Year: 2015

Europe’s real estate industry goes from strength to strength

Posted on by Ashton Wenborn

The real estate investment industry in Europe is booming. In recent years, it has seen record levels of cash being ploughed into the market, much of it emanating from Asian investors looking to secure core assets in some of the regions most admired cities. A by-product of this newfound obsession with property in prestigious locations, such as London, Paris and Milan, is that it has helped fuel a rapid rise in the market’s overall value and, fortunately for all those involved, it is a trend that shows little signs of slowing, with many industry experts anticipating even more cash finding its way into the region over the next 12 months.

Though the European real estate market has benefitted from a hefty increase in foreign investment, it would be wrong to assume that it arrived here by sheer chance. The sector has helped itself significantly in securing capital from abroad by greatly increasing levels of market transparency, as well as making general improvements to how it is regulated. The upshot of such developments in oversight has been a bolstering of investor confidence, with many now seeing the sector as a smart and secure investment alternative. New tools to support transparency, such as performance indices, investment guidelines and associations to bring the industry together, as well as other key regulatory changes, have all played a significant role in helping the real estate market in Europe continue its momentous rise in value.

[I]nvestment flows are less regional, and more global

One company that has its finger on the pulse of the European property market is CBRE Global Investors, with an impressive market share that comprises of more than $33.7bn (€26.7bn) of assets under its management (as per 30 September 2014), spanning 17 countries across the region. With the European property market set to hit record volumes this year, World Finance checked in with Pieter Hendrikse, CEO EMEA of CBRE Global Investors to find out what else is in store for Europe’s flourishing real estate market and how his company plans to meet the demands of its clients.

How does the real estate investment industry differ in the various regions in which you operate?
We see significant changes in the maturity of the market by region. European institutional investors have been investing outside of their domestic markets for decades, whereas Asian investors have only started to expand their investment horizons significantly to an international one in the last five to 10 years. This means that in Europe, most investors that commit to real estate have an allocation of approximately seven to 10 percent of their overall investment portfolio, but for other regions this percentage is still growing.

Lastly, what we have seen since the recovery of the crisis is that investment flows are less regional, and more global. There is a certain layer of institutional investors that are more and more becoming global players, with a wide scope and allocation model.

What trends are being seen in the real estate and wider investment market in Europe?
While funds played a major role in the business pre-financial crisis, we now see that institutional investors want more control by investing directly into real estate, often via joint venture and separate accounts.

The requirements from clients to have separate account structures is related to challenges that funds experienced during the crisis where investors were confronted with a lack of control and a lack of liquidity.

Through our separate accounts, we serve the same type of clients and investment capital but in a more direct way, on a one-to-one basis. We also offer joint ventures, club deals and multi-manager programmes in addition to funds and fund of funds programmes. Everybody still has the choice and we are still active in the same regions with the same strategies and form of execution.

This has not meant the end of funds as these have also evolved to meet investors’ requirements and the lessons learnt by fund managers through the crisis.

How is it likely to look in the future?
In many ways, the property market has started from scratch again, given the new market circumstances and we have noticed that the allocation models have changed as well. There is much more discipline in the market and less reliance on debt.

We’re seeing new lenders, new sources of capital and supply, and we are able to accommodate different strategies in multiple geographies and sectors with specific risk-return requirements.

What impact are new regulations having on the industry?
Regulations are necessary, and will help the industry to become more transparent, but as an industry, we are looking for a balance as regulation can be to some extent take away entrepreneurial freedom at a time that investors are becoming increasingly critical about how fund managers act.

We can’t afford to make mistakes in the new market environment, to provide lower quality management solutions or to drift away from the strategy and discipline. As an investment manager, you are looking to offer the right balance of caution and entrepreneurial spirit.

What key investment trends are there in the wider, global real estate markets?
Emerging investors, in particular those from Asia and sovereign wealth funds, are making an impact on the global investment industry. These emerging sources of capital are strong enough to bring a new level of competition to the markets and filled an equity gap following the crisis so are taken very seriously as new players. They have the funds to make these decisions, and also scalability: most of these investors are of such a size that they can make a significant investment independently, without having to pool up with other investors.

