Year: 2015

As Russia’s legal problems mount up, is it judgement day for Putin?

Posted on by Ashton Wenborn

To read the international press, one would think that the last two years have been good ones for Russian President Vladimir Putin. His campaign in Ukraine has largely achieved its main goals; Russia has wrested control of Crimea and destabilised large portions of the rest of the country. Plunging oil prices may have wreaked havoc on Russia’s finances, but so far Putin’s popularity seems unaffected.

But a long stream of little-remarked-upon legal defeats could have a dramatic impact on Putin’s fortunes. In 2014, for example, the European Court of Human Rights (ECHR) delivered 129 judgments against Russia, and in January, the Council of Europe deprived Russia of its voting rights for its violations of international law. As rulings pile up, they are starting to pose a threat to Russia’s international standing, its financial health, and Putin himself.

129

ECHR judgements against Russia in 2014

Judgment days
The rulings have not been merely symbolic. In July 2014, the Permanent Court for Arbitration in The Hague ordered Russia to pay $50bn to former shareholders of the oil company Yukos for having illegally bankrupted the firm and distributed its assets to Rosneft, a state-owned producer. At its peak in 2003, Yukos was valued at $30bn. The judgment is the largest ever awarded by the arbitration court, and it cannot be appealed. France and Belgium have begun seizing Russian assets to enforce the judgment.

In a separate case, in June 2014 the ECHR ordered Russia to pay Yukos’s shareholders more than $2bn “in respect of pecuniary damage”. This judgment was also the largest in that court’s history. Russia, which is in the midst of a liquidity crisis, will struggle to raise such huge sums; failure to comply, however, would jeopardise future foreign investments.

The Yukos case could be a sign of things to come. In April, the European Commission issued a Statement of Objections to Russian gas giant Gazprom, charging it with violating Europe’s antitrust laws by partitioning Central and Eastern European gas markets, forbidding cross-border resale, and closing its pipelines to third parties. Gazprom faces a fine of 10 percent of its revenues, which totalled $177bn in its last fiscal year. Already struggling with low gas prices, increased competition, and now falling production Gazprom will be hard pressed to come up with the necessary funds without sacrificing urgent infrastructure projects.

Criminal conduct
Russia is also coming under increased pressure regarding alleged criminal conduct. Indeed, it recently vetoed a Security Council resolution, sought by Malaysia, Ukraine, the Netherlands, Australia, and Belgium, to establish a criminal tribunal to prosecute those responsible for the downing of Malaysia Airlines Flight 17 in July 2014 over rebel-occupied territory in Eastern Ukraine.

Evidence gathered by the five countries points to a missile fired from a Russian BUK system operated by a Russian crew.

Were Russian guilt for the downing of Malaysia Airlines Flight 17 to be established, Putin’s depiction of his country as a bystander in the Ukrainian conflict would be exposed as a lie. In any case, Russia’s veto in the Security Council is a tacit admission of guilt, opening the door for the Netherlands – which lost the most citizens in the attack – to push for additional sanctions.

Meanwhile, in July 2014, the UK reinstated a legal inquiry into the November 2006 polonium poisoning of Alexander Litvinenko, a former Russian state security officer who had become a UK citizen. Public hearings were held in London to identify “where responsibility for the death lies”. The inquiry devoted particular attention to a Russian law passed in March 2006 allowing the state to kill those, such as Litvinenko, deemed to jeopardise national security.

A ruling by a British court that the Russian government ordered or abetted the murder of Litvinenko would have far-reaching consequences. The verdict would lend credibility to other charges of criminality, such as the bombing of four Russian apartment blocks in 1999 and the murders of several investigative journalists. It would also strengthen the European Parliament’s call for an independent international investigation of the murder of the Russian opposition political leader, former-Deputy Prime Minister Boris Nemtsov, and bolster his family’s petition for an international investigation.

The annexation of Crimea
Finally, while Russia has established de facto control of Crimea, it is likely to find itself increasingly embroiled in legal challenges to its presence there. No credible government or international organisation accepts Russia’s description of the annexation as a legal democratic act by the Crimean people. The United Nations, the G-7, the EU, and the US all characterise it as an illegal act. In May, German Chancellor Angela Merkel described it – in Putin’s presence – as “criminal and illegal under international law”.

In June, Ukraine presented Russia with a 17-volume calculation of its losses from the annexation of Crimea, totalling nearly $90bn. Additional losses could be billed for the Russian-supported war in Southeast Ukraine, which has led to 6,000 deaths and large-scale damage to infrastructure. Russia is certain to find itself mired in years of legal battles in venues like the ECHR and the International Centre for the Settlement of Investment Disputes. These endless legal challenges will scare off investment in Crimea, requiring Russia to subsidise its occupation for years to come.

Putin has overplayed his hand. In addition to its exposure to liability for damage caused during the conflict in Ukraine, Russia faces legal penalties totalling roughly four percent of its GDP – roughly what it spends on education. Putin may have been able to bring his country’s legal system under his control, but he remains vulnerable to international rulings. With Russia too enmeshed in the international legal and financial system to cut ties and become a rogue state, its president is increasingly likely to face the consequences of his actions.

Did Gazprom gazump the competition?

The dominant gas supplier in several countries across Central and Eastern Europe, Gazprom is under investigation by the EU Commission for what it describes as “hindering competition” in the gas markets of Bulgaria, the Czech Republic, Estonia, Hungary, Latvia, Lithuania, Poland and Slovakia. In particular, the commission details the following:

“Gazprom imposes territorial restrictions in its supply agreements with wholesalers and with some industrial customers in above countries. These restrictions include export bans and clauses requiring the purchased gas to be used in a specific territory (destination clauses). Gazprom has also used other measures that prevented the cross-border flow of gas, such as obliging wholesalers to obtain Gazprom’s agreement to export gas and refusing under certain circumstances to change the location to which the gas should be delivered. The Commission considers these measures prevent the free trade of gas within the European Economic Area.”

“These territorial restrictions may result in higher gas prices and allow Gazprom to pursue an unfair pricing policy in five Member States (Bulgaria, Estonia, Latvia, Lithuania and Poland), charging prices to wholesalers that are significantly higher compared to Gazprom’s costs or to benchmark prices. These unfair prices result partly from Gazprom’s price formulae that index gas prices in supply contracts to a basket of oil product prices and have unduly favoured Gazprom over its customers.”

“Gazprom may be leveraging its dominant market position by making gas supplies to Bulgaria and Poland conditional on obtaining unrelated commitments from wholesalers concerning gas transport infrastructure. For example, gas supplies were made dependent on investments in a pipeline project promoted by Gazprom or accepting Gazprom reinforcing its control over a pipeline.”

Source: European Commission

Paul Gregory is Professor of Economics at the University of Houston

© Project Syndicate 2015

China considers new stability plans

Posted on by Ashton Wenborn

Chinese equities have faced a turbulent summer. Wild fluctuations in prices set off alarm bells in global markets, as well as forcing the Chinese government to step in, in an attempt to enforce stability. Through banning selling by major shareholders, to state agencies and state owned enterprises buying up falling stock, government efforts racked up a bill of $236bn. China now, however, has come up with a more permanent solution to its stock market swings, with plans for instituting a “circuit breaker” mechanism.

The Chinese equity market is particularly prone to panic buys and sells

The mechanism would see a temporary halt on trading whenever market price sees either a five percent bull or bear. According to the draft plans, this could only happen once a day. Further, a market index swing, up or down, of seven percent or greater would see trading closed for the rest of the day. According to state-owned news agency Xinhua, “China’s stock exchanges on Monday began soliciting public opinion on an index circuit breaker system,” and will continue to do so until September 21.

Commenting on the system, Yang Delong, Chief Strategy Analyst at the Southern Fund, said: “the A-share market has seen violent plunges recently, and with the circuit breaker mechanism investors would have a cooling period before taking irrational actions”.

The Chinese equity market is particularly prone to panic buys and sells due to being dominated by individual sellers that are more jittery and often do not consider the fundamentals of certain company stock due to a mistrust in the public financial reports of firms. Such a “circuit breaker” then, could provide much needed stability.

The Chinese government is also using tax incentives to encourage longer-term investment strategies. Any investor who holds on to a share for more than a year is to be exempt from the five percent dividend tax. Selling a month or sooner after purchase will incur a 20 percent dividend tax, while holding a share from between a month to a year will see a rate of 10 percent.

Yanis the dynamis: a look at Varoufakis’ time in power

Posted on by Ashton Wenborn

On July 5 2015, after months of tense negotiations between Greek government officials and European leaders, the Greek population voted in a historic referendum. Asked whether or not to accept certain austerity conditions and unlock bailout funds, the people of Greece overwhelmingly voted no. This, at the time, was lauded as a big victory for the Syriza Government, which called for the referendum in the first place and urged a ‘no’ vote. However, one man in the government – though pleased with the outcome – reacted in an unexpected way. The morning after the result was announced, Yanis Varoufakis announced his resignation as Minister of Finance.

Upon entering government, Varoufakis immediately became a media sensation, riding his motorcycle to meetings and appearing next to European leaders sporting an unbuttoned shirt and boots. As Suzanne Moore wrote in The Guardian, “Clearly, in the world of Eurocracy, to not wear a tie is radical. Or rude. Or both. Sometimes he wore a leather jacket. Or a Barbour, or a shirt that was perhaps a little bit too tight. He signalled simply that he was not another ‘suit’, and made the rest of them look stuffy, uptight and clonish.”

Varoufakis seemed to revel in the role he had created for himself, happy in his status as the arch-enemy of Brussels and Berlin

Varoufakis seemed to revel in the role he had created for himself, happy in his status as the arch enemy of Brussels and Berlin. In a post on his personal blog, the former minister hailed the referendum result as “a unique moment when a small European nation rose up against debt-bondage”, urging that “the splendid ‘no’ vote” be used by the Syriza-led government to secure “an agreement that involves debt restructuring, less austerity, redistribution in favour of the needy, and real reforms.”

He went on, however, to claim that this would best be achieved without him in the role of Finance Minister, adding that he had been made aware that his absence from any further negotiations would strengthen the country’s bargaining position. So, in the hope of Greece securing the best possible outcome from future talks, he, along with Prime Minister Alexis Tsapris, felt it best for him to resign immediately. “We of the left know how to act collectively, with no care for the privileges of office”, he said.

From activist to academic
Before irking the most powerful men and women in Europe, Varoufakis was a relatively obscure economist. Born to a politically active family, his father was a communist veteran of Greece’s civil war, and later an activist in the centre-left Panhellenic Socialist Movement (PASOK). At a young age, Varoufakis helped set up the youth group of PASOK, and as a teenager he developed an interest in the Irish Republican Army, supporting the Troops Out Movement, which advocated an end to British military presence in Northern Ireland.

After gaining a PhD from the University of Essex, Varoufakis went on to hold a number of teaching positions at universities around the world, before returning to his native Greece and taking up a position at the University of Athens. In the early 2000s, he made his first foray into politics, acting as advisor to George Papandreou’s PASOK government, ironically the same government that created much of the mess Varoufakis would later take on the role of trying to fix.

In late 2011, he was headhunted by Gabe Newell, CEO of Valve Software, where they were having trouble scaling up virtual economies on their platforms. This led to him being hired in 2012 as the economist-in-residence at Valve, where he researched for Steam and its virtual economy, which he detailed in a blog.

Speaking to The New Economy while at Valve in 2013, Varoufakis’ disdain for conventional economics and its practitioners, for which he would later become world famous, was already clear: “After the crash of 2008, we have no excuse to continue living in hope that economic models can be as useful to the social theorist as mathematical physics is in helping explain the universe. Economics resembles a religion with meaningless equations and fruitless statistical models.” He would later express his view on the current state of economics further in his 2013 book The Global Minotaur: America, the True Origins of the Financial Crisis and the Future of the World Economy. Prior to this, he had penned a number of other books, but the larger part of his work was academic, concerning the finer details of game theory economics, which had little readership outside of academic circles.

The Global Minotaur, which takes a long view of how the 2008 economic crisis developed over the centuries, takes aim at US hegemony and economic policies, and was printed by Zed Books, a publisher known for its left-wing output. This helped propel Varoufakis to the forefront of left-wing thinking in Europe. The premise of the book is that the US economy is reliant upon the primacy of the global economic dollar surplus. While the US enjoyed the position of the global surplus economy since becoming a debtor nation in the 1970s, a huge part of the world’s capital flows were being sucked in, leading to financialisation and the creation of various Wall Street bubbles.

Dealing with negative press
Although he never actually joined Syriza, he became one of the most familiar faces of the government it formed. In his first few days in government, the British press was ablaze with intrigue about the man meeting top UK cabinet ministers. Though generally calm and self-effacing in the spotlight, he did attract criticism for posing with his wife in a luxurious photoshoot in a French magazine – something he later regretted.

His biggest critics, however, were those he was tasked to negotiate with. Sticking to his guns over his core belief in the need for Greek debt relief, various finance ministers and other European leaders openly expressed their disdain for the motorbike-riding renegade.

Varoufakis seemed to revel in the role he had created for himself, happy in his status as the arch enemy of Brussels and Berlin. He often took to Twitter to voice his disdain for European officials; after one conference he not so subtly quoted Franklin Roosevelt, saying: “They are unanimous in their hatred of me… and I welcome their hatred.” His relationship with the German Finance Minister was particularly rocky, saying once: “We didn’t even agree to disagree.” In his resignation blog post, he boasted that he would “wear the creditors’ loathing with pride”. He maintained his maverick status to the end, giving his resignation conference in casual attire, later to be photographed in a bar drinking beer with friends.

Despite the shortness of his time in power, his personality, politics and charisma mean he will be remembered for as long as the crisis in Greece continues. With a CV consisting of various academic posts, employment by one of the largest gaming companies in the world, and a starring role in attempting to remedy the biggest crisis the EU has ever faced, Varoufakis is sure to have plenty of options for his next move. Few, however, would bet on a predictable turn.

Saudi Hollandi Bank promotes the growth of the Kingdom’s economy

Posted on by Ashton Wenborn

In recent years, the Saudi Arabian economy has begun a period of transformation. Both the government and the private sector are realigning their sights on untapped markets and industries as part of an effort to diversify the country’s oil-based economy. The result has been a fast-paced development of the state’s infrastructure and the creation of new opportunities for corporations of all shapes and size. In turn, this economic shift has had a drastic impact on the Saudi banking industry, which is in a state of expansion.

As such, banking in the country continues to go from strength to strength, being driven forward by growing confidence and recent innovations in technology. Moreover, the Saudi Government is firmly committed to driving the financial industry forward through the implementation of a new regulatory framework and support.

Even with the strides already taken in Saudi banking, there is still a great deal of the market that has not yet been reached. This is especially true because Saudi banks are still underbranched at present, particularly in the country’s most remote areas. Leading the trend in offering an expanding network and meeting evolving customer demands is Saudi Hollandi Bank (SHB), the longest-established provider of financial products in Saudi Arabia. With a focus encompassing the entire spectrum, from big organisations to individuals, SHB is at the forefront of understanding customers and providing adept solutions. World Finance spoke with the company’s CEO, Dr Bernd van Linder, about the expansion of Saudi Arabia’s financial industry and how the bank is preparing for a new economic era in the Kingdom.

Saudi Hollandi Bank

1926

Founded

1,637

Employees

56

Branches

SAR 1.82bn

Net income

SAR 65.15bn

Loans and advances

SAR 96.62bn

Total assets

Notes: Figures from year ending 2014

Tell us briefly about the recent growth of the Saudi Arabian banking industry
The Saudi Arabian economy reported 3.59 percent growth in the first quarter of this year. Combined with strong producer and consumer confidence, this growth underpins a resilient and expanding banking sector. The government’s investment in infrastructure projects and its strategy of diversifying the Kingdom’s oil-based economy is creating more opportunities for private and public sector companies as well as for individuals and their families. The Saudi banks have an important role to play here, supporting large project financing, large, small- and medium-sized enterprises (SMEs), and the growing wealth of the Kingdom’s population.

We are seeing particular growth in areas where the government is focusing its energy in supporting smaller businesses and entrepreneurs, such as SMEs, and in the encouragement of home ownership by individuals. Working in partnership with the government to provide banking services to small companies, while offering additional finance to Saudi families on top of government provided housing loans, means that the banking sector is broadening its services and deepening its impact.

How significant is personal banking for the industry’s ongoing development?
When you consider that the Kingdom is still underbranched compared to other countries, particularly in remote areas away from the major cities, the opportunity is very significant. Because of this, banks have expended their physical presence. For our part, we have grown our branch network by 20 percent over the last year and almost doubled our ATM network over the last two years. We expect this type of growth to be common across the industry in the coming years.

However, it is not just about physical presence in the retail market. The key will be to successfully integrate branch services seamlessly with other channels. Customers should expect to be able to initiate a transaction using one channel and finish it on another, without having to restart or duplicate their activities. Of course, branches will continue to play an important role in the future, but as one part of the overall customer experience rather than as the sole or even the main point of interaction.

All of this is being driven by customer demand and a growing sophistication in customer expectations, encouraged and enabled by technology. As a whole, the industry has seen significant growth in retail banking over the last year and we expect to see that trend continue.

What are the major opportunities and challenges in this area?
Clearly, with the government’s commitment to continue to invest in the economy and its support for private enterprise and families alike, we expect there to be opportunities across the whole spectrum of corporate and retail client segments. Although growth is likely to be strong in all segments, we expect it to be particularly material in the segment of SMEs. We also see an opportunity to help customers in this sector from the perspective of advice, as well as finance. Many entrepreneurs are growing their businesses fast without any previous experience so we are providing structured advisory assistance to them in addition to providing the full range of banking services.

But there are challenges. Competitive pressures are always present and margins are tightening, and we see this intensifying as every bank is recognising the potential of this market. And as technology evolves and customer expectations become more defined and sophisticated, there will be pressure on the banking industry to address these issues quickly and design new services and channels efficiently and securely.

How is SHB preparing for future changes?
We are already known as a force in corporate banking, and we will continue to expand our business with large corporates, but mindful of the trends I mentioned earlier, we have also made significant investment in our support for SMEs and individuals.

We are growing our presence in both of these areas and are proud to have already been recognised for our work through a number of awards. By focusing on providing the solutions we know these customers need to grow their own businesses or manage their personal financial assets, we aim to become the bank the Kingdom always chooses.

What is it that differentiates SHB from others in the industry?
Founded in 1926, SHB was the first bank to operate in the Kingdom and acted as the de facto central bank for some time. So a major differentiator for us is the length of our involvement supporting the Kingdom, its companies, individuals and communities. This brings with it deep knowledge and understanding of the fundamentals that drive every customer segment. We know our customers; we know their requirements, and we are able to provide solutions to meet those requirements. Our customers in turn know that Saudi Hollandi is a bank that will stand by them through economic cycles.

But we don’t rest on our laurels. We know that customers want to access the products and services they need quickly, easily and securely. So we listen to them and create ways to deepen our relationships using a mix of the latest technology, specialised customer service and streamlined processes. From extensive internet banking and our smartphone app, to more ATM services and business banking centres, our corporate, institutional, SME and individual customers can connect to us in even more convenient ways.

This is helping to build real customer loyalty and we are always looking for ways to deepen and reward this. To make our retail offerings more attractive, for example, we have a unique bank-wide rewards programme, which gives customers value at each touch point, earning points when they apply for any product or use an alternative delivery channel, such as internet banking or our mobile app. We want to give our customers something back to thank them for their usage of our products and channels.

Customer deposits, sar billions

2010

41.60

2011

44.68

2012

53.19

2013

61.87

2014

76.81

How does the country’s banking industry compare with other nations in the region?
The sheer scale of the Saudi economy, and the country itself, marks it out from its near neighbours and so poses many more opportunities for growth as well as different challenges in terms of physical reach and service provision. The government has worked hard to establish an effective and robust regulatory regime and today the two main bodies – Saudi Arabian Monetary Agency (SAMA) and the Capital Market Authority (CMA) – are recognised internationally for their strong guidance and support. In fact, today the Kingdom’s banks and financial institutions are at the leading edge of compliance with global banking standards.

This has ensured that the sector has grown steadily and carefully; an approach that is being reflected in the opening of local financial markets to international investors. An exciting development for local institutions and their stakeholders.

Broadly speaking, the Kingdom is relatively underbranched, when compared to similar markets in the region or outside. But we, like others, are addressing this, as I mentioned earlier. Otherwise, the challenges that banks face around the world, not just here in the Gulf, are common to all. Competition, quality of service, channel expansion; just a few of the challenges that banks and their customers worry about.

What role has technology played in the industry’s development?
Since the earliest days of electronic payments and transfers, technological advancements have driven changes in the banking industry at a rapid pace and the banks that have adapted to these quickly have been able to maintain the loyalty of their customers. That trend is still true today. We are now in an age where formal and informal information flows are instantaneous and customers expect to be able to react using the channels they find most convenient. From simple deposit placing, to bill payment, to asset management, our customers expect to be able to transact online and via apps as well as in our branches. So we make continual investments in our current platforms as well as in the work we do to build the channels of the future.

Technology has noticeably transformed the retail banking market and it is a key success factor in preparing and launching any new product for our customers. Used well, and of course marketed and explained well, technology can make banking straightforward and easy and it is a cornerstone of our connectivity to customers of every size and ambition. Consequently, its latest applications are at the core of the training programmes we run for our bankers and their teams.

Can you expand on the importance of multi-channel solutions in the banking industry?
Even though we believe that physical branches continue to play an important role in customer interaction, primarily at the time of customer acquisition, and we expect the number of bank branches in the Kingdom to continue to grow over the coming years, the key will be to have these branches integrate seamlessly with other channels.

Customers want options, so we have to provide them. It is as simple as that. And today technology allows us to develop channels to allow them to access their bank in ever more easy ways.

What examples can you give where technology has helped grow your business?
A great example is our new bank-wide rewards programme. Customers accrue points through their usage of our products and services and use technology for online redemption of these points with vouchers from partner organisations. This also allows us to monitor customer behaviours and trends, which is useful feedback for future tailoring of our services.

Also, recently we launched a completely revamped internet banking system for our corporate customers, which offers many new administration, transaction and global trade services. And we similarly made advances in personal banking to simplify transaction flows and further widen services such as e-statements for loans and mortgages and for registration with credit cards.

One very popular service has been our mobile banking app, which enables customers to perform their essential daily banking transactions on the go. This has already attracted nearly 20 percent of our customers and we expect that percentage to continue to grow during the year. We are also working on the next generation of our mobile app with different designs for smartphones and tablets that include a number of exciting innovations.

How significant has the opening of the stock market to foreign investors been for the banking industry and the economy?
This move has been much anticipated both in the Kingdom and abroad and comes at a time of a strong economy and a growing financial sector. The opportunity is clear – the Saudi stock market capitalisation is larger than all the other GCC stock markets combined and is likely to prove an attractive option for investors wishing to gain direct access to the Kingdom’s growth story. For example, the local insurance market is the second-fastest growing in the GCC and has good potential for further gains due to its low penetration levels, according to Moody’s Investors Service.

The opening of the Saudi market will widen the foreign investor base, which is currently less than one percent of total holdings. Given the size and depth of the market, it is expected that the Kingdom will be included in the main emerging markets benchmark indices in the future, attracting further interest.

This exciting development is being handled with care and caution by the well-regarded regulators and very clear rules have been put in place to ensure that investors with longer-term interest are prevalent.

3.59%

Growth of the Saudi Arabian economy, Q1 2015

What are some of the current opportunities for foreign investors in Saudi Arabia?
Encouraged by robust GDP growth and macroeconomic stability, both producer and consumer confidence are well above the regional average. Growing private credit and increased public expenditures (see Fig. 1) on infrastructure and other projects provide a broad basis for robust opportunities in Saudi Arabia, and these are translating into particularly strong and sustained growth in domestic demand.

The Kingdom itself has never been more committed to supporting economic growth. As wealth reaches previously less developed areas of the country, attractive opportunities are emerging to cater to pent-up demands in sectors such as healthcare, power and water, and consumer goods.

As the region’s largest economy (see Fig. 2) and the world’s 19th largest exporter, the sheer size of the markets that Saudi-based companies serve is a competitive advantage, allowing Saudi businesses to benefit from economies of scale. With excellent access to Saudi and other MENA markets, as well as the advanced and emerging economies of nearby Europe and Asia, market exposure for Saudi-based companies is not only vast but also highly diversified.

How important has regulation been in facilitating this growth?
The regulators have played a key role in ensuring that the Kingdom’s growth is controlled and well-managed. This applies, for example, to the way in which banks provide the services the Kingdom needs and the very high levels of capital strength with which they are expected to comply.

How would you say Saudi Arabia’s corporate governance standards stack up against those in neighbouring nations?
In Saudi Arabia, corporate governance standards are already high and effort is now being applied to intensify compliance with the opening of the markets to foreign investment. The CMA is continually focused on ensuring compliance, strengthened controls and improved transparency. As a result, listed corporates and banks are exercising great diligence in managing their affairs.

According to the Hawkamah Institute for Corporate Governance, its ESG index, which measures the environmental, social and governance attributes of publicly traded companies in the MENA region, has shown good results for Saudi Arabia. Another attractive trait for international investors.

What are SHB’s ambitions for the future?
We aim to be the bank the Kingdom always chooses and will continue to work hard to that end. There are three key drivers of our approach: efficiency and capital strength, investment in our core businesses and a single-minded focus on our customers. Together with the strong internal culture that helps customers realise every opportunity, these cornerstones will ensure that we continue to grow and to broaden our market presence.

BOD Financial Group harnesses opportunities in Latin America

Posted on by Ashton Wenborn

A slow and uneven recovery throughout much of Latin America has intensified the challenges for financial services, and with the global commodities boom having faded and FDI struggling, the responsibility has gone on to local names to harness growth opportunities from within. Nowhere else is this challenge more pronounced than in the banking sector, which has been tasked with managing the region’s changed economic circumstances and serving a community for whom opportunities come less easily as they perhaps have done in the past.

Recently, the banking system has undergone a series of extraordinary changes, though the challenges facing the industry at present ask that they understand the changing nature of risk and get to grips with a marketplace no longer flush with hot prospects. In meeting the challenges and opportunities of the day, certain names have taken the lead and done much to push the latest developments.

[BOD Financial Group], which is among the six largest issuers of American Express cards in the world, has globally grown exponentially, rising 430 places in the Global 2000 list published
by Forbes

BOD Financial Group, for example, is proof that a sound financial footing and a commitment to the community are essential. However, this commitment is one that must come from the top and extend to all areas of the business, if only to make a real and measurable difference, and unfortunately such an attitude is rare.

The history of BOD Financial Group is closely linked to Victor Vargas, its President and an experienced Latin American businessman. A career highlight has been to transform the previously regional bank into the fourth largest financial institution in Venezuela. In addition, over the course of these past two decades Vargas has managed to build BOD into the 34th biggest financial institution in Latin America, according to The Biggest 250 Banks in Latin America report, published by América Economía earlier this year.

The bank, which is among the six largest issuers of American Express cards in the world, has globally grown exponentially, rising 430 places in the Global 2000 list published by Forbes, according to which BOD is the 1,407th most valuable company in the world. Currently, the business generated by the group exceeds $25bn and provides work for over 14,000 people across Latin America.

A history of growth
Victor Vargas’ career as a banker began at a young age. He was appointed President of Banco Barinas, a regional business that grew to become the Cordillera Group, at the age of 28. In 1991, he decided to sell the company in order to begin a new stage in his business career with the creation of the Cartera de Inversiones Venezolanas holding company (CIV) and enter into new markets.

He founded pioneering companies in a wide variety of industries, including Fabrica de Carrocerías Cordillera (FACORCA), which was franchised by British automobile manufacturer Rover to assemble the Mini Cooper in Venezuela and distribute it across South America; Alfa Gerencia Inmobiliaria and Grupo Asesor Inmobiliario (GAINCA) in the real estate sector; and Aficheras Nacionales (STYLE) in advertising. The holding also continues through financial investments with the creation of BOI Bank in Antigua and Barbuda, and National Leasing in Panama – which have both been operating institutions for 25 years.

In 2000 BOD merged with Banco Noroco and Valencia Entidad de Ahorro y Préstamo, (which subsequently became Norvalbank). In December 2002 Norvalbank, Banco de Monagas and Fondo de Activos Líquidos BOD merged, which marked a significant step, as BOD then became a universal bank. Four years later, in September 2006, Vargas acquired CorpBanca from the Chilean Corp Group, and in the process became American Express’ operator in Venezuela – extending the services of both banks across the entire country. In 2007, BOD and CorpBanca integrated their technological platforms, allowing clients to carry out banking transactions at both banks. The merger was finalised in 2013, five years after the process began.

Another major acquisition process began in 2008 as BOD opened negotiations with Spanish group Banco Santander over the acquisition of what was then its Venezuelan subsidiary Banco de Venezuela, the country’s first bank with over 100 years of history. After BOD had transferred $150m to Santander as part of the acquisition process, the late President Hugo Chávez decided to nationalise the bank, side-lining Vargas from negotiations. To this day Banco Santander and BOD are still trying to resolve the issue in court.

Vargas’ strategic vision led to the creation of Grupo Financiero BOD, a step taken as a response to the growth of the holding company and the need to further strengthen its financial arm. Grupo Financiero BOD is made up of BOD (Venezuela); Allbank (Panama); BOI Bank (Antigua and Barbuda); BONV (Curacao); and Bancamérica (Dominican Republic). For capital markets institutions it is made up of BOD Valores Casa de Bolsa (Venezuela); Corp Casa de Bolsa (Venezuela); Plus Capital Markets (Panama); Plus Capital Markets (Dominican Republic); BOD Fondos Mutuales (Venezuela); and Element Capital (Venezuela-Panama). The group also includes a number of insurers, including La Occidental; Global Care; Salud Care y Planinsa (all Venezuela, as well as Pymefactoring RD (Venezuela-Dominican Republic) and National Leasing (Panama).

With a career spanning over 32 years, Vargas is today one of Venezuela’s most successful entrepreneurs, not simply for the large number of companies he has acquired but also for his commitment to the country and his contribution to the development of the national economy. The Spanish magazine Ejecutivos recently named him ‘Empresario Latinoamericano de Referencia’, which means a Standout Latin American Businessman.

Social engagement
Alongside his professional work, Vargas has supported a number of business, cultural and educational projects, and in the process has contributed to the growth and development of Venezuela. Through the BOD Foundation that was created in 2002, he has invested close to $20m in CSR programmes, which has helped to support thousands of entrepreneurs, improve education, spread cultural awareness and bring the bank’s social work to disadvantaged communities. The BOD Entrepreneur Centre has organised training and financing projects, with over 300 credit operations at a total value of over $15m, helping entrepreneurs develop their businesses.

As part of a commitment to social engagement, for over 20 years Vargas and BOD have supported cultural initiatives. Their commitment to culture grew in 2006 with the acquisition of CorpBanca, an institution that operated a historic cultural centre in the Venezuelan capital, Caracas. Thanks to Vargas’ strategic and managerial vision, the BOD Cultural Centre turns 25 this year and is considered a reference point in both Venezuela and abroad. In 2014, it welcomed 116,420 attendees to 920 theatrical events, 28,834 spectators to 98 concerts, 43,060 participants to 112 corporate events and 12,157 visitors to 4 art exhibitions. In total, 204,071 people attended 1,137 events.

BOD’s educational work features the BOD Prize for Educative Talent and along with the Fundación Enclave runs an annual Musica para todos programme, which provides free music lessons to 6,500 children in public schools. Investment in the development of the programme reached $500,000 in 2014.

“As an entrepreneur myself, supporting entrepreneurship in all its forms is one of my greatest passions. Since the start of my professional career as a lawyer until now I can say with pride that over the course of the past 32 years I have built financial companies with a proven national and international profile”, said Vargas.

The upcoming challenges for Vargas and BOD are to focus on Grupo Financiero BOD’s international growth. The group is already present in five countries: Venezuela, Panama, Dominican Republic, Curacao and Antigua. Since Vargas acquired the company in 1994, BOD has maintained its position at the forefront of the Venezuelan financial sector. The bank’s objectives up until 2016 are focused on offering its clients personal assistance with projects, and on positioning BOD as a reference in terms of quality.

The plan underscores BOD’s present and future objectives of becoming a multichannel bank by 2016, one that its clients can access from different channels and within which its various internal channels interact among themselves. The foundation of this methodology is twofold: a clear understanding of the client through effective Client Relations Management and an efficient business model. The success of a financial company is not solely based on affronting business challenges or market developments. It must be based on solid principles of proximity and commitment to its community and, as part of the country, producing benefits for its citizens.

Banca CIS plays vital role in San Marino’s banking industry

Posted on by Ashton Wenborn

While European microstates such as the Republic of San Marino have only been partially integrated into the European single market, they have already made significant strides, particularly within the banking sector. Usually when speaking about the EU, the first thought that comes to mind is the 28 member states that comprise the supranational institution. However, there are a lot of very small sovereign states scattered throughout Europe, better known as microstates. These are small independent states that, different from micro nations, are actually recognised by larger sovereign entities.

As a result of their size, microstates tend to have small, less diversified economies, which means that they have less choice both in domestic markets and in foreign policy. Therefore, they tend to rely on cooperation with the EU and neighbouring countries in supporting their economic targets.

For many years, these microstates had gained access to the EU by managing close relationships, through bilateral treaties with nearby neighbours. In the case of San Marino, a microstate set in a small enclave, Italy is the closest neighbouring country. But as the scope and size of the EU has grown, there has been a desire for deeper European integration and microstates have requested a more direct agreement that does not rely on the involvement of neighbouring countries.

There are a lot of very small sovereign states scattered throughout Europe, better known as microstates

In an attempt to address the issue, the EU Commission published a report that explained how the participation of the small-sized countries in the EEA was still not yet a viable option due to ‘political and institutional reasons’, and instead pushed for ‘association agreements’ as a more feasible mechanism for integrating microstates into the internal market of the EU.

This EU agreement for microstates, though not perfect, does provide the basis for a new level of cooperation that has many benefits for San Marino, and in particular its developing banking sector. World Finance spoke to Professor Massimo Merlino, Chairman of Banca CIS – Credito Industriale Sammarinese (Banca CIS) and Daniele Guidi, General Manager and CEO of the bank to discuss the company’s role in San Marino’s banking industry. “Many economists look with favour to the results of microstates in the globalised arena”, said Merlino. “Many of them and the other small states are driving globalisation processes with very good performances. San Marino is a benchmark among microstates in the World Health Organization regarding its welfare and health systems. The mutual transferring of best practices among microstates can be of exceptional interest for all them.”

A smart bank in a smart state
Originally founded in 1980, Banca CIS is part of the Republic of San Marino banks that have played a leading role in helping raise the country’s economic performance, while also gaining an international strategic position in the private banking market. Cultivating an impressive and effective business model achieved this.

Banca CIS has defined how it operates from three cultural and practical experiences, all of which are very different but still complementary: the private banking culture of the original Banca Partner of 2002; the tradition and prestige of a historical bank as Credito Industriale Sammarinese; and, the retail culture of a Eurocommercial bank have all merged to form an entirely new and distinctive Institution, with cross fertilisation of strategies and cultures.

All these factors are constantly revised in a continuous effort of improvement, helping to make Banca CIS a very peculiar and unique offering both within San Marino and in the wider international business community. But in order to balance its offering, it maintains more traditional banking services and practices, as well as providing customers with a wide array of products and services that cater to fulfil every possible need.

After the merging process from 2012, Banca CIS has reengineered its operations and organisational structure in order to attain a number of objectives. One of its many accomplishments has been its improved strength in relation to compliance, legal, auditing and risk management functions according to the new regulations introduced and coordinated by San Marino’s Central Bank. The new enhancements have enabled the bank to improve its risk management, focusing on credit loans. The bank has also been extremely proactive in updating its organisation department in order to fulfil the requirements of regulators and improve the use of new technologies in all areas of the business.

All of this has helped to strengthen the business area of the bank, especially in private banking. “Banca CIS is building a quantitative model to help the strategic planning department and top management to simulate different strategic alternatives, calculating the impact on main financial variables and indicators of the balance sheet and assets of the bank”, explained Guidi.

“With the help of this tool, top management will be able to examine a set of different scenarios and coherent decisions, and to verify their feasibility and value for business development and their relationship with the rules and ratios defined by the supervisory authority. New tools in risk management are also being set up to analyse management decisions and external scenarios in term of risks for the bank. All these tools and methodologies are used for financial forecasting in both European markets and other promising world areas”, continued Guidi.

A united front
The bank holds a unique position in the San Marino domestic private and retail market with more than 8,000 clients, all of which are very loyal to the new institution created when all three banks finished their merging process. Management is client focused, with a particular care for customer satisfaction by integrating services with traditional and innovative products and services.

Great attention is paid to the bank’s customers, which is evident in the comments made in customer satisfaction surveys. In order to maintain these high levels of service in the future, Banca CIS has set up a fully immersed training programme for all human resource staff members. Through its financial company Scudo Investimenti SG, the bank is able to offer funds of San Marino law to its clients, covering any form of investment they prefer from shares to corporate bonds and art portfolio investments.

“From its origin in Banca Partner, the competencies of business developers were oriented in private banking, but of course a deep transformation occurred with the exit of San Marino from off-shoring practices”, said Merlino. “Now Banca CIS needs the best professionals available in the market to compete with updated offering from international banking.

“A programme of reinforcing the structure of private banking department with new senior promoters has already been launched and will perform before this end summer. Supporting tools in CRM will be also introduced to better follow customers’ requirements and administration.”

While most private banks promote their wealth management as the most accurate and geared around the customer, Banca CIS aims to highlight its performance. It therefore makes sure to offer a wide range of services from trust to family office, personalising all of its financial products and services in order to better meet each individual customer’s preferences and needs, as well as continuously collecting detailed feedback from customers about their satisfaction in a continuous search to better understand and improve service quality.

“Accurate evaluation of the different cultures in Europe and in other major countries are made in approaching wealth management potential customers”, explained Guidi. “In other words the objective is to open the international market to Banca CIS, and this can only be done through a private banking service level not expected from a visitor of San Marino. In this way, Banca CIS provides customers with the same sense of security and quality service that they have come to expect at other more well known financial platforms in the world that exist outside the microstate of San Marino.”

The new status of normalised relations with Italian institutions, which was created as a result of the EU’s willingness to strengthen relations with microstates and attempt to better integrate them into the European single market, will result in new opportunities of commercial links with the Italian financial system. Banca CIS expects that the possible cooperation with Italian banks will provide various benefits for both countries.

Closer links and cooperation between countries will help financial institutions to improve the assistance towards the interests of their own customers, and that will facilitate the creation of a wider agreement for the development of new products and services for customer assistance. At the moment, funds of San Marino law cannot be commercialised in Italy, but this initial agreement is just one step in a much larger process, which in the future will hopefully build the foundations allowing for the creation of new opportunities with Italian financial authorities.

“For these reasons, the new Banca CIS business plan targets three macro guidelines”, said Guidi. “This is a strategic business model, with the goal of overseeing a network of international markets that include Dubai, Singapore, Malaysia, Hong Kong, the UK and US.” There is the investment advisory model that has an integrated approach to private and corporate business for customers that are both high net worth and ultra high net worth individuals working with the cross-border market growth of the EU, Monaco and Switzerland, with progressive steps forward in line with the development relations between San Marino and the EU.

Baiduri Bank on the evolution of finance in Brunei

Posted on by Ashton Wenborn

Established in 1994, Baiduri Bank is part of the Baiduri Bank Group, one of the largest providers of financial products and services in the sultanate. Its shareholders include major players such as Baiduri Holdings, Royal Brunei Airlines, Royal Brunei Technical Services and the French banking giant BNP Paribas. With this strong backing, the bank has worked hard to invest and commit to local projects, interests and clients, in addition to offering global expertise, earning themselves a reputation for financial innovation and pioneering that would benefit the local economy.

The fall in oil prices has been a mixed bag, with energy exporters feeling the pinch and losing billions in revenue, while consumers in net importer nations are all smiles at the pump. Brunei may well be a wealthy country and its government have taken steps to try to diversify its economy, but it is still a net exporter of oil and gas (see Fig. 1). Brunei relies heavily on the revenues it receives from the sector, with it accounting for more than half of its GDP. Therefore, many expected the country to struggle when the commodity’s price fell by more than half earlier this year. And while this may have slightly slowed the sultanate’s economy in 2014, its banking industry has managed to escape the effects of the commodity’s plummeting price unscathed.

The fall in oil prices has been a mixed bag, with energy exporters feeling the pinch and losing billions in revenue, while consumers in net importer nations are all smiles at
the pump

Exhibiting resilience
The resilience the country has shown is because its economy is mainly driven by government spending (see Fig. 2), according to Pierre Imhof, CEO of Baiduri Bank. “This year the government has decided to maintain the budget – and therefore the spending – at a level very close to last year’s”, he told World Finance. “For the year 2015-16 the budget has been reduced only by around five percent, so it’s very small. Of course, the income will not be at the same level as last year, so the budget deficit should be covered by part of the accumulated reserves of the country.

“So this budget remaining more or less at the same level will definitely help the domestic economy. Therefore, being a local bank with all our activities within the country, we expect that we will not suffer too much from the lower oil prices”, said Imhof.

That is not to say that the banking industry does not face challenges as a result of falling energy prices. In fact, if prices remain low for a prolonged period of time, the country, its economy and members of the banking sector will have to think of ways to adapt and adjust to this unfavourable environment.

Imhof expressed doubt over whether budget levels may be maintained should energy prices remain low and explained how the oil and gas industry – and the operators in such an environment – are likely to cut costs should this trend continue. If it does, then it may affect the private sector and could even delay some infrastructure developments by the government, admitted Imhof.

Staying competitive
Staying competitive is of course a major issue for any bank, and that often means really staying on top of the latest technological innovations, as well as offering new and exciting products and services that will entice new customers and provide a reason for existing ones to stay. Implementing all that effectively is a real challenge, but is essential for any bank looking to succeed in the modern digital economy.

“Technology is definitely an important part”, said Imhof, “but our absolute priority is to give our clients the best customer experience – whether they visit one of our branches or utilise our electronic channels”.

That is why the bank launched the first café bank concept branch in Brunei. “When our customers come to the branch, they can relax on a sofa and have coffee while they are transacting”, said Imhof. “We also want to give customers a choice. If they prefer one on one interaction, we have the branch network. If they want to go through the internet, we are also able to offer our online banking services.”

It is one of the many fresh and innovative ideas to come from the bank, with it possessing a wide array of impressive services and products. The latest of which, is the Visa payWave, allowing customers access to contactless payments.

Imhof admitted that the country’s small population makes it more challenging to embark on new technologies due to the absence of economies of scale. “However, we will definitely continue offering our clients the latest banking technology. It is a challenge, but it is also an opportunity we do not want to miss out on”, explained Imhof.

Brunei's top five export sectors

Baiduri Bank clearly understands its customers and knows how to attract their attention, but at the beating heart of any economy are small and medium-sized businesses (SMEs) and the owners that run them. And with 90 percent of private businesses in Brunei being SMEs, how Baiduri Bank chooses to serve them is crucial not only to their success, but will also contribute to the long-term economic stability of the entire country.

“First, our services – and especially financing – are customised for these clients”, contended Imhof. “Secondly, we are a local bank, so the decision making process is in Brunei. It allows us to be more flexible, and faster, taking a decision in granting a facility or in structuring financing.

“Third, SMEs need very specific financing. We have micro-finance schemes, and enterprise facilitation schemes, which we offer to SMEs in collaboration with the Ministry of Industry and Primary Resources. And these are schemes which are designed for SMEs: they are cheaper, and companies which might not be eligible to other schemes can still access financing through such schemes.”

In 2014, Brunei implemented the Local Business Development (LBD) programme in the oil and gas sector, which had a big impact on both it and the banking industry in Brunei. The programme was developed by the authorities in Brunei to encourage economic players to rely more on local resources and to develop more local content in their human capacity.

“The LBD encourages companies operating in Brunei to do more business with local banks, which has benefited banks like us”, said Imhof. “One of the characteristics of Brunei banks is having large excesses of liquidity. The banks are extremely keen to re-inject the funds back in the domestic economy by financing more projects and property.”

In its effort to develop local content, the LBD seeks organisations to employ more locals. The population of Brunei is over 400,000 out of which 28 percent are between 20 and 34 years old. The young are eager to work and contribute to the country. However the initiative needs to be done in a progressive manner over time.

Brunei Government Spending

Moving forward
Energy prices will always play a decisive role in the country and if they continue to remain at low-levels, drastic action will need to be taken by the government in order to reduce its reliance on oil and gas income. If that does happen it will be a very difficult time for the government, but a number of positive outcomes could arise from it, according to Baiduri Bank’s CEO.

“One positive outcome is that it may lead to accelerating economic diversification programmes in the country”, said Imhof. “And the banks will have a lot to benefit from diversification: first of all it will give them opportunities in the country. But companies in Brunei may also look for opportunities overseas, and if they do, there will be opportunities for banks to finance their clients’ activities overseas. Progresses made within ASEAN economic integration initiatives will certainly provide opportunities for the banking sector to play a wider role in the region.

Stanbic Bank facilitates mobile banking in Zimbabwe

Posted on by Ashton Wenborn

As technology the world over has been moving at an accelerated pace, as a country Zimbabwe has also been evolving. The banking landscape in particular has altered vastly, as a result of the exponential advancement of technology. Over the last few years, banks in Zimbabwe have gradually moved away from the traditional brick and mortar branches to embrace new technologies that offer convenient, safe and reliable banking solutions to their customers. World Finance spoke with Solomon Nyanhongo, CFO of Stanbic Bank Zimbabwe, to discuss the country’s current mobile banking situation.

Branches have now been complemented and in some cases replaced by self-service channels such as ATMs, point of sale terminals, and the introduction of internet and mobile banking. Mobile banking has been facilitated by the growth of Mobile Network Operators (MNOs), whose service now covers the whole country including areas that were previously deemed inaccessible.

MNOs are running mobile wallets with retail and individual agents acting as cash-in (deposit) and cash-out (withdrawal) points. All this has aided the process of financial inclusion, though it is also disruptive to banks that were not offering mobile money as a payments platform. The country has also seen a significant increase in transaction volumes going through electronic banking channels, as customers now want easier and instant transactions.

There has been a strong growth in ATM usage as Zimbabweans now have confidence in the banking structure after adopting a multi-currency system in 2009. The introduction of self-service channels – which operate 24-hours a day – has helped to enhance the quality of service delivery in the banking industry, as banks strive to remain relevant to the public that have now come to expect quicker, more reliable services.

The road ahead
Failure to contain credit risk, especially during a time when the country is experiencing a slowdown in economic activity, has resulted in the cancellation of some financial institutions’ banking licences. This slowdown has been manifested in terms of tightening liquidity, increased number of company closures and job losses, as well as declining levels of profitability.

Arguably the biggest factor holding back the banking industry is the lack of government support

The level of Non Performing Loans (NPLs) in Zimbabwe had reached an average of 15 percent at the end of the Q1 2015. NPLs are due to a host of issues adversely impacting business viability, including high cost of borrowing. “There is currently growing pressure on banks from [Zimbabwe’s] central bank to lower interest rates and bank charges [further], which are perceived to be unsustainable to the productive sector, in spite of an escalating cost base with most banks recording decreases in profitability”, explained Nyanhongo (see Fig. 1). “There is also stiff competition from MNOs, which are now providing financial services. These were traditionally provided by banks.”

Telecommunication companies are now offering mobile wallets, but these have low-levels of regulation, which serves to only raise settlement, KYC and CFT concerns. Opportunities also exist in the growing informal sector, where banks have not been effective in mobilising liquidity and have failed to provide relevant banking solutions.

“The nature of the informal sector is such that transactions are largely conducted on a cash basis and we think there are opportunities to provide convenient, low cost and safe transactions platforms to enable efficient payment system for goods and services”, continued Nyanhongo. “In addition, Zimbabwe has vast untapped natural resources mainly in the mining sector, which present opportunities for growth of the banking industry in Zimbabwe.” The country also has one of the highest literacy rates in Africa and boasts highly skilled personnel who are ready and waiting to work, but sadly, many will have to wait for the economy to pick up before enough jobs become available for them to do so.

In the last three years, a number of financial institutions in Zimbabwe had to close down their business operations on account of growing business costs, liquidity challenges and inadequate capital. Some banks actually failed to honour customers’ payment instructions, but according to Nyanhongo that has not been the case for Stanbic Bank Zimbabwe, which has ensured that customer transactions are processed efficiently.

“We have remained focused on driving our channel strategy which has seen us opening branches in the resort town of Victoria Falls, Beitbridge border town, and most recently in Hwange, the bank was previously not represented in these places”, maintained Nyanhongo. “This strategy has contributed positively to financial inclusion at a time when other financial institutions have closed down a number of their country branches.”

The bank has continually searched for opportunities to grow its branch and ATM network, introducing mobile banking and smart apps to provide its customers with convenience and easy access to banking services. It has increased its support of SMEs and other local businesses through lending and has introduced mortgage loans, which will provide qualifying customers the chance to become homeowners.

Keeping pace
Despite the massive strides taken by the national banking sector, it still falls short when compared to banking systems in more developed nations around the world. Electronic banking, for example, is an area that is still far less technologically advanced and in order to improve it, huge capital investment is required.

The rise of internet and mobile banking in the country has been stifled slightly by high data costs, which are negatively impacting the rate of usage of these technologies. As is the case throughout the African continent, there is lower financial inclusion than in many developed countries, with a large percentage of citizens, especially in remote rural areas, simply not having access to banking services. The time it takes to process transactions is also far slower than in developed nations, as many banks use old systems that require extensive upgrades, or in some cases a complete overhaul in order to accommodate the huge transaction volumes that they are now required to process. But arguably the biggest factor holding back the banking industry is the lack of government support.

“In times of crisis, governments in developed countries have the capacity to intervene, bailing out their banks’ financial crises, but Zimbabwe’s central bank is yet to be fully capitalised, so it is unable to assume its critical role of being the ‘lender of last resort’”, said Nyanhongo.

The country’s economy at the moment is largely cash-based and, therefore, the use of plastic money for settlement is still low. Due to the high credit risk and the lack of a central credit reference bureau, there is minimal issuance and use of credit cards to customers. Such products are awash in developed markets and make transacting for the banking public easier.

The banking sector has seen the greatest advancements and progress in technology use, with most banks now offering internet and mobile banking, along with POS machines being rolled out to more retailers and ATMs at more sites across the country. Mortgage financing is also on the increase following the removal of government taxes on income from mortgage business.

Zimbabwe's interest rate

New technologies also reduce the cost of operations for banks. A visit to a bank’s web page can be done easily and much faster than a visit to a physical branch. Such virtual branches, as they are commonly called, can even serve more customers per day than a physical setup allows.

The strong support that Stanbic Bank Zimbabwe has received from its parent company, Standard Bank Group, has contributed significantly to the viability of the agricultural and mining sectors in Zimbabwe, which form part of the major economic pillars of the economy.

“Over the years, Standard Bank Group has helped the country by facilitating lines of credit worth over $300m per annum, which is a welcome development in a country going through severe liquidity challenges”, said Nyanhongo.

“The focus is on Africa as the main market. We invest in the potential that Africa has and we see growth opportunities”, he added. This has resulted in a deep understanding of Africa and the various markets the group operates in.

Standard Bank Group has a rich history in the continent, spanning more than 150 years, which has resulted in it possessing a very strong brand in the markets that it operates in. This strong brand image has immensely benefited Stanbic Bank Zimbabwe through flight-to-quality as depositors are increasingly looking for safe havens for their hard-earned wealth.

The bank’s cautious approach to lending has seen it remaining profitable at a time when other banks performance has waned as a result of growing credit impairments. Its continued focus on digital and electronic banking platforms will help it stay ahead of the competition. Currently Standard Bank Group is in the process of modernising its core banking system with many functionalities, which is why it is likely to remain at the forefront of banking in Africa for the foreseeable future.

Millennials make their mark at Rizal Commercial Banking Corporation

Posted on by Ashton Wenborn

There is a youth unemployment crisis and it is only getting worse, according to the International Labour Organisation. Today, young people are more likely to be unemployed than previous generations, with roughly 73 million young people around the world desperately looking for work.

There are many factors contributing to this statistic, the global economic downturn being one, with some companies reluctant to take those who lack experience or simply lacking the resources to train them.

Everyone knows that the youth of today will be responsible for building a better tomorrow, but knowing how to develop the younger generation into leaders capable of taking a business to the next level is a huge undertaking. One organisation that’s helping millennials not only find a job, but to excel within them, is the Rizal Commercial Banking Corporation (RCBC).

Established in 1960 by the Bangko Sentral ng Pilipinas (BSP), the Philippines-based bank is helping young people develop into the future leaders of the business. But this is no graduate scheme. Nor does it focus on picking individuals from key positions in the company. Instead, RCBC reaches out to all levels of management in an attempt to find the best and brightest candidates the bank has.

“By nurturing the abilities and aptitudes of incumbent associates, we gear ourselves up with a deep bench who are, at any time, ready to assume key roles when called upon”, explained Rowena F Subido, First Senior Vice President and Head of RCBC Human Resources Group. “We did the aforementioned when we instituted our very own RCBC Leadership University [RCBC Leadership U], which offers a laddered set of courses, catering to all management levels.”

80%

Employees attending one type of training

52%

Employees attending three types of training

Managing millennials
Studies, as well as experience, show that millennials tend to switch jobs more frequently than previous generations. This is due to the high-speed, electronic-filled, socially networked world that they have grown up in. A negative consequence of this environment, however, is that they have less patience, making their tolerance levels short, according to Subido: “Millennials were raised to ‘follow their dreams’, hence they tend to be very confident, optimistic and idealistic.”

This combination of characteristics makes guiding millennials both rewarding and challenging in equal measure. As Subido explained, one of the biggest mountains to climb when attempting to manage millennials’ careers – especially during the early stages – is trying to think outside the box and come up with ways to keep them excited at work. Equally necessary is the balancing of their expectations, which the head of HR says can be unrealistic at times.

Such things only push Subido and her group to improve the development process in order to ensure that this new generation of leaders gets the most out of their experience. “The experience, when one undergoes the RCBC Leadership U, is similar to when one attends school, as it is modelled after formal educational institutions”, Subido added. “It strategically targets the competency development of the bank’s officers and has five levels being implemented across all ranks, from junior officer level to top management level.”

The programme is clearly working, as it has a number a success stories under its belt in a relatively short space of time. Five years after graduating from the programme, two employees were promoted to department heads, with one gaining the title of assistant vice-president. Not only that, but three other graduates are now occupying group head roles at senior vice president/first senior vice president level. These are just a handful of examples that highlight what the programme has achieved, as well as showing other companies the benefits of nurturing talent from within, rather than turning to outsiders to fill management roles.

“The Leadership U Program not only aims to develop the officers’ leadership competencies, but also builds a culture of performance that the bank needs to accelerate the delivery of desired results in a challenging and dynamic environment”, explained Subido. “It offers different programmes that cater to the individual needs of all management levels. With our programme to hone talents from within, we encourage loyalty, good character, integrity and correlate the same to their success and fulfilment within the organisation”, Subido added.

Attracting talent
In the US, the financial services industry has had to compete with the technology sector in attracting top young talent and the story is much the same in the Philippines, explained Subido. For her department acquiring and then holding onto talented young individuals has been a big challenge, as millennials see the technology sector as far more attractive and stimulating when compared with the world of finance. This is why it is important for the financial industry and RCBC in particular to make more of an effort to attract potential employees as early as possible. In an effort to improve in this area, the bank has ramped up its recruitment efforts at universities up and down the country.

“In association with prestigious educational institutions here and abroad, the Leadership U is considered as the most innovative and comprehensive corporate training initiative in the Philippine banking industry today”, Subido elaborated. “For our Middle Management Development Program (MMDP), we partner with the De La Salle University Center for Professional Development in Business and Economics. For our Leadership Development Program (LDP), we partner with John Clements, Harvard Business Publishing and the Executive Development Program in Kellogg School of Management, Northwestern University and Hong Kong University of Science and Technology for top-level officers.”

At RCBC, even group heads and top-level managers undergo continuous training. These high ranking senior officers are sent to the Kellogg-Hong Kong University of Science and Technology’s Executive MBA Program to further propel them to the forefront of influence in today’s multinational business environment. The bank believes that leaders need to have a global understanding of economic trends and concepts mixed with a sensitive understanding of local realities. The programme offers insights into every aspect of the business universe, harnessing insights into politics, economics, culture and human relationships.

RCBC's investment in employee training

RCBC understands that in order to build on its successes it must evolve its leadership programme and provide a system that suits the needs of millennials and beyond. Since the RCBC Leadership University started in 2011, it has strengthened its leadership bench by institutionalising ground-breaking programmes that have attracted the best and the brightest young talents who now occupy key positions in the bank. As a consequence of this, the bank has had a higher employee retention rate than the industry average. On top of that, there has been a significant increase in the number of job applicants, highlighting the success of the programme and its effectiveness in appealing to young people.

“When the Leadership U was being conceptualised, it was crucial that the board of directors bought into the programme and believed in it”, said Subido. “These key stakeholders were made to understand that a sustainable programme such as this should not be viewed as an expense, but rather, as an investment on the organisation’s most valued assets, its people.”

Luckily, the directors got on board and were able to see the benefits of such a programme. Soon after the Leadership U Program began to take shape, with group heads and senior officers working together in order to define business issues, objectives and leadership needs that would need to be addressed early on.

After this was accomplished, the programme was designed with an approach that was flexible enough to adapt to the constantly changing business environment, but with the structure required to make it reliable enough for it to be replicated across the bank’s multi-regional locations.

Since then, the bank’s commitment to learning has benefited employees, while addressing the competencies of leadership, customer service, sales planning and management, product knowledge, risk management and technical proficiency – such as specialised external training programmes (see Fig. 1). In 2014 alone, the bank invested in 5,835 attendees across all job levels.

To further reinforce growth and development, while simultaneously promoting stronger interpersonal relationships, RCBC actively encourages participants to continuously communicate and exchange insights, even after the formal learning sessions have been completed. “Truly, the RCBC Leadership U has become a way of life in the organisation and is considered the backbone for its continued growth and sustainability”, concluded Subido.

With the Leadership U Program now firmly in place, RCBC’s human resource group has started to create a strong foundation for its next generation of dynamic leaders. In the future, it envisions it will have an academy dedicated to develop each of the bank’s unique business units, which would comprise the RCBC Corporate University. Its management believes in the importance of investing on its talents to ensure operational longevity and success. In doing so, this ensures that the bank will flourish in the years ahead.

Banco Privado Atlântico paves the way for Angolan banking

Posted on by Ashton Wenborn

The world economy is living through a time of uncertainties. This year, those countries – including Angola – whose oil is their main export have suffered because of excessive exposure to the consequences of a near 50 percent fall in the price of the crude barrel. As a result, the Angolan economy now faces two scenarios: one of challenges and one of opportunities. After all, it is at times of crisis that economies reinvent themselves and market players tend to get more creative, building strategies that ensure greater sustainability and investing in innovation.

The main challenges faced by the Angolan economy concern the funding of a significant number of the programmes and projects that comprise the Angola National Development Plan (PND) 2013-2017. Once peace had been fully achieved in 2002, the government started financing a substantial part of the national reconstruction and infrastructure programme using funds from the oil sector. However, the fall in the price of oil and the slowdown in cash inflows have meant the country has had to cut back on public spending and prioritise its outgoings.

We participated as the financial advisor in the requalification of Luanda Bay – a strategic project for the country, particularly for the Angolan capital

Another challenge is related to the need to continue the work done through the programme to combat poverty, provide support to rural women, pursue the policy to build new homes and increase the level of schooling. There is also the ongoing concern to improve medical and medicinal assistance. The banks are going to face their biggest challenges through their work within communities and with the less well-off sections of society.

Emerging opportunities
Nevertheless, this has presented several opportunities in other sectors. The reduced cash flows on the country’s commercial balance sheet will allow Angola to implement a broadening of its tax base and, as a result, increase revenue through fiscal reform.

Besides this, Angola also has an opportunity to speed up its economic diversification policy and reduce its dependence on the oil sector. As a result, attention will now be turned to the agricultural and industrial sectors, which will both play a key role in increasing the revenue stream.

At the same time, this diversification will require a significant investment in human capital, particularly as regards the training of Angolan workforce. In such a context, the robust and dynamic leveraging provided by the banking system is all the more important, as it serves as a way of helping both entrepreneurs and companies face up to these new challenges.

Local market knowledge
Banco Privado Atlântico is one of Angola’s leading financial operators. Founded in 2006, we were the first bank in Angola offering an investment and relational banking product mix based on a high-level of financial expertise and in-depth local market knowledge. Our business model focuses on specialised services to corporate, private, affluent and emerging affluent clients. We aim to cover the segments most likely to benefit from Angola’s macroeconomic framework.

Headquartered in Luanda, we have created a significant footprint in Angola since the bank was founded. We operate through a network of 60 branches and corporate business centres – aiming to reach 70 by the end of 2015. Our customer base consists of more than 153,000 clients. We have hired highly talented and skilful personnel from the major financial markets and currently have a team of 814 employees.

For us, being a major player in the Angolan financial service sector and, simultaneously, maintaining a consolidated international presence means: being a leader in innovative customer services; maintaining continuous staff training and development; making a strong commitment to create value for our shareholders; and being a player in Angola’s sustainable economic growth.

Over the nine years since the bank was founded, we have experienced positive growth. We began operating with $35.1m in assets. In less than a decade, the results reveal a successful strategy: in 2014, assets reached $3.65bn, operating income amounted to $81.8m and net profits totalled $62m, representing a return-on-equity of 15.1 percent and a cost-to-income ratio of 58 percent. In keeping with our continuously improving performance, at the end of first quarter of 2015, assets reached $3.93bn, operating income was $68m and net profit was $25m (see Fig. 1).

Consequent to this significant growth, we are now the fifth largest financial institution in Angola by assets and deposits, according to the Angolan Banking Ranking compiled yearly by Deloitte. In terms of loans, we have a consolidated position making us the fourth largest Angolan bank in the banking sector (in a universe of 24 banks). We attained these results through our strategy of being a financial institution committed to sustainable development and value creation for the Angolan economy. Guided by this goal and supported by the fast growth of Angola’s GDP, we have been in the forefront of financing extensive public infrastructures, of establishment PPPs and of supporting business growth in the private sector. Thus, in nearly a decade of activity, we have gained a position in the frontline, both in Angola and internationally, consolidating our expertise in a wide range of diverse banking operation areas.

Banco Privado Atlantico in numbers

Investment projects
We are committed to being a catalyst for Angola’s development and, at the same time, also a financial and technical partner for investors by providing a range of solutions allowing them to benefit from investment banking services, structuring investment projects and also from corporate advisory throughout the whole investment cycle. From the beginning, we have been supporting the task of redefining and improving management practices, as well as implementing investment projects. These tasks have been carried out by structuring funding models for companies and by providing services to support development in various areas, such as infrastructures, agro-industry, manufacturing industry, transport and others.

We have gained expertise in several fields through our experience in investment banking and follow a different approach tailored to each market segment, always aware of diverse customer needs and constraints. As an example, we tailor our services to the type of organisation we are dealing with, whether it is the central government, public companies or local administration departments. In the private sector, we deem it important to be the financial advisory for private equity houses, sovereign funds or infrastructure funds, as it helps multinationals, large companies and small- and medium-sized companies, or even high-net-worth individuals and family offices.

We have not only the financial expertise to ensure excellence in our approach to the submitted project, but also knowledge of the local market, which is essential for the success of the respective projects. As an example, in 2012 we participated as the financial advisor in the requalification of Luanda Bay – a strategic project for the country, particularly for the Angolan capital. Additionally, also in 2012 and in keeping with our innovative and pioneer profile, we led the first subordinated bond issue in Angola made by an Angolan bank.

Our investment banking team has its decision centre and base structure in Angola but also includes an international network and members based in Banco Privado Atlântico Europa, in Lisbon. Banco Privado Atlântico Europa was founded in 2009, as the first step of our internationalisation strategy. The goal was to streamline the Portuguese and Angolan corporate structure, as well as their respective partnerships by providing relationship and investment banking services.

Therefore, we are able to embrace and cover any geographical segment, in terms of implementation of mandates. Moreover, we have taken on the role of a financial partner that supports trade and financial flows to and from Angola, focusing on the regions with the closest links to the country. We have been developing a solid relationship network through partnerships with key financial institutions in Africa, Europe, America and Asia. This year, the group is expanding its international presence to Namibia and Mozambique.

Financial performance
In the corporate finance business segment, our financial advisory services help companies and » institutions grow, both in the private and public sectors and in a broad range of business areas. One of these services is consultancy for mergers, acquisitions and joint ventures by assisting the client in all process stages. This includes services such as identifying a purchasing or merging target, support to negotiations, operational design, and coordination with external consultants and other parties involved in the transaction. We also play a key role in company restructuring processes arising from either over-indebtedness or the need to adjust to a new business paradigm.

In privatisation situations, we coordinate the sale of public sector companies to private institutions and investors, aligned with their business diversification and growth strategies, providing assistance for structuring, organising and managing the sale process.

As an investment bank with a wide range of products and services, we play a major role in structured finance. In this field, we have consolidated expertise for defining and implementing the different structures of highly complex financial services and products and also the capacity to provide financing. Whether as an advisor or lender, we may operate alone or in partnership with national or international entities that may contribute with recognised added value in the different operations in which we participate.

Consequently, we provide project finance and PPP structuring services, in order to obtain and place non-recourse financing, with resources in cash flows generated by the project and with the possibility to syndicate a loan facility. Typically, these types of operations are carried out in the infrastructure sectors, such as water, sewerage, energy production and transport, waste collection and treatment or transports.

In leverage and acquisition finance, we also substantially support investors in their specific expansion processes or in their investments in the capital of companies. Normally, this support consists of guidance and structuring of non-recourse financing for the acquisition of companies, with a possibility of underwriting, where the reimbursement of the debt depends on the performance of the purchased company and the cash flows generated by it.

In the capital markets area, we are seen as a pioneer and innovator in the local market. With the launch of the stock exchange (BODIVA) in Angola towards the end of 2014, we have a strong foothold to leverage our position as a key player in this newly developing market, which will be an important alternative means of financing the economy.

We act in the arrangement and placement of corporate bond issues, and have structured and placed Angola’s first corporate bond issue. We also have expertise in sovereign and public finance structuring, and in the arrangement and placement of sovereign bond issues.

In equity, we carry out structuring, arrangement and placement of securities in regulated markets, including initial public offers, secondary share offers, public takeover bids and private placements, and fixed income investments.

Striking partnerships
We have a shareholding structure of reference with a strong base of Angolan capital and the participation of leading companies in this activity sector, such as Millennium BCP Group, the owner of, among other institutions, the largest Portuguese private bank.

We have a wide network of international contacts and relations established with institutions of various types of profiles, through which it is possible to establish business partnerships when our in-house expertise needs to be complemented. We work with international investments banks based in London, New York, Sao Paulo and Johannesburg, with commercial banks, with Angolan or foreign financial advisors, M&A boutiques and the ‘Big 4’ consulting firms. We also work with Angolan and foreign law firms on a regular basis, including the main international offices and institutional investors.

Banco Privado Atlântico was founded with a corporate social responsibility policy as part of its development strategy. In 2008, we created the LOGOS project, which aims to increase the quality of life of the most disadvantaged communities and children, through support based on psycho-pedagogical programmes in sports, education, arts and cultural areas. Currently, the project assists more than 4,000 participants ranging from six to 18 years of age. In 2015, we aim to support over 5,000 Angolan children in all the 18 provinces of the country.

At the same time, we have always focused on improving the financial literacy of Angola’s population, an interest shared with the Angolan Government. Angola’s rapid economic and social development has boosted a huge evolution in several contexts; including the way Angolans address available banking services and products. Therefore, we continuously create campaigns and tools to help and support the population’s financial literacy needs.

Jamaica’s banking sector stabilises country’s economy

Posted on by Ashton Wenborn

Having expanded at a considerable rate over the past decade, financial services in Jamaica have done a great deal to stabilise the economy’s more troubled areas. Nowhere else is the contribution more significant than in banking, where the landscape has undergone quite an extraordinary transformation and promises to pull lesser performers out of the mire.

“The transformation of Jamaica’s banking sector hinged on improved risk management programmes and processes, enhanced understanding of customer behaviour, cutting-edge technologies, reorganisation of functions and business units across the sector, and improved products and services”, Audrey Tugwell Henry, Senior General Manager of Retail Banking at National Commercial Bank (NCB) Jamaica told World Finance.

With the sector’s progress centred largely on improvements to the regulatory environment, new product developments, pricing strategies and geographic expansion, it’s little surprise that banking has fast become a bright spot for Jamaica’s gathering recovery. Having grown 11.5 percent since 2005, in a period wherein manufacturing has contracted by much the same rate, growth in financial services is outpacing that of the wider economy, and by some margin.

11.5%

Growth in Jamaica’s banking sector since 2005

“These changes to the sector have empowered the industry to seek more flexible capabilities and technologies to accommodate rapid change, driven home by the importance of using data analytics to drive decision-making. The sector focuses more on low total cost-of-ownership for solutions and technology to manage the cost base, in light of tightening revenue margins”, said Henry. “We expect the banking sector will make operational processes more transparent to enhance customer satisfaction while continuing to promote process automation and more efficient workflows.”

Conscious that the sector was in a similar position for much of the early 1990s, when its non-stop development contributed to the national economic imbalance and resulting crisis, major names in the banking community have taken pains to ensure that growth this time around is sustainable. Regulations have come thick and fast, and only those with the willingness to uphold the country’s stringent controls have performed. Having signed up already to a procession of international regulatory protocols, the Jamaican banking sector of today is united by a responsible operating culture and a commitment to its people.

Honour the individual
In keeping to this sense of social responsibility, many names, principally NCB, have cranked up the focus on ensuring banks honour the individual. “The landscape of the banking sector workforce has transformed with persons filling jobs with revamped mind-sets to manage the new framework of technologies and improved customer interaction; today’s work pool is required to embrace change as a constant”, said Henry.

“The Jamaican banking sector is an industry that was not ordinarily known for radical changes but the workforce has moved along with the on-going transformation in the sector and reinvented themselves through training and improving their competitiveness. NCB has put measures in place through courses and job opportunities to assist employees in advancing their capabilities and skillsets in line with the environmental and business demands.”

NCB’s roots in the local banking community stretch back to 1837, and the bank has in that time secured a pioneering legacy that has shone through as the organisation has evolved and transformed through the years. Currently, NCB is the country’s largest financial group. “Focused on maintaining a profitable organisation, which provides highly competitive and innovative products and service offerings for our customers”, according to Henry. “Its aim is to maintain a solid governance structure and robust compliance framework, while utilising flexible business models and efficient operational processes and systems.”

Its vision is to rank among the leading five institutions in the English and Spanish speaking Caribbean by 2016, and, in a bid to achieve this end, NCB has been driving productivity in its core business while exploring inorganic growth opportunities elsewhere. Abiding by a threefold commitment to innovation, expertise and strength, NCB is looked upon both by consumers and industry peers as a pillar of Jamaica’s burgeoning financial services sector.

Boasting an asset base of $500bn (see Fig. 1), as of December 31 2014, NCB is committed to the cause of financial prosperity, and also wishes to instil social consciousness through its many nation-building activities. “Through relationships with our employees, customers, shareholders, suppliers, vendor partners, regulators and the wider public, we are focused on sustaining our strength and helping you put your best life forward.”

Having done a great deal to spearhead the latest developments in Jamaica’s banking community, NCB is an important cog in the banking machine and a key driver on the country’s road to recovery. Carrying out its operations always within a framework that observes proper ethical, regulatory and financially responsible practices, NCB has gone to great lengths to embrace its role as a leading corporate citizen in Jamaica. Add to that the bank’s wide-reaching structural adjustments made in response to the renovation of Jamaica’s banking landscape, and there’s much to distinguish NCB from its competitors.

Taking the lead
“NCB is taking the lead in advancing the renovation of the Jamaican banking landscape”, said Henry. Looking at the structural adjustments made by the bank, management has ensured that its corporate strategy drives the strategy of its business lines, while also promoting a low total cost of ownership for solutions and technology. NCB has also fostered an improved understanding of segment profitability and maximised up/cross sell opportunities and taken a lean approach to business processes, in a bid to reduce error, redundancy and waste. Lastly, the bank has implemented an enterprise information management initiative to enhance its data analytics capabilities.

“Given the far reaching impact of human capital on the sustainability of a company, we are focused on equipping the workforce with the knowledge, skills and competencies required for the NCB Group to exploit the current and emerging business opportunities in our operating markets. Fulfilment of our aspiration to become the premier Caribbean financial institution necessitates a workforce that is proactive, innovative, flexible and agile”, said Henry.

In furtherance of this aspiration, NCB has opted to declare the identification and classification of key positions across the business that directly impact business continuity and present risk exposure, while also mapping existing employee talent to current and future roles in order to identify competence gaps. The bank has also designed a robust succession management framework to ensure leadership continuity, talent retention and development and facilitation of individual growth and development.

On the digital front, the bank is a keen user of social media, particularly for the purposes of enhancing the recruitment, selection and placement processes. NCB also gives employees plenty of opportunities for personal development via its eCampus portal, which features a series of accredited courses for professional development, as well as business and skills related tutorials for personal growth.

The bank’s deserved status as a responsible corporate citizen is best evidenced by its NCB Foundation, which was formalised back in 2003 to fulfil the bank’s philanthropic commitments. Over the foundation’s lifespan, the bank has invested upwards of $1bn to support development projects across Jamaica centring on education, youth leadership and entrepreneurship, and community development and sports.

NCB

Spill over effect
Focused not just on furthering the banking sector, but on furthering the competencies of the population at large, NCB’s achievements go far beyond financial services and extend the communities in which it operates. The commitment is one best seen in the bank’s values, which read that it holds a deep and abiding respect for every customer, colleague and shareholder in its regional network.

“Our market leadership, solid track record of financial performance and growth, innovation along with an experienced team of executive officers and customer-focused staff gives us competitive strengths which position us for continued growth and future profitability in the island and the region”, according to Henry. For the time being, the bank’s efforts will rest with the sector’s on-going development and in ensuring that the banking landscape undergoes a smooth transition, as it falls subject to closer regulatory scrutiny and increased expectations from both customers and shareholders.

“A healthy and robust banking sector will aid the country’s economy by strengthening the capacity of businesses and individuals to grow and spur GDP growth, lower unemployment and increase economic certainty”, said Henry. “Additionally a healthy and robust banking sector contributes to socio-economic development through corporate social responsibility.”

Assuming that the banking sector continues to realise the same level of growth it has done in years past, its success could well spill over into less successful areas of the economy and prove decisive in charging the country’s recovery. Spearheaded by pioneering names in the industry, chief among them NCB, the banking sector is fast emerging as a leader, not in terms of economic contributions, but in observing ethical and responsible standards.

KBZ Bank on Myanmar’s strong future

Posted on by Ashton Wenborn

The financial industry in Myanmar is in a phase of momentous transformation, with new market entrants in the banking sector, both local and foreign, the emergence of the private insurance sector, and the launch of the Yangon Stock Exchange driving growth. The government’s focus on liberalisation has also created a dynamic and attractive landscape for both foreign investors and the international business community, and Myanmar’s financial landscape has benefitted greatly as a result.

spoke to Nang Kham Noung, Executive Director of KBZ Bank, about the transformation sweeping the banking sector and what the future holds for financial services.

There are tremendous opportunities for growth in Myanmar’s banking sector as most figures cite that the unbanked population comprises 95 percent of the country’s population

How would you assess the outlook for growth in Myanmar’s banking sector?
Due to increased competition in the industry, Myanmar’s banking sector is becoming more dynamic. In addition to the extension in commercial banking products, many banks are now starting to concentrate on new segments such as SMEs and the mass market.

There are tremendous opportunities for growth in Myanmar’s banking sector as most figures cite that the unbanked population comprises 95 percent of the country’s population. Taking into account that only five percent of the population is participating in the banking sector, the prospect for immense growth is certain. Among the banked population, we are already starting to see incomes rise in the cities and the seeds of an emerging middle class starting to show.

There has been strong interest from foreign banks wishing to enter the Myanmar market. A total of 25 banks bid initially on a license to operate, with nine banks coming from Australia, Japan, Singapore, Malaysia, Thailand and China eventually being awarded licenses. This is a clear indication of the positive outlook for future growth and a sign of confidence in Myanmar as a market for the international community.

What government reforms are required to make the banking sector more internationally competitive?
The government has undertaken many reform initiatives since the political, economic and social liberalisation commenced in 2010. We have to acknowledge that the Myanmar government has been extremely progressive, taking into account that the country has been isolated for over 50 years. Since 2010 the government has instituted extensive reforms to the banking sector and has given it increased international credibility. The regulatory environment is much more flexible today.

Are financial institutions ready for the current course of development?
The rate of development in recent years has been rapid and fast paced. Some of the financial institutions in Myanmar have been flexible and innovative in keeping with the changing financial ecosystem. The financial institutions that have been flexible have been able to capitalise on liberalisation, greatly expanding their operations and product range year-on-year, while others have been left lagging behind. Financial institutions like KBZ that focus on investing in human capital, technology and strengthening corporate governance are best equipped to thrive in this evolving landscape.

What are the biggest challenges for KBZ Bank and the banking sector in general?
The biggest challenge facing the entire banking sector is the shortage of skilled and qualified banking professionals within Myanmar. As a whole, the banking sector here is expanding and adding more people into its ranks every month. There is increased demand as well as increased competition to recruit suitable talent locally. KBZ Bank has experienced unprecedented growth. In 2012 we had less than 5,000 employees while today we have reached over 13,000. We are facing increased difficulties recruiting staff with strong technical and analytical skills. We are also finding it more difficult to recruit staff for our branches outside of the city areas.

How do you overcome these challenges?
I believe people are our best asset. KBZ Bank is investing heavily in the development of HR capital. We provide comprehensive training programmes at all stages of employment and opportunities to develop new skills. We have dedicated training centres in our two largest cities of Yangon and Mandalay to ensure our employees are equipped with the necessary skills to move our company forward. We have also sent many of our employees abroad on education and training programmes, as well as to our partner banks to facilitate knowledge transfer and acquire international best practices.

What does the future hold for KBZ?
We look at the future with optimism. With the new reforms come challenges as well as opportunities. At present we are working to transform ourselves to become regionally competitive while maintaining our position as a leading bank with the largest market share in Myanmar. We believe that we are very well placed to grow along the trajectory as the country grows and bring our people along with us.

Sampath Bank pioneers Sri Lanka’s economic growth

Posted on by Ashton Wenborn

The global economy was expected to grow by 3.3 percent in 2014, growth that was forecast to remain at the same level by the end of 2015, should momentum be maintained. However, the financial sector has faced several significant challenges, which threaten to disrupt such growth. Whether it be the rapid decline in oil prices, the quick adjustments in exchange rates, escalating geopolitical tensions related to Russia/Ukraine and conflict in the Middle East, or the increased concern about the economic and political future of the EU, each has posed some sort of threat to the global equilibrium.

Here parallels can be drawn with the Sri Lankan economy, with the rapid economic growth dependent on finding a stable political environment in the country. The Sri Lankan economy was able to maintain a growth rate around seven percent up until the end of 2014, it then decreased to 6.4 percent by the end of the first quarter of 2015.

Most of the government infrastructure projects in the country have been delayed due to new priorities. This could have a significant effect on the construction sector throughout 2015, and could slow economic growth further. The sector was one of the prime contributors to the country’s economic growth in previous years, but due to the indeterminate political future, private investors and foreign investors could hold back their investment.

LKR 432bn

Sampath Bank assets in 2014

Elsewhere, the leisure sector continues to expand in line with the increasing number of tourists, with an 18 percent increase in visitors year-on-year as of March 2015. Per capita income is estimated to be around $4,009 for 2015. The country’s currency platform shows a mixed outcome over the first six months of the year, with the Sri Lankan rupee depreciating against the US dollar and UK pound sterling, while appreciating against the euro, Japanese yen and Australian dollar. Annual average inflation declined to 2.1 percent in April 2015 from 3.3 percent at the end of 2014. This recent trend in inflation rate is mainly due to aforementioned decrease in oil prices in the country and price reduction on essential product and services by the government. This trend is expected to continue into late 2015.

Ups and downs
In 2014 Sri Lanka’s banking sector began with restrained credit growth due to moderate demand for credit in the market and a reduction of exposure to pawning portfolio, due to the steady decline in gold prices. However, private sector credit growth rebounded during the latter part of the year and momentum continued into 2015. As such, an increase in credit demand could be expected in the later part of the year, if political stability is achieved.

Market interest rates fell in 2014 and the same downward pressure on interest rates continued into 2015 due to the Central Bank of Sri Lanka’s (CBSL) relaxed monetary policy. Average weighted lending rates of the sector decreased from 15.18 percent at the end of 2013, to 11.91 percent at the end of 2014 and to 11.53 percent at the end of April 2015. Falling interest rates and increased competition threatened to narrow the sector’s Net interest Margin (NIM), but even with the shrinking rate, the NIM remained at the 3.5 percent from 2013 to 2014, and increased slightly to 3.8 percent at the end of first quarter of 2015.

CBSL’s relaxed monetary policy has also decreased the deposit rates in the market sharply, reducing the average weighted fixed deposit rates from 11.78 percent at the end of 2013, to 7.33 percent at the end of 2014 and to 6.87 by the end of 2015. The CASA (current and savings accounts as a percentage of total deposits), increased from 33.9 percent at the end of 2013, to 39.5 percent by the end of 2014 and only a marginal change was observed at the end of first quarter of 2015.

Within this challenging environment, the banking sector saw the post-tax profit increase to LKR 88bn ($661m) at the end of 2014, a growth of 18 percent. One positive knock-on-effect of the shrinking interest rate is that banks are encouraged to focus on other income sources as a result. This has seen the total non-interest income of the banking sector increase to LKR 98bn ($734.5m) at the end of 2014, a 14 percent growth on 2013, albeit the rate did marginally decrease by LKR 3.1bn ($23.2bn) in the first quarter of 2015.

Yearly comparison
In comparison with the banking sector performance in 2013, return-on-assets and return-on-equity also increased in line with the increased profit of the sector, and stood at 1.4 percent and 16.6 percent respectively as of December 31 2014. This level remained until March 31 2015.

Throughout 2014, banks were keen on improving the asset quality by recovering non-performing loans, specifically non-performing pawning advances. The asset quality is measured by non-performing loan to total loans and has improved from 5.6 percent in 2013 to 4.2 percent at the end of 2014 and 4.3 percent at the end of the first quarter of 2015.

The branch network expanded marginally in 2014, comparatively less than the previous year. This is mainly due to challenging market conditions the country experienced last year and future expansions will depend on the necessity of traditional branch banking in Sri Lanka, innovative banking products/services and technology. Nevetheless, it is possible that leading banks in Sri Lanka are purposefully increasing the branch network at a slow pace as they have already covered most of the country, while other banks will continuously increase their network in par with the banking necessities of the economy.

Local challenges
Sampath is one of the largest private sector banks in Sri Lanka, ranked third based on its asset base. As pioneers in technology, we have introduced IT-based banking solutions to customers, specifically the introduction of the first ever ATM in Sri Lanka in the late 1980s. Since then we have continued to provide technology-oriented products and services such as internet banking, mobile banking and foreign currency ATMs.

Since the incorporation of the bank in 1986, we have faced many challenges and so our achievements thus far have been nothing short of remarkable. The bank has played a prominent role in developing Sri Lanka’s retail banking sector in recent years, by opening 89 new branch outlets since 2010, arming each with well-trained staff members and advanced technology to provide the best service in what is a highly competitive market.

The bank has 223 branches in the Sri Lanka covering almost all the vital business areas in the country and has 345 ATMs, which enable us to serve local and especially foreign customers. Our foreign currency exchange ATMs are located in famous tourist areas in the country to make transactions easier and more central. The bank has recently invested largely in off-site ATMs in order to facilitate the customers who do not have speedy access to the branch network. Our ATMs provide many services including cardless cash and bill payments. If you are a foreign tourist or anyone intending to visit Sri Lanka, we can provide tailored banking services for you in any part of the country.

Over the years Sampath Bank’s achievements have been honoured by internationally recognised magazines, shoulder to shoulder with some of the biggest names in the industry. It was named Best Bank in Sri Lanka by Euromoney for a second consecutive time in 2014 and has most recently been named Best Commercial Bank and Best Retail Bank for Sri Lanka in 2015 by World Finance.

Despite such success, it is the bank’s statistics that speak for themselves. Our pre-tax profit growth for the year 2014 showed a remarkable 49.8 percent growth, compared with 28.5 percent in 2013. In addition to this, our asset base stood at LKR 432bn ($3.24bn) in 2014 and increased by LKR 9bn ($67.6m) in the first quarter of this year. Our core capital ratio is well above the minimum regulatory requirements and the bank also has an AA (stable) rating from Lanka Rating Agency and A+ (stable) from Fitch Ratings.

Our strategy is to tackle the challenges of the local banking industry in a diligent way, for instance, due to shrinking interest margins we would focus on other income sources such as fee and commission based income, charges recovering, etc. We are also focusing on a growing quality credit portfolio and improving credit quality of the existing portfolio. Currently our non-forming ratio is around two percent, which is prudently maintained by us and it is well below the non-performing ratio of the banking industry.

We don’t just do banking; we also involve and invest in many corporate social responsibility projects. We have so far been involved in renovating northern railway, renovating tanks to aid agriculture in rural areas and have helped out in a massive tree-planting project, among other things.

Sampath Bank, being pioneers in providing innovative banking solutions to customers in Sri Lanka, will continue to improve its service quality with improved efficiency coupled with innovation. Furthermore, as a premier responsible corporate citizen in Sri Lanka, Sampath Bank is continuing to focus and invest in development projects in vital areas of the country’s economy, such as education, environment and community based developments.

Piraeus Bank works to restore trust in Greek banks

Posted on by Ashton Wenborn

Headquartered in Athens, Greece, with more than 21,000 employees in nine countries, mainly in Southeast Europe, Piraeus Bank Group offers a full range of financial products and services to approximately six million customers.

Founded in 1916, Piraeus Bank was privatised by the Greek State in 1991 and has rapidly grown in size and activities since then, with total assets of the group amounting to €89bn, net loans to €56bn and customer deposits to €47bn on March 31 2015.

In the past three years, the Greek banking system has undergone a series of significant developments, in particular a major round of recapitalisation and consolidation. Piraeus Bank has played a pivotal role throughout this process, aiming to safeguard the industry’s financial stability and support the recovery of the Greek economy.

In the past three years, the greek banking system has undergone a series of significant developments

The biggest branch network
In particular, Piraeus Bank successfully completed in the past three years the integration of seven different banking operations in Greece (ATEbank, Geniki Bank, Panellinia Bank, and the Greek operations of CPB Bank, Bank of Cyprus, Hellenic Bank and Millennium Bank) in record time, tripling the bank’s size. As a result, Piraeus Bank is today the leading bank in Greece, with the biggest branch network in the country and market shares of 29 percent in loans and 28 percent in deposits.

As a universal bank, it serves all business segments with particular expertise in the areas of small- and medium-sized enterprises, agricultural banking, consumer and mortgage credit, green banking, capital markets and investment banking, leasing, and factoring.

Piraeus Bank is widely perceived as the most innovative bank in the Greek market, with a customer-centric approach, strongly founded on its corporate philosophy and values of innovative entrepreneurship, client service, empowerment, integrity, social responsibility and collaboration, as well as its ability to deploy market-leading technological solutions.

The bank’s customer focus is reflected in its customer segment based approach. Focusing on the specific needs of customer segments and local communities enables the bank to fine-tune its offering and provide effective solutions. These solutions are offered through the bank’s nation-wide network of 800 branches, 1,800 ATMs, 470 APSs and a unique e-banking platform.

Piraeus Bank was the first bank in Greece to launch an integrated electronic banking platform (ATM, phone, web, mobile) under the brand Winbank in 2000. The platform features more than 800 transactions, payments and applications, while more are constantly being added. Customers are able to manage their banking products and services online, through technologically advanced tools, enjoying high levels of security, user friendliness and speed.

Complementing the web banking platform is the mobile banking suite of applications Winbank Mobile, which was recognised in 2012 as Best Mobile Banking Platform in Europe, and includes the innovative, award-winning Easypay Mobile app (bill payment through barcode scanning and plastic card scanning), Instant Cash app (ATM cash withdrawal without the need of a card) and the Yellowday app (loyalty-oriented, merchant-funded rewards).

Winbank is today the bank’s main platform for transactions, accounting for more than 80 percent of remittances, credit card payments and transfers, while its users constitute the most satisfied customer segment of the bank, with customer satisfaction of over 95 percent and very high rates of loyalty, product ownership and product usage.

Piraeus Bank is the only bank in Greece to offer all consumers a platform of merchant-funded rewards. Yellowday is a newly developed innovative, mobile-first, deal-serving platform, where a consumer may browse the app and find discount deals/coupons for products and services in various categories. The application runs on gamified, geofencing-enabled mobile apps, as well as on a powerful web site, making it a unique loyalty-oriented platform, one of very few in Europe.

Piraeus Bank Group also has a strong digital-media presence, which includes websites optimised for search engines, various specialised Facebook pages, a Twitter account for customer service issues and a YouTube channel.

In order to assess customer satisfaction, Piraeus Bank conducts regular customer surveys. In the last major survey conducted in 2014, post the integration of acquired operations, 58 percent of the interviewed customers assessed their overall experience with the bank as being ‘excellent/very good’ and 33 percent as ‘good’, adding up to a total of 91 percent positive rating.

Reflecting an economy
Recently, the bank has been developing its product and service offering to reflect the current economic environment in Greece and address the resulting client needs. Since the beginning of the economic crisis, Piraeus Bank has been intensifying its support to its customers – businesses and households – facing difficulties in repaying their loans, through specialised debt-adjustment programmes. Piraeus Bank has established a dedicated recovery banking unit aimed at managing the non-performing loans and other non-core assets of the bank, in order to provide effective restructuring solutions to customers and maximise value creation for the bank.

As part of this drive, the bank decided recently to implement a far-reaching debt-relief and advantageous debt-restructuring programme addressed at customers in extreme financial hardship, with 100 percent relief of consumer loans and credit card debts up to €20,000, and freezing of payments on mortgage loans, for customers qualifying for special humanitarian assistance by the state.

Even under the current constraining environment of capital controls, Piraeus Bank remains committed to offering its customers the best service possible, responsibly and professionally, leveraging especially its multi-channel platform.

Piraeus Bank places particular emphasis on corporate social responsibility, embedding this focus in its business activities, with special emphasis placed on the protection of the environment and the preservation of cultural heritage. The bank’s environmental strategy is reflected in the inclusion of environmental criteria in business processes, the active management of the bank’s environmental footprint, the focus on green entrepreneurship, the undertaking of climate risk assessments and special initiatives aimed at the protection of biodiversity, and the provision of environmental training for employees.

In 2007, the group established a corporate responsibility committee, which sets out the group’s strategy for the bank’s social, cultural and environmental initiatives. In terms of social initiatives, Piraeus Bank supports employee volunteer actions, provides direct grants and donations to selected causes, and collaborates with non-government organisations, with a focus on supporting families, education, health and entrepreneurship.

Furthermore, the Piraeus Bank Group Cultural Foundation (PIOP), in the context of supporting the preservation and showcasing of Greece’s cultural heritage, promotes initiatives combining the support of culture and of the environment. The foundation’s work is carried out through its seven thematic museums in the Greek provinces, which contribute substantially to the economic development and tourism in these remote or island regions. PIOP’s rich output also includes historical archives, a library, research work, publications, educational programmes, and cultural and academic events.

Piraeus Bank Group is a signatory of the United Nations Global Compact and The Finance Initiative of the United Nations Environment Programme (UNEP FI). The group also participates in the Carbon Disclosure Project and is a constituent of the Dow Jones Sustainability Index for Emerging Markets.

A better offering
Piraeus Bank is strongly focused on the development of its people, a priority of particular relevance in the aftermath of the multiple recent acquisitions, which resulted in the welcoming of 12,000 new employees. The bank implemented a uniform HR policy and promoted from the start the active participation of new employees in the group’s operations, offering opportunities for high performance and creativity, supported by numerous training programmes. All actions taken were based on the principles of transparency, merit and responsibility, leading to the embracement of a unified corporate culture and the achievement of the group’s employees’ homogenisation.

The group also places particular emphasis on its infrastructure, processes and systems, with the aim to increase effectiveness and efficiency, continuously upgrade IT and data systems security, and provide timely and reliable information on multiple levels. The bank’s modern Group Data Centre achieved a Tier IV certification by the UpTime Institute in 2014, making Piraeus Bank one of only 50 companies worldwide to possess such a certification and the only one in Greece.

Restoring trust in the Greek banking system is now one of the most important tasks that Greek and eurozone officials will face as they try to get the economy moving again after the latest turmoil, which has affected the banking industry most directly. Piraeus Bank is in the centre of this effort and is fully committed to achieving this aim, while upholding its values and being fully aware that its actions have a direct effect on its customers – households and businesses – as well as on the group’s employees in Greece and other countries where it operates.

In this context, Piraeus Bank is facing the challenges ahead with the high sense of responsibility resulting from its leading position in the market. The bank’s main strategic priorities focus on the enhancement of its liquidity and safeguarding and strengthening of its capital base; the effective management of non-performing loans using innovative methods and tools; the reduction of operating costs and recovery of profitability; and the enhancement of customer service quality, with the overarching aim to support the restructuring and recovery of the Greek economy and banking industry, while remaining the number one bank in customer choice, satisfaction and loyalty.

ICSFS equips financial services industry with cutting-edge technology

Posted on by Ashton Wenborn

In today’s world, when a business is looking to take things to the next level, it turns to technology to help get it there. In the banking sector, the current economic climate and increased regulation mean that profits are restricted and bottom lines shrink, but through the application of new technologies banks are able to reduce outgoings and remain competitive in this highly constrictive environment.

Nowadays, banks must yield their highest return on investment by transforming their business through implementing and investing in innovative technology solutions that will drive productivity, lower their costs and risks, and deliver user centricity – for customers and employees. Banks can transform their business whether by replacing their legacy or in-house system, adapting a new system or adding new layers of product features on existing system. In order to make sure that they make the best decision moving forward many financial organisations turn to companies like, ICS Financial Systems (ICSFS), which make it their mission to help its clients to evolve their business through the latest technologies on offer, allowing them to achieve shorter innovation cycles and get products and services to market faster.

In order to better understand how technology is unlocking banks’ potential in such a challenging environment, World Finance caught up with ICS Financial System’s Managing Director, Robert Hazboun.

The banking industry today is experiencing a major shift caused by technology advances; in fact these advances are more like an earthquake rather than a steady change

How important is technology in equipping banks more appropriately for the present climate?
Utilising technology is the key not only to be ahead of the curve, but also to remain ahead in today’s fast-moving market. I believe that banks can generate and improve productivity by a much higher percentage of their usual intake. By utilising technology, banks can significantly increase their level of automation, hence higher performance and lower risk, and simultaneously reduce their manual processing, whether it’s for the front, middle or back office.

Banks should look for optimal end-to-end technology solutions that simplify their processes taking into consideration the solution’s flexibility and agility, development approach and reliability, real-time processing and cutting edge technical services. In summary, banks should capitalise on technology innovation in this ever-changing market. A fully-fledged, “bank-in-a-box solution” is how our clients describe our solution. Other clients have stated that they have “not missed a beat” after rolling out ICS Banks.

What are the major challenges for banks looking to transform through technology?
Leveraging technology has put a lot of pressure on the IT departments in any bank, as they are expected to accommodate and integrate new technologies into each business process of the bank, and face the challenges accompanied with the new technologies as well as measure and control the quality, create value, enhance productivity and drive IT-led revenues.

The right investment is achieved by choosing the right technology solution. Today, there are so many technology solutions that claim to offer a one-stop-shop for any bank whether it’s a universal, retail, corporate or even an Islamic bank. However, many of these technology solutions seem to fail in one or more of the banks transformation processes, whether in gap analysis, migration, implementation, or in optimising data centre and disaster recovery, or even in complying with local requirements and new regulations.

It is a major challenge for banks as any technology solution, whether it’s an add-on or a new system, is a big investment. It is like a marriage; if the bank and technology provider started the relationship with the right methodologies and were both honest from the beginning and completed the roadmap as planned, the relationship will last happily ever after. However, if the technology provider is not dealing with transparency with the bank, problems and delays and even more costs will occur, which will lead the bank to distrust the technology provider and end up with a divorce at the end.

When a bank rolls out a new system, theoretically the bank should see instant effective performance. While the bank is eager to see results, employees are used to deal with a system that they were comfortable with, now, although the new system is much more user-friendly and agile, employees lean to be more attached to the old system they are used to. Banks need to make sure that their employees’ behaviour will not incur any risk of losses and that they are motivated by serving their clients to become client-centric.

We recognise the challenges the banks face during the transformation especially when they have prospects of new acquisitions – the challenges will double if not triple. At ICSFS, we tackle the challenges so the transformation runs smoothly. We have replaced many systems over the past decades, and have experienced and successfully tackled the challenges with our clients. As complicated as the transformation is, ICSFS proactively enhances the business and technological demands of its users with its precise and accurate platform design that covers majority of emerging business trends.

How can this transformation drive or contribute positively to the business?
The technology transformation contributes positively to the business strategy; it will enable the bank to maximise profitability, cost efficiency, productivity levels and will enhance the use of capital, liquidity and leverage. Also, with leading compliance and risk capabilities, the transformation will minimise fines and losses; hence the bank will be more in control.

Can you tell us about the major ways in which technology has shaped banking in recent times?
The banking industry today is experiencing a major shift caused by technology advances; in fact these advances are more like an earthquake rather than a steady change. Mobile technologies, social media and of course cloud computing are advancing swiftly. In the past, banking technology providers had a very little or no problems keeping up with the pace of technological advances rather than financial products change. But nowadays, technology is taking the lead so financial and technological products require quick deployment. For example customers are eager to have their new financial products deployed rapidly or having a new mobile banking or social media-banking tool implemented and deployed in a very short time. The core competition spreads from financial banking products development to technological banking products deployment.

How is it that ICSFS factors into this transformation?
At ICSFS, we understand that universal and retail banking industry is restructuring, producing a rich supply of information and services to customers. The relationship between banks and customers is changing rapidly, requiring innovative solutions. With increasing competition and volatile economic situation, financial institutions are now looking beyond existing traditional business models to identify future profitable opportunities.

We also understand that modern banking today is on a smart planet, where financial institutions are obliged to serve their customers anywhere and anytime. This is exerting pressure on financial institutions and banks to open their infrastructure and push their services to banking and non-banking customers. This will, in turn, lead to challenges of scalability, performance, security and cost.

We are dedicated to provide our clients with comprehensive, smart and business-driven banking software with a record-breaking time of implementation. Our team ensures best practice processes from initial planning to risk and mitigation analysis, fine-tuning, development, testing, data cleansing and migration, implementation, training, going live and handover. ICSFS solutions provide innovative products and next generation banking services for its customers.

What differentiates your services from your competitors?
Our strengths are our professionalism, flexibility and cutting-edge technical skills. Our development approach ensures a rich spectrum of features in our software, ICS Banks, reflecting customers’ actual process and best practice. ICS Banks solutions are parameterised powered by Business Process Management so clients can quickly put to use the features they need with minimum time, risk, effort and cost.

ICSFS caters to the needs of modern financial institutions. ICS Banks is packaged as one complete solution to provide a complete integrated and parameterised end-to-end solution that covers all banking activities.

ICS Banks helps banks to transform operational procedures to meet current and future financial industry standards through applying best practices and by being in compliance with international standards; such as IFRS and Basel requirements.

One of our main strategies is to maintain a strong relationship with our partners and customers, using continuous interactions via internal and external communications. We embark the importance of building and preserving strong and lasting relationships with partners and customers throughout the organisation, as well as all external communications.

We have grown with our clients, and have successfully implemented and consolidated big banks – a five bank merger of 110 branches project was completed in four months, another project was for a nine bank merger of which each bank had a different core banking system totalling to around 300 branches, a project that reached completion in record-breaking of nine months.

What is ICSFS’ vision for a transformed banking industry?
Our vision is to ensure our growth by achieving the highest possible customer satisfaction, never compromising on the integrity of our approach or on the enhancement of our technical strengths. As critical as products and technologies are, nothing is more important to ICSFS’ success than the ability to build and preserve strong and lasting relationship with customers as in this century, technology is the heart of a bank, starting initially from the core to out-of-the-box solutions including internet and mobile banking. ICS Banks connects its users more efficiently with their customers, technology have not been well understood or trusted years ago, however now banks are becoming more interested in technology and are gaining competitive advantage and deploying digitalisation through technology.