep and cut almost to the bone to repair them

World Finance: So tell us what initially drew you to Sudameris bank?

Conor McEnroy: If you frequent broken banks often enough eventually, especially if you’ve got demonstrated ability to repair them and bring them back to life, you are in clear and present danger of being offered one. I was called one day by the Union bank of Switzerland, and they told me that they had pre-screened me with Bank Intensa San Paolo in Italy, and they offered me Sudameris, which was a delicate, difficult case. At first I was a little sceptical but I went and did a due diligence. I made them an offer and they accepted.

World Finance: You’ve talked briefly about your experience of restructuring banks. Perhaps you can expand a bit on that and what experience you’ve gained?

Conor McEnroy: Key issues would be self regulation does not work. I’ll say it again, self regulation does not work. And secondly, history repeats itself; there’s always another generation ready to come and make the same mistakes as the previous generation. You have to remember, what is the purpose of a bank? What is the role of a bank in society? In the first instance, it is a safe place for you to deposit your money. There is no human right, and there is no civil right, of access to credit. You have no god given right or man given right to my money. I will lend it to you if I choose but you have no right to it. So the first responsibility and activity of a bank is not to lend money. It’s to provide a safe place for a deposit and you lend money within that context. It’s easy to lend money, it’s hard to raise deposits.

There is no human right, and there is no civil right, of access to credit

World Finance: On that theme of banking models, you’re based in Latin America. How do banks there differ from those in Europe?

Conor McEnroy: The key difference is that banks in South America are traditional, if you permit a joke, they’re the three-six-three. Pay three, lend at six, go and play golf at three o’clock. Old fashioned banking, plain vanilla banking. I believe that the downfall of banking as it’s known in Europe and the United states is driven by the issue of regulation, in particular, commercial banks being allowed to play investment bank, and investment banks being allowed to play commercial bank. And secondly, I think the great social ill that we have is the credit card, and the use that credit cards have been put to.

World Finance: And if we look at the policies being put forward by the FED and the ECB in the US and Europe. What impact is that having on the economic landscape?

Conor McEnroy: Well, whilst the banking environment in Europe and the United States are practicing this low interest rate environment, primarily to help the banks and ergo their clients since they were having a crisis along with the banks. It has a knock on effect in South America, where we don’t have these solvency issues and we’re getting a holiday. So suddenly our yields are a little bit higher than Europe or the United States so we suddenly become very attractive, we can access long term money and so we’re on a little bit of a boom in terms of development capital. Building factories, building infrastructure, at very cheap historic rates for us.

Paraguay is coming from a low base, it’s very rich country in terms of assets, natural assets and so on

World Finance: And this boom has been recognised in a recent study which puts Paraguay as the fifth fastest growing economy in the world. Do you think the growth can be sustained?

Conor McEnroy: Paraguay is coming from a low base, it’s very rich country in terms of assets, natural assets and so on. It’s a country that’s putting itself in order and having all the benefit and high growth figures that come with putting your house in order. I can certainly see it for another ten-fifteen years. I would even say thirty.

World Finance: Conor, thank you

Conor McEnroy: Thank you very much

Shehu Dikko and Mohammed Audu | Deanshanger Project Limited | Video

Posted on September 18, 2013September 9, 2013 by Ashton Wenborn

Deanshanger Project Limited is comprised of three companies that focus on all aspects of project development, finance, and investment. Its CEO Shehu Dikko, and COO Mohammed Audu, discuss some of the challenges and risks involved in infrastructure development in Nigeria.

World Finance: Shehu, first tell us about Deanshanger and what you offer your clients?

Shehu Dikko: Basically we are a project development, finance, investment, and management company, with core interests in the areas of social development, real estate, energy, agriculture, and PP projects.

At the moment we have quite a number of projects in place in the footfall of the company. What we bring to the table basically is the expertise and the diverse experience of the group, there from the Deanshanger Limited. We are coming from a diverse group from the finance world, from the project management side, from the inter-relations side, and we come together. And so, we bring a diverse experience, and above all the commitment of the group and the partners to most importantly show that whatever we do we add value.

We are involved in projects that will add value to society and to the system, above all. And to ensure we deliver our projects professionally, within the context of the specifications, and the time frame that we envisaged, and above all the budget required and in place for the project.

“One of the biggest challenges that we have is the government being able to meet their obligations”

World Finance: Mohammed, what are the risks involved with PPP projects, and what options are there to mitigate these risks?

Mohammed Audu: The framework of the PPP projects ensures that the private sector makes the initial investment, then the public sector helps the private sector to recoup this investment afterwards. One of the biggest challenges that we have is the government being able to meet their obligations. In light of the fact that there are loads of projects on the hands of the government, and they have limited resources to execute these projects.

The second issue is the issue of political risk. Back in Africa, of course you know, government policies change with governments. If the government who is in power now has encouraged PPP and these kinds of projects, and they leave power after a few years, there’s every likelihood that the policy of the next government could change. If this happens there is potential danger for PPP projects because there is no continuity. But what has been done is that the government has come up with an institution called the Infrastructure Construction Regulatory Commission.

This commission is in charge of ensuring that the government meets its financial obligations, and has provided some sort of contingent liability in their budgets. And then where there is a change of government, they ensure that the policy change is controlled in such a way that it doesn’t affect PPP projects. This has been the way that Nigeria has been able to deal with these risk factors.

World Finance: Shehu, one of your core areas of business has been in infrastructure development, tell us about some of the opportunities offered by the private sector.

Shehu Dikko: There are diverse opportunities available, certainly within the context of the Federal Capital Territory Administration. Under the present transformation agenda of the federal government of Nigeria, within the FCT is a city being developed under the federal capital of Nigeria. There are a lot of opportunities to develop the city.

Within the last 35 years or so, only around 30 percent of the city has been developed. So there are huge, huge opportunities to get the private sector involved with the public sector. In addition to that, the city has investment opportunities within the railway sector – they are trying to develop the light railway within the city of course – and other investment opportunities develop with that. Therefore what the private sector needs to do, is to come together to put their acts together to see how they can partner with the public sector, by putting out the right business case, to make the project available, realistic, get the right finance involved and in place, and also get the right technical and managerial capabilities to deliver projects.

“On the international scene, we have the risks of the foreign exchange fluctuations”

World Finance: Mohammed, if you can talk also about the challenges you’ve faced in financing local and international infrastructure development?

Mohammed Audu: The first challenge, a local challenge, is with local banks. PPP is more or less a new concept in Africa, so local banks don’t really have the capacity to understand what the framework of the PPP is, and as such, make it very difficult to put together the project and be able to fund the project.

Now, on the international scene, one of the things that we have is the risks of the foreign exchange fluctuations, because local currencies back in Africa are very volatile, and if you don’t have hedging instruments to hedge against these enormous fluctuations, it may become very difficult to fund, because it may not be profitable for the banks and the projects may potentially run into financial trouble if it’s not done. So what the Central Bank of Nigeria is doing is trying to put together a hedging instrument, you know, to mitigate against these kinds of situations, so that people can borrow money at a fixed amount even for the future.

World Finance: Mohammed, finally, what are some of the difficulties that can arise in the operation and management of PPP projects, and how do you overcome these?

Mohammed Audu: A few of the difficulties come from issues like the government trying to come together to do business with the private sector, and these are distinctly different because the culture of the public sector is different from the culture of the private sector.

What we have been able to do in this case is to hire an independent consultant on behalf of the public sector, to be able to keep up with the speed of the private sector, because if you don’t do that the process of deciding what to do in a situation might take a very long time and this may impact on the financing.

There’s one second issue which is quite important, which is the issue of resettling people who have been in an area. For instance, if you’re doing an infrastructure development like we’re doing, the people who have been there have been there for 50 or 100 years and that’s where their livelihood has been, their farmlands are there, and everything. Now having to relocate them from that place is very difficult, but what we’ve been able to do in our case is that we’ve been able to go into the community, warm up with the community, with the community leaders and everything, and employ some of them, give them jobs with the projects, and then at the same time try as much as possible to compensate them adequately for whatever trees, economic crops, and anything that is taken away from them, so that they don’t feel the pinch of having to relocate from that place. And then the government has also provided a resettlement grant for them, so those houses have been built already by the government, so what we do is aid the process of relocating them from one place to where the government has provided for them. This is how we have been able to deal with the issues.

World Finance: Mohammed, Shehu, thank you.

Mohammed, Shehu: Thank you very much, thank you.

Fathi Ben Grira on Middle East investments | MENACORP

Posted on September 17, 2013April 6, 2016 by World Finance

The Middle East and North Africa is a region of huge growth right now, with booming businesses and massive state investment. MENACORP is an investment bank specialising in the MENA region, and its CEO Fathi Ben Grira discusses the opportunities in the area, how MENACORP became the leader in stockbrokerage in the UAE, and the bullish outlook for the UAE market.

World Finance: MENACORP is based in the UAE so why is this a strategically important location?

Fathi Ben Grira: As you just said, we cover the whole Middle East and North Africa region, that’s why our company is called MENACORP. MENA standing for Middle East and North Africa. Some of our competitors chose to cover the region through Qatar, Bahrain or Egypt. These are great places to run the business, but we believe that the UAE gives us a really competitive edge compared to the other countries. First, political stability. In the region you can’t ignore the importance of this factor. Second, economical growth. With a huge wealth of the emirate of Abu Dhabi and so that strong dynamic of the economy in Dubai, that’s really the right place to be. Third, geographical position. We are at the crossroads of some of the fastest growing economies in the world and at the centre of the oil and gas reach GCC and also when I find myself at the Dubai airport, I really have the feeling to get the centre of the world, or at least the centre of the new world.

World Finance: Now you’re stock brokerage division has been enjoying remarkable results, tell us why you are a leader in this field in the UAE.

Fathi Ben Grira: In UAE, you have fifty stock brokerage forms operating on the Dubai financial market and the Abu Dhabi security exchange. So roughly you should take fifty companies each of them should have their own two percent market shares. We are far above those figures since we reached fifteen percent market share on the Dubai financial market, and eleven percent market share on the Abu Dhabi securities exchange in terms of trading value. So this brings us to the first place in terms of trading value, but also in terms of size of clients portfolio where we crossed one billion dollars. All that has been achieved thanks to the dedication of our team. We have the largest sales team in the country led by our managing director of brokerage, Mr. Nabil Al Rantisi who did an amazing job during, since he joined our company. But also thanks to the back of his finance department and IT department, strong sales force, state of the art risk management, and proper execution, that’s how we run the business and that’s why we are the number one in UAE.

World Finance: You also have other business lines including investment banking. Tell us about your focus for the next few years?

Fathi Ben Grira: The first thing we will focus on our brokerage activity to offer more products to our clients such as Forex commodities, international trading, we will cover all the markets of the MENA region to offer one single entry point on all those products. The second thing we will strengthen our practice in asset management in our case I should speak more about wealth management since our clients are mostly high net worth individuals based in the GCC. Third, investment banking, traditionally many mandates, but we will also have a strong focus on IPOs as we see a huge trend for the coming years in the UAE, especially for family owned business. And we know from the discussions we have with the market authorities with the regulators that soon they will issue a new set of regulations easing the listing rules for those family owned businesses. Finally our financial research, we focus on two page document with a lot of data, with a lot of financial ratios, and since now we cover one hundred percent of the listed companies on the MENA region, I guess our clients are happy with it.

World Finance: Several international investment banks are also based in the UAE and specifically Dubai, so how do you complete with the established names?

Fathi Ben Grira: You are right, most of them are based in the offshore zone of the Dubai international financial centre, so which means that from a legal point of view they have the statues of foreign companies. They are not an on shore company. We are an on shore company, we are one hundred percent Emirate, regulated by the local authorities so for me it’s a substantial difference, but let’s get things clear we are not here to compete against Morgan Stanley, Bank of America or HSBC, we operate on different fields, most of the time we try to cooperate with these international financial institutions each time they need a local partner to operate on shore.

World Finance: Finally, what is your outlook for the UAE economy and your role within it?

Fathi Ben Grira: I’m extremely bullish on the UAE economy. The country is doing great under the guidance of Sheikh Khalifa bin Zayed Al Nahyan who launched the vision 2030 for Abu Dhabi. The emirate of Abu Dhabi engaged huge government spendings in terms of investment infrastructures in order to totally transform the economy of the Emirate. On the Dubai side, Dubai, the city is a beacon for the whole Middle Eastern North Africa region but we know that when you leave the ambition of his highness Sheikh Mohammed bin Rashid Al Maktoum is not limited to the region. With the bid of Dubai to be the city hosting the expo 2020, his ambition is really to bring the city and the whole country, to the forefront of the international scene. And at MENACORP we are proud to be an official bid supporter for Dubai 2020. Our job is to support the vision of the leaders of the country and to make it really international financial platform, is to provide the best service we can to these institutions for their execution needs and also to promote each time we can, the country as a major financial centre.

World Finance: Fathi, Thank You

Fathi Ben Grira: Thank You.

Russell de Mel | National Development Bank | Video

Posted on September 16, 2013September 16, 2013 by Ashton Wenborn

NDB Bank has been one of the largest sources of medium and long-term project finance in Sri Lanka since 1979. In 2001, NDB entered commercial banking by acquiring ABN Amro Bank’s SL operations. Discussing the development of NDB Group is Russell de Mel, CEO of NDB Bank.

World Finance: So introduce us to NDB and describe the evolution of the company.

Russell de Mel: When we initially got into banking, we felt that being a late entrant into this sector, which is highly competitive, we would someday have to operate to a differential business model, and that there ought to be some functions that need to supplement banking. And it was capital markets that we opted for, and also supported by insurance.

So over the years, the banking segment has expanded to take on commercial banking and retail banking, from the project finance banking and SME banking that we had initially. On the capital markets side, we’ve expanded into investment banking, stockbroking and wealth management. We had an investment in insurance which we divested recently, but we still have a product offering on bancassurance.

And now we are positioned to what we always wanted to be: a one stop shop for all business and financial needs of the country, and we’ve very successfully accomplished this. And I think the times are very opportune for us to really leverage ourselves and forge ahead.

“We are unique in terms of a human resource and we position ourselves in fact as a knowledge hub”

World Finance: So amid this expansion, how have you differentiated yourselves from your competitors?

Russell de Mel: Well, we have a unique group structure as I just mentioned. The combination of banking with capital markets, and that’s supplemented and supported, ably supported, by a very unique human capital base.

On the one end we have the professional bankers, at the other end we have the high end CFAs, and in between we have lawyers, accountants, engineers, stockbrokers, wealth planners. So we feel that we are unique in terms of a human resource and we position ourselves in fact as a knowledge hub. There is quite a distinct advantage when you focus on advisory, because we feel that transaction will always follow.

Sri Lanka is emerging, and investment is very vital to promote growth, and we can play a vital role in directing the right investment into the right sectors, and providing the right advice. So we look forward to very interesting times. You know the one stop shop concept, coupled with the knowledge hub, we lead a great advantage vis-a-vis RPS.

World Finance: Against the emerging growth of Sri Lanka’s economy then, where do you place NDB, and what’s the growth story there?

Russell de Mel: All banks have a moral obligation to be an integral part of this growth phase, but the NDB Group has a bigger responsibility given our strength and core competencies.

Today Sri Lanka is planning to achieve rapid economic growth, and as I said, growth is spurred by investments: both locally and taken with a local entrepreneurs, as well as bringing the foreign investments to the country, which is much desired.

We have an investment bank in Bangladesh, we have an MOU with DBS Singapore, we have a leasing company in the Maldives. What foreign investors are looking for today is a trusted portal. Once you have an idea to start an investment or a project, the series of activities that go along with it from the conceptualisation stage to preparation of the feasibility, identifying investors, raising the finances and if anyone wants to exit to the stock market, or “play the stock market” and exit, no other entity of within our peers can offer this range of activities. And we feel that this is the cutting edge, and we are very well placed to capitalise on the emerging situations, emerging activities, and forge forward.

“All banks have a moral obligation to be an integral part of this growth phase”

World Finance: You talked earlier about developing your business lines, how important is it to merge both wealth management and capital markets with core banking?

Russell de Mel: Through our wealth management entity, we are offering the investors a range of products, because today investors are very intelligent. They know what their risk appetite is, so what we have done is coupled risk appetite with the commensurate returns, so the investor would know this is my risk appetite, with this kind of risk appetite, this is the kind of return I can expect. And then maybe if I invest on this product, and some of these products are driven online so he or she can monitor the progress the investments over a period of time.

We manage large funds, and wealth management is imaginably one of the best corporates within the NDB Group, so as I said earlier, capital markets with wealth management and insurance, insurance also has different products, we are in a position to really position NDB Group way above our peers.

“We spend a lot of time training our people and guiding them towards a group we share”

World Finance: Finally, what’s the strategic vision for NDB over the next few years?

Russell de Mel: Well, we’ve been growing ever since we were formed in 1979, in fact I’ve been very much involved in this change process, and one thing that I need to respect within the group is that when a change takes place, it’s not when the balance sheet records your investment but it’s when the people and the people believes in the change that the real change takes place.

So we spend a lot of time training our people and guiding them towards a group we share, and that we’ve accomplished now. When a client walks in, our vision is to help them sign one mandate which is shared right across the group, across all the products, and at the end of the month, he or she will receive one statement giving the transactions on the assets and the liabilities. This is not a far fetched dream, we started on it many years ago, we are finding the IT platform because it has to be driven by information technology, and we are heavily leveraging on IT, so that is my dream and I am sure that the NDB Group will be achieving this dream very soon.

World Finance: Russell, thank you.

Russell de Mel: Thank you so much Nick.

Mengxi Guo on the changing landscape of forex | OctaFX

Posted on September 13, 2013October 8, 2013 by Ashton Wenborn

OctaFX provides forex brokerage services to its clients in over 100 countries around the world. Talking about the current market realities and some of the latest developments at OctaFX is Mengxi Guo, Head of the Asia Pacific Region Development Department at OctaFX.

World Finance: The European crisis has obviously had an impact on the forex industry, what challenges has it presented for you?

Mengxi Guo: Well, more liquidity and more volatility, and also prices involved both for brokers and traders. It might also cause some kind of panic attack, especially when things were not that good in Spain, Greece and Cyprus. So our challenge was, and remains, to let our customers know that things are eventually going to be all right.

“The STP broker models that we implemented make our clients risk-covered”

World Finance: And how do you plan to overcome these challenges?

Mengxi Guo: When we talk about the crisis, actually it’s not a big problem, because the STP broker models that we implemented make our clients risk-covered and also off-setting the interim bad market, so we have our clients completely backed up. And also, when we talk about risks for one it might be threatened, but for others it might be the great opportunities, and there are lots of success stories in the market.

World Finance: Opportunities you mentioned there, so tell us about the opportunity for the Asian financial market.

Mengxi Guo: Well, I can talk for ages about that, and we know that the world has become indeed global, and more and more people are interested in investment, including the forex trading, so now we are getting huge demand from the Asian market, and we expect rapidly to fulfil this market.

“It’s no longer the world of single traders”

World Finance: Tell us about some of the ways that you think the foreign exchange industry and market has changed over the last few years.

Mengxi Guo: There is a remarkable trend for networking betraying traders, and now it’s possible for them to communicate and also learn from each other, with mobile and also some stationary devices, at any time and at anywhere and also at high speed. And this really changes the whole picture because now the interaction becomes truly instant and the time of grosses has gone. So it has never been so easy to share the trading signals and also even some particular trades.

So now we are in 2013, and it’s no longer the world of single traders. It’s an immense global community, so we are actually doing our best to make sure that all the opportunities are explored and offered to our clients. And I can’t tell you how excited I am about the future of forex trading in general.

World Finance: So what do you say to those who doubt the viability of forex as an investment option?

Mengxi Guo: We need that indeed, the forex trading is quite risky, so there’s no doubt that it must be taken very seriously and responsibly. But on the other hand, we know the forex market is the most volatile market in the world, and lots of success stories speak for themselves. So we think that reasonable, responsible, and rational forex trading might be one of the best investment options that our clients ever had. So actually, I can’t hardly imagine some other investment approaches are as global or as easily accessible to our clients as forex trading.

“In general customer services are becoming better and better”

World Finance: Finally then, what are some of the latest developments at OctaFX?

Mengxi Guo: The industry is growing rapidly and now we see the customer service levels has reached its height, which is really hard to imagine five years ago. In general the customer services are becoming better and better, and also more easily accessible to our clients. So I’m really proud to work in brokerage which is at the cutting edge of these changes.

World Finance: Mengxi, thank you.

Mengxi Guo: Thank you Nick.

Luxembourg agrees to a more open framework

Posted on September 13, 2013August 6, 2019 by

On April 13, 2013, Luxembourg’s Prime Minister Jean-Claude Juncker announced the path that would be followed by the country in the coming years. It was no surprise for many financial institutions and private banks – notably the members of Luxembourg’s Association des Banques et Banquiers and the Private Banking Group. The Prime Minister announced that the country’s banks will automatically exchange information, defining a new framework for the financial sector and putting an end to the lack of fiscal transparency that came from the strict respect of banking secrecy.

Expected for a long time, this new framework aims to create a level playing field among EU members. It highlights the need for Luxembourg’s financial sector to speed up its adaption of reporting tools, its creation of specialised niches and its development of new markets in order to remain competitive – especially in its private banking activities.

This major change was met with mixed anticipation within the sector. Those players that do not adapt themselves to the new context may lack competitiveness and the relevant know-how – especially those still convinced their services are of sufficient quality or in their product ranges’ continued competitiveness. The new environment will oblige all players to not only be competitive in the Luxembourg market, but also in the local markets of our cross-border clients.

Fundamental change
Competences and various servicing models do exist, and the majority of the players have been transforming themselves for years. Nevertheless, it is common sense to understand that this decision will deeply impact the Luxembourg private banking world. There is little doubt to us that this fundamental change will lead to a consolidation within the private banking sector and to certain players leaving the market.

Considerable investments are required to continuously adapt to regulatory changes (FATCA, EU directives, etc.) and to the new needs of our clients, especially with regards to their reporting needs (e.g. tax certificates or consolidation tools). Foreign authorities also have increasing demands and require investment in this area. This is a significant burden, especially for the smaller players, who may lack the critical mass to make this a profitable investment.

Taking this into account (and noting the necessity of important investments), it is interesting to be part of a bigger structure in which synergies and economies of scale can be developed. If banks are to make their Luxembourg private banking activities viable in the long term, they must:
– Capitalise on being part of a larger group, and benefit from the lessons learned and sharing of best practices;
– Allocate the costs and benefits on different business lines, or even in different countries (e.g. tax reporting for non-residents);
– Take advantage of synergies at a local level and with other group entities;
– Question their service model and adapt it to their clients’ needs;
– Adopt a global client approach and an open architecture model, rather than confining themselves to a focused activity.

Competing in today’s environment
Luxembourg is a key market for ING and our presence includes all the business areas of a universal bank. With 800 employees, all activities are covered: ranging from an important domestic retail segment to private banking and commercial banking activities fully supported by our internal dealing room.

Today, ING Luxembourg is the main contributor to the group’s results after the Netherlands, Belgium and Germany. The ING brand is well known around the world (the group is present in more than 40 countries) and strongly associated with retail banking, corporate banking and insurance activities. In many countries nevertheless, private banking wealth management is not what characterises ING if asking people on the street.

Private banking is relatively new to Luxembourg. It was developed 15 years ago and, by the end of 2012, assets under management had reached $8bn. Over the last five years, ING Private Banking Luxembourg’s first-mover advantage, with regards to anticipating the evolution of the regulatory context, has helped it grow its client asset base. The drivers of this growth were a fundamental change of mindset and the recognition of the need to diversify revenue sources.

On the one hand, we have prepared our traditional client base for the new regulatory context by changing mindsets and creating individualised wealth plans. In order to cope with our clients’ needs, we have reinforced our wealth planning team, partnered with external experts and invested to develop our capability to deliver tax certificates for different markets (e.g. Belgium, France and the Netherlands).

These efforts were recognised with the Euromoney 2011 award Best Bank in Luxembourg in Terms of Tax Services, and by the fact that, for the last two years, we have maintained a stable EAB despite a difficult environment of continuously changing EU regulations. Continuous efforts to help clients comply with their home countries’ regulations have led to a great level of satisfaction, and long-term confidence and loyalty.

On the other hand, we have recognised the need to move beyond our traditional client base. Our strategy in this respect is articulated around three points: the development of new geographical markets (e.g. Russia, Romania, Morocco); the study and implementation of services for specific niches of clientele, such as ultra-high-net-worth individuals (UHNWI); and the creation and development of synergies within Luxembourg – mainly working with corporate banking in order to tackle the corporate and private wealth of our clients, but also with other group entities in Europe.

We are striving to be known as the centre of excellence for cross-border private banking services within the ING Group. To finance this strategy when there is pressure on costs and margins, we have an appointed revenue manager, and improved commercial discipline and operational efficiency.

As such, we were largely able to avoid unilateral fee increases at the expense of our existing clientele. Customer centricity and operational excellence are two pillars in achieving our vision of becoming the most recommended bank by 2015. In order to be able to assess our positioning, we have launched various ‘net promoter score’ surveys. Results have clearly indicated that we are at the forefront with regards to operational excellence, as compared to our direct competitors.

Service and organisational model
In order to serve our clientele efficiently and successfully, we have designed our commercial forces into a dual model. Our commercial forces work hand-in-hand with our internal team of experts in wealth and estate planning, and with our front office lending manager.

ING Luxembourg has developed a two-layer segmentation model. The first one is dedicated to the residence country of our clientele, the second segment being based on the assets under management. Since its creation, the upper segment of UHNWI clientele has represented one third of our total private banking assets and approximately 200 clients. It is currently the fastest growing segment. Nevertheless, the model is not relevant if each segment does not benefit from a specific service and product offering. That is why – if all clients make use of the expertise of our wealth planners, who focus on civil, tax and succession planning issues – UHNWI can also benefit from the expertise of our lending manager, especially in terms of cross-border real estate financing and yacht financing.

Expected for a long time, this new framework aims to create a level playing field among the EU members

UHNWI also need convenient banking services. Playing its role as a universal bank, ING was a first mover among the local universal banks when it came to online banking. My ING is our online banking service, which enables our clients to check the balance of their accounts and cards at any time and from any computer or smartphone.

ING Private Banking Luxembourg covers Luxembourg, Belgium, France and The Netherlands, through dedicated desks. At the same time, we focus on the development of new markets through our international desk, currently covering Romania and Russia, which translates our clear focus on the East European countries. We also specifically serve UK residents or UK residents non-domiciled, German, Spanish, Italian and Moroccan clients. The idea behind the development is to leverage potential synergies with other ING Group entities in these countries in a business-to-business approach, providing them with our securities platform and booking centre services. Alternatively, this can be done in a classic business-to-consumer approach with dedicated teams consisting of private bankers and relationship managers.

ING Private Banking Luxembourg can also count on the expertise of its portfolio management team, responsible for providing discretionary and advisory management services. Portfolio managers have on average more than 17 years of experience in their field and are supported in their daily work by risk managers, middle officers and IT specialists. Each portfolio manager has specific responsibilities in the follow-up of equities, bonds or funds.

The philosophy behind this service model is also directly linked to the three pillars of the ING Group: customer centricity, operational excellence and top employer. In order to achieve this and to become the most recommended private bank by 2015, we also focus on the ongoing training and up-scaling of the competences of our people. All our private bankers, have – on top of their academic degrees – followed complementary high level certifying programmes in tax or wealth planning and finance. Our dedicated team for UHNWI are CFA charter holders or have other highly valued certifications.

Open architecture
ING Luxembourg has developed an enlarged service model in addition to its existing portfolio of management services. Our new approach also includes patrimonium and wealth management.

As such, a dedicated team of jurists specialised in cross-border issues has been developed internally – in order to cope with various client needs related to topics such as applicable civil laws, fiscal law and succession planning. The main objective is of course not to replace the legal opinion provided by law firms, but to be able to assess the situation of a particular individual and to help them in finding the most appropriate solution/structure in an open architecture model (in case of re-composed families, protection of heirs, cross-border successions, structuring of private and professional wealth).

There is little doubt to us that this fundamental change will lead to a consolidation within the private banking sector and to certain players leaving the market

Such an open architecture model also exists with regards to the financial assets management services. Our model is indeed open to external asset management companies, external funds (through ALTIS SA, a Luxembourg-based ING subsidiary and specialised in third party funds selection) and family offices.

Consequently, ING Private Banking Luxembourg, in close collaboration with our corporate and institutional segment, is able to plug our securities and reporting platform directly to the IT system of the external service provider. This allows them to have direct access to the markets and to develop global reporting tools for the clientele.

Although we have not currently developed a specific internal service offering dedicated philanthropy expertise, we have actively sensitised our private bankers to philanthropy services (in order to be able to understand our clients’ needs and to provide them with appropriate solutions). We have decided to work in an open architecture model capitalising on the expertise of renowned actors on the field such as The Luxembourg Foundation and the Fondation Roi Baudouin in Belgium.

Brand recognition
In order to develop our image and to convince people that it is worthwhile working with ING Private Banking Luxembourg, we clearly focus on the development of our network of professionals, capitalising on our strong technical expertise, our open model and our integrated value chain. We sponsor dedicated events – not only in Luxembourg but also internationally – focusing on UHNWI/HNWI passions such as art, polo (sponsorship of the Polo Club de Chantilly in France), or classic cars. The creation of the brand name itself, ING Private Banking, also inspires our clients with confidence.

Regarding brand recognition, private banking has the ambition to develop a sub-brand to ING that clearly wants to put forward the complementary added value with the ING trademark that is very often reframed to retail.

Accessibility is all about capitalising on the ING know-how to create a more modern no-nonsense private bank, which uses modern technology at the disposal of our clients at any moment. It is also about pro-activity and anticipation in our client approach.

Last but not least, we spend a very meaningful amount of money and days to enable our private banking staff to be trained in hard and soft skills. We are known for our competences and the quality of our advice. In order to create this, we want our people to follow predefined courses with exams and a reward system if they succeed, but also to be replaced if they don’t. These high standards are fully recognised by the clients and by our competitors. It also means that our compliance behaviour is on top of the market, but we believe that this is the only way forward for sustainable growth.

We may say that our environment is changing and that we want to lead this change. We have the fiduciary duty to our clients to protect and manage their wealth in a responsible way.

Taking into account the fast-changing environment, our stakeholders, clients, shareholders and partners expect a capability to transform, expand and generate the private bankers of tomorrow, while implementing new tools and integrating new technologies in order to be able to meet their expectations. In our opinion, the key success factor for a universal bank is to generate a competitive edge compared to the boutiques or mono-private banking players. It is vital for a bank to put in place dedicated specialised teams with a clear vision of focusing on internal synergies between the different business lines.