These players tend to be looking for core real estate in their first moves in new markets. They often choose to invest into landmark buildings or other top assets within their asset classes, limiting risk, but providing a stable income. This has meant they are strong competition to existing investors who have returned to the market looking for core investments, particularly in Europe where the economies were still in crisis.

What products does CBRE Global Investors offer?
We offer access to a true European real estate platform; we have offered a pan-European approach for almost 20 years though our country offices. We have now opened up our European structure and are moving away from a country-specific approach to a pan-European one. That strategy has already started to bear fruit. We’re seeing a serious inflow of capital, from the US, Asia and the Middle East.

CBRE Global Investors is now profiling itself as a broader investment manager with a mixed offering of structured investment vehicles, separate accounts and global multi-manager mandates. We’ve emerged healthy out of the crisis despite some of the risks. Some of our fund vehicles have experienced pain, but that was due more to the market cycle than to the intrinsic quality of the assets.

After the merger, we spent time revising and renewing our company strategy in EMEA; we looked at what we had, what we had to do and what we would like to do. That is all behind us now. We have survived and have moved through the storm. We have made a big and serious transition in terms of integration and formulating a new strategy, culture and policy in the middle of the stress of the crisis and during the liquidation of some of our funds.

How has the company developed since its founding?
Since the merger with CBRE Group it has allowed us to grow a truly integrated company. We are now backed by a firm that purely focuses on real estate as its core business and this has given us the competitive advantage of a complete offering of real estate services globally. The platform for CBRE Global Investors also became truly global and we can offer clients a joined up service for their domestic and international requirements.

How does CBRE Global Investors stand out in a competitive market?
Our differentiators are that ability to handle global or pan-regional relationships with clients so they can comfortably invest outside their own borders, and our on-the-ground property expertise giving us local insight and knowledge to make the best investments of their behalf. Our scale also means we have the capacity to adapt to changing investor requirements.

What is CBRE Global Investors’ long-term strategy and what are its key focuses for development?
After being a net seller in the last couple of years due to maturing funds, CBRE Global Investors is a net buyer again. It is our strategy to be an active asset manager and not an asset collector and it is our goal to materialise returns. We have introduced new strategies to grow our business again, and we aim for a balanced mix between separate accounts and pooled funds.

Putin proposes single currency for the EEU

Posted on by Ashton Wenborn

Amid growing tensions between the EU and the Kremlin, President Vladimir Putin has called for a regional currency union with Belarus and Kazakhstan, whose leaders are believed to support the proposal to create a Eurasian central bank by 2025. Putin’s plans follow instructions he gave to Russia’s central bank earlier in March to determine the future direction of integration in the EEU and the feasibility of establishing the monetary union.

The proposals follow a turbulent period for Russia

The proposals follow a turbulent period for Russia during which the ruble devalued by 40 percent, as a result of international sanctions and falling oil prices, while the value of the Belarusian ruble and Kazakh tenge have also plummeted in recent weeks. Speaking at an EEU meeting, Putin suggested it would be beneficial for the three countries to work together to overcome their economic difficulties.

He said: “The time has come to discuss the possibility of creating a future currency union. Working shoulder to shoulder, it is easier to respond to financial and economic threats from outside and protect our common market.”

Kazakhstan, the second largest post-Soviet oil producer and economy within the bloc, has suggested the three nations synchronise their monetary policies before attempting to adopt a single currency. While Mikhail Myasnikovich, former Belarusian prime minister, has called for the process to be fast-tracked within the next four years, the former head of Kazakhstan’s central bank estimated 10 to 12 years before the introduction of a Eurasian currency.

The economic bloc, which also includes Kyrgyzstan and Armenia, formally began in January but has spent years creating a single market among member countries without trade tariffs. Putin’s plan for further integration has been likened to the process the EU underwent in the second half of the 20th century.

A new age of sustainability for South Africa’s mining industry

Posted on by Ashton Wenborn

Although mining is the backbone of South Africa’s economy, its success is not without consequence; and only by considering environmental and social wellbeing alongside financial performance can leading companies pave the way for sustainable growth. As the country’s mining industry enters into the modern age, it is essential that companies work responsibly and, in doing so, benefit all corners of society.

Looking to the example set by Anglo American Platinum, it’s clear that key industry names can bring a greater measure of sustainable prosperity by focusing on matters aside from profit-making potential. We spoke to Chris Griffith, CEO of Anglo American Platinum about the country’s mining industry and the importance of corporate social responsibility in shepherding it on to greater things.

What’s the current economic environment like in South Africa, and how is this affecting the mining industry?
The South African economy is diverse with a number of activities contributing to the economy. However, mining is still a significant contributor to the South African GDP. Here at Amplats, we develop socio-economic programmes such as agricultural programmes and contribute significantly to South African education and health by building schools, clinics, roads etc. We see ourselves as an integral part of the society.

We are also encouraged by the manner in which stakeholders such as unions, employees, the government, businesses, investors and NGOs collectively agree that we have to work together to develop sustainable solutions in the mining industry. Labour unrest affects all sectors of the economy especially small businesses within mining towns. We have seen how a labour strike in one sector can negatively affect other sectors that are stable.

[M]ining is still a significant contributor to the South African GDP

Environmental, social and governance risks are fundamental to our business, we see financial risk as an integral part of the business, the same way we see environmental, social and governance risks, and we continue to identify risks in all areas of our business to ensure a holistic approach to business sustainability. We are encouraged that the South African economy is steadily improving.

How has that affected Anglo American Platinum and how has the company adapted to it?
Despite the challenging environment of the industrial action, the effect of business improvement initiatives is evident across all our operations. Our revised marketing strategy aimed at improving margins and increasing future demand for platinum group metals (PGMs) continues to have a positive impact. We prioritised all existing asset-optimisation, supply chain programmes and initiatives identified in the 2012 Platinum Review. We continue with our value-driven strategy, cost-reduction programmes and improving operating efficiencies.

Our focus remains on the restructuring and repositioning of our portfolio. We have the high quality assets to enable us to do this, and a new capital optimisation programme to ensure we allocate our scarce capital to the highest potential assets and projects.

What mechanisms does Anglo American Platinum have in place with regard to the environment?
We aim to create and extract maximum value from our full basket of metals in a safe, profitable, competitive and sustainable way, for the benefit of all stakeholders. We do this responsibly by ensuring that resources such as water and energy are optimised and saved. For example, our total new-water consumption decreased from 33.4 million metres cubed in 2013 to 27.1 million metres cubed in 2014. We have total basal energy expenditure of 61.3 percent against a 2013 target of 58 percent. Our safety has improved too. We believe that zero harm is achievable.

What has the company done to ensure it is socially responsible towards South Africa?
Social deficit is a fundamental issue not only for Anglo American Platinum, but for all sectors of society and governments in the developing nations, and South Africa is far from unique. Moreover, South Africa is still repairing wounds suffered as a result of apartheid, and most of our host communities still lack fundamentals such as schools, roads, health facilities, transport infrastructure and so on. Mining is seen as a source of employment and income, and the local economy still needs to be uplifted to improve access to facilities and other opportunities.

Mining contributes significantly to the GDP of South Africa and other countries where we operate. In figures, mining creates 1.35 million jobs, accounts for about 19 percent of GDP and is a critical earner of foreign exchange – typically greater than 50 percent. The industry also accounts for 20 percent of private investment, 12 percent of total investment, attracts significant foreign savings of around ZAR 1.4trn ($121.4bn), has approximately ZAR 440bn ($38.1bn) in annual expenditure, spends ZAR 93.6bn ($8.1bn) on wages, ZAR 4bn ($346.9m) on skills development and ZAR 2bn ($173m) on community investment.

In 2014, Anglo American Platinum trained 49,763 employees, with 4.9 percent of total payroll spent on training and development. With regard to sustainability indicators; in healthcare 16,875 community members received primary healthcare by company funded mobile clinics. In education 79.4 percent of the company bursary fund for communities was awarded; and there was the completion and handover of a ZAR 40m ($3.47m) school for the local community in Bizana. We also invested in skills training, with 1,320 employees, community members and contractors benefitting from adult basic education and training programmes.

We believe our social contribution is notable and significant. However, our host communities and citizens require more and there is still a lot to be done, which is why, as a company, we have developed Alchemy. Alchemy – Anglo American Platinum’s ZAR 3.5bn ($303.8m) social development framework model for shared ownership – is a community based empowerment scheme. The sole aim of Alchemy is simply to develop and empower our host communities beyond the life of mine. We believe that this is the right thing to do and that overtime, communities will benefit immensely from this strategic initiative.

Anglo American Platinum was recognised as Best Performer in 2013 and 2014 by the Johannesburg Stock Exchange’s Socially Responsible Investment Index.

What main governance structures and processes has the company put in place and what impact are they having?
The board regards governance as fundamental to the success of the company’s business and is committed to principles of good governance in directing and managing the company to achieve its strategic objectives. The board conducts its business in accordance with the principle of King III, which includes the exercise of independent discipline, responsibility and transparency, and also the accountability of directors to all stakeholders setting out its role and responsibilities.

Platinum supply by region

Through proactive stakeholder engagement, not only do we integrate media views but, specifically, engage minority shareholders because we believe that they provide useful and important views and strategies to ensure that the business remains sustainable.

Stakeholders are engaged in groupings and on an individual basis. That is why we have developed an ESG communication strategy that will ensure that every stakeholder’s view is taken into consideration and addressed.

In short, structures such as a Safety and Sustainable Development Committee, Social Ethics and Transformation Committee, Audit and Risk Committee, Executive Committee and a Business Integrity Committee ensure that the whole system operates within local and international good governance frameworks.

What are Anglo American Platinum’s key policies with regard to sustainable development more generally?
Sustainability is not an isolated phenomenon but an integral part of the business. Everything we do is done through lenses of sustainability, and our policies are reviewed and tested against best international sustainability practices and standards. The anti-competitive policy is a practical example: our reputation as a business may be negatively affected if we do not identify employees and contractors who are exposed to antitrust risk, and ensure that they all receive appropriate training. As a company we subscribe to the principles of International Council on Mining and Metals, which means that we must mine responsibly. We ensure minimal environmental impact and eliminate other factors such as noise and dust.

What challenges do the company and wider industry face?
As the company develops so too do social needs. Land and housing is a challenge, and the two represent a high risk to employee health and safety. As a company, we build houses and ensure employees have a living-out allowance when choosing to live outside of identified accommodation. Some of the challenges have come as a result of undeveloped infrastructure, such as public roads, and while this is not entirely within our control, we see this as a challenge because our employees are exposed to unsafe roads. In response to these challenges we partner with local, provincial and national government in initiatives focused on improving infrastructure. We build roads, provide safe transport and provide accommodation.

What is Anglo American Platinum’s overall vision for the future in terms of the wider platinum industry?
Our vision is to be a global leader in PGMs, from resource to market, as we work towards a better future for all.

Murex spearheads capital market innovation

Posted on by Ashton Wenborn

Out of the financial crisis came a common consensus that agreed capital markets must exist in a more tightly controlled risk management environment, if only to avert the calamitous events of the recent past. With this school of thought has emerged a sharper focus on innovation and technology in bringing changes to the industry. Only by incorporating the latest technological advances and partnering with capable enterprise software providers will leading industry figures acclimatise to always-complex and often-disruptive changes to the financial services sector.

Of the firms to have assisted the financial services sector in meeting more stringent risk management controls, there are perhaps none more capable than World Finance’s 2014 Best Risk Management Systems Provider award winner and enterprise software provider Murex, whose contribution to the transformation of capital markets recently is second-to-none. “Murex has been the leading provider of cross-asset trading, risk management and processing solutions for the financial industry since its creation in 1986”, according to the company’s Chief Marketing Officer, Stella Clarke. “Murex has played a key role in proposing effective technology as a catalyst for growth and innovation in capital markets.”

The key to success in providing capital markets solutions is not simply investment and customer centricity, but a focus on key structural changes in the industry

Headquartered in Paris, the firm boasts as many as 17 offices worldwide, a staff of 2,000 specialists and has stayed the course in committing a huge chunk of its income to R&D. Over the past three decades, the firm has abided by two central pillars – innovation and customer partnership. By always enhancing its technological experience and expertise, Murex’s reputation in the industry is solid. Not only that, but in treating each partnership as a shared journey, the company is seen the world over as a trusted advisor and an enabler of growth and transformation. The firm strives to attract top talent and to maintain a solid culture of financial and technological expertise, and, in realising these goals, looks to IT as a major driver.

Historically speaking, IT is a less-publicised aspect of financial services, yet leading industry names have realised that without the latest technologies, they will likely fall short of the competition or response to market changes. The importance of enterprise software in capital markets therefore mustn’t be underestimated, and choosing the right platform can often make the difference between financial success to out-and-out failure.

Innovative platform technology
Understanding this to be the case, Murex has embarked upon one of the most impressive R&D programmes in the industry in a bid to bring a powerful and flexible technology platform to market. “Driven by innovation, Murex’s MX.3 Front-to-Back-to-Risk platform leverages the firm’s collective experience and expertise, accumulated through its strategic customers partnerships, to offer an unrivalled asset class coverage and best-of-breed business solutions at every step of the financial trade lifecycle”, says Clarke. “Customers worldwide benefit from the MX.3 platform’s modular set of business solutions, specifically designed to solve the multi-faceted challenges of a transforming financial industry.”

Innovation is at the very core of Murex’s strategy, and nowhere else was this clearer than with the launch of MX.3 platform. Murex became the first company to introduce the concept of an integrated technology across trading, risk and back-office functions in the late 1990s, marking the first step on the road to releasing the now-iconic MX.3 platform in the mid-2000s. Pioneering again, the company has been adding flexible business solutions to the platform, shifting towards a more service-oriented architecture (SOA).

“Since the 2008 financial crisis, Murex has enabled the transformation of the capital markets at large global institutions”, says Clarke. “In a world where trading and risk management analytics need to be real-time and consistent, Murex has been able to deploy at a controlled cost, integrated solutions that answer the regulatory requirements from pre-trade to post-trade.”

However, providing expertise at every step of the value chain is redundant without first understanding what it is customers require. “Murex has a customer-centric strategy based on long-term partnerships and proven by very high client retention rates over the years”, says Clarke. “One of the key strengths of Murex is its ability to support its customers beyond the initial implementation and allow them to benefit from regular innovation in terms of technology and functionality.”

The importance of customer experience is becoming key in developing effective capital market solutions, and Murex believes any user requires intuitive interfaces and app-like functionality, and is committed to deliver them. Any enterprise software platform, therefore, needs to be mobile and cross-platform enabled, in order to successfully negotiate the current technological shift in financial services.

With a proven track record in supporting customers from global money centres to local banks, large asset managers to medium-sized hedge funds, and large corporations to energy utilities, MX.3 has made a name for itself as an industry platform. “Murex services a wide range of investment banks: from large, global players that look to Murex in rationalising their trading, risk and processing infrastructure, to regional and local players looking to develop their capital markets business in the market. Murex has also an offering for the buy-side and works with large institutional asset managers across the world”, adds Clarke. Boasting a user base of more than 40,000, the success of the platform is such that trading, hedging, funding, risk management or processing operations are more manageable and successful for thousands across the globe.

Riding industry challenges
The key to success in providing capital markets solutions is not simply investment and customer centricity, but a focus on key structural changes in the industry. Without first partnering with a successful enterprise software provider, those in the financial services sector will come up against un-scalable hurdles and fail to acclimatise to an ever-changing market.

For example, big data is taking over the trading world, and requires the very best in business intelligence if those in the industry are to make real-time and complex decisions. State-of-the-art aggregation and visualisation tools are in demand, and companies like Murex must marry enterprise-level non-functional requirements with the best in analytics.

The sheer amount of data spiralling about capital markets is not a problem in itself, rather it is the ability to understand this information for instant decision making. The importance of solutions such as Murex’s MX.3 platform, therefore, mustn’t be underestimated, as firms look to process and apply wave upon wave of data in a bid to improve their understanding of capital markets and the various processes associated with it.

According to Marwan Khalil, Head of Core Technology at Murex: “10 years ago in 2005, a system achieving 10 trades per second with a position keeping frequency of one second was deemed best of breed. Today, to qualify for best of breed requires the capability to process 10,000 trades per second, with five millisecond positions keeping latency. In the not so distant future, the trend will continue, with a target of 100,000 trades per second with sub-millisecond position keeping latency. Smart use of new technology allows our customers to achieve faster response time.”

He continues, “For example, the use of GPU instead of CPU or in-memory grids allows never seen before performance at a fraction of cost and near linear scalability.” However, the challenges facing enterprise software providers ask that their solutions deliver fast and high-quality software evolution. “Introducing constant testing, agile development and technological innovations in its software factory has been a crucial part of the company’s response.”

“The next big frontier is for investment banks and their capital markets business to move to the cloud”, says Clarke. “Opinions vary on the speed at which the shift will occur. Traditionally capital markets have been highly secretive and demonstrated a marked preference for owned infrastructure, and Murex believes a move to private clouds is around the corner, which is why the firm is working to enable the MX.3 platform with enterprise-cloud providers.”

The success of Murex is due largely to a company decision to invest such sums in R&D and technology; two factors that the firm has rightly recognised as key points of differentiation between it and others in the enterprise software provider market. True industry vision, an advanced platform and high quality service are distinctive qualities, though these qualities would scarcely be achievable without high levels of investment. Due to the steep financial costs of entry, the market is dominated by enterprise-level technology providers – as opposed to start-ups – yet a commitment to innovation is still very much present among even the market’s biggest names.

Jordan’s banking sector holds up the economy

Posted on by Ashton Wenborn

Although Jordan’s recent fortunes have been hampered by any number of external shocks (see Fig. 1), the country’s banking sector has emerged as a key economic contributor and an area in which the Hashemite Kingdom of Jordan is performing ahead of those even in more developed countries. With credit facilities, assets, capital adequacy and liquidity all on the up, banking has played a key part in setting the national economy on a clear path.

Yet the sector’s success is not due simply to financial performance, but also a willingness among leading industry figures to focus on ever-changing stakeholder concerns and on positively impacting the workplace, marketplace and society in which they work. We spoke to Jordan Islamic Bank’s (JIB) Vice Chairman, CEO and GM, Musa Shihadeh, about the bank’s role in leading the nation onto better things.

From strong beginnings
Established in 1978, JIB is responsible for single-handedly launching the country’s Islamic banking sector, and to this day the bank continues to have a positive influence on many of the country’s larger dealings. Recognised locally and globally as a pioneer of Islamic banking, “JIB is committed to offer banking services and social services to all people in compliance with the Islamic sharia principles”, says Shihadeh.

As of 2013, Islamic banks accounted for just shy of 21 percent of all financing, over 16 percent of all deposits and 14 percent of total banking industry assets, of which JIB accounts for over 13, 10 and eight percent respectively.

[B]anking has played a key part in setting the national economy on a clear path

The bank’s success (see Fig. 2) is closely in keeping with a three fold commitment to consolidate and deepen the values of Islamic sharia, equally serve the interests of all stakeholders, and apply the latest applicable products and services in banking and technology. However, what differentiates JIB from so many others in the banking industry is its sustainable strategy, and it is for this reason chiefly that JIB has been awarded the World Finance Award for Best Banking Group and Best Islamic Bank in Jordan, 2015.

With a network of 86 branches and 147 ATMs, JIB enjoys a worthy reputation as an industry giant. As the largest of the country’s four Islamic banks with the third-largest conventional banking system included, JIB is proof that a focus on innovation and corporate social responsibility can lift both the business, economy and society as a whole. “The bank adopts the values of the Islamic faith as its method and constitution, and embraces the principles of the Islamic economy as a guide.

“In doing so, it has played an effective role in socio-economic development and has come to occupy a distinguished place among the banks operating in Jordan”, writes the bank’s Chairman of the Board of Directors, Adnan Ahmed Yousif, in JIB’s latest Social Responsibility Report. “The bank will keep with its straight path, Allah willing, to serve its message, interact with the needs of the national economy and of local society, and contribute to each good deed with all means it has”, Shihadeh adds.

Providing sharia-compliant banking and social services to all people means that sustainability and corporate social responsibility are deeply embedded in the very fabric of the business. Evidence of this can be found in the fact that JIB has established two social responsibility committees, one for board members and the other for management, with the former responsible for policy plans and the latter for the implementation of a strategic sustainability plan.

Here the bank’s social responsibility committee has introduced a sustainability strategy plan for five years from 2014 to 2018, which outlines a number of key objectives. Of the goals is one that states JIB must rely on renewable energy resources for 50 percent of the bank’s energy consumption, and another that will see JIB work alongside the Ministry of Water and Irrigation to reduce total water consumption by 20 percent before 2018’s year’s end. The measures mean that the bank can minimise its impact on the environment and, in doing so, JIB has implemented environmental standards that others in the industry can aspire to.

Jordan's current account balance

However, JIB’s ambition is not simply to reduce its environmental impact, but to breed a culture of sustainability. And in a bid to ensure its staff are well equipped to do whatever job they’ve been tasked with, another of JIB’s goals is to raise training to 60 hours per year, per employee by 2018, and to protect against any human rights violations. Far from excluded to its own employees, JIB has pledged to support and fund SMEs and, in doing so, drive social and economic development at a national level.

Regulated reviews
JIB’s sustainability strategy plan also contains a number of sub-objectives, intended to bring a greater measure of sustainability to the banking sector and to the wider economy. Among these secondary commitments is a system of incentives, designed to award participation in social responsibility plans, to which the bank has put in place systems that ensure relevant parties periodically review and evaluate governance processes, to be committed accordingly.

In upholding what the bank believes to be important principles of good governance and social responsibility, it will continue to commit valuable resources to community development programmes and the financing of social projects. Since the bank’s establishment, it has and will continue to commit funds to the development of the community, namely by supporting and funding SMEs, craftsmen and professional sectors.

The bank has recently launched a new programme to finance the purchase of basic goods, medical treatment and hybrid cars for citizens who may otherwise be unable to afford basic goods. JIB’s decision to offer interest-free loans – or Qarad Hassan – is typical of the bank’s pioneering spirit, and it remains the only bank in Jordan to offer a product of this type.

Similarly, JIB runs a scheme to support young craftsmen and women to get projects of their own off the ground. In 2013, the bank helped thousands of Jordanian citizens by paying $2.62m for education, $842,993 for medical treatment and $711,578 for marriage, the entirety of which will be repaid in monthly instalments with zero interest. Since the product’s first outing, approximately 350,000 people have benefited from almost $280m worth of handouts. JIB can play a vital part in reducing poverty and alleviating the unemployment problem in Jordan.

JIB has also established a social services/joint insurance fund, which, since it began in 1994, has cost the bank over $700,000. The premise of the programme is that participants will jointly indemnify part of any damage incurred on any of them according to Takaful principles, meaning that any persons involved are helping themselves without on boarding additional financial obligations.

This focus on social and environmental responsibility is not only crucial for the banking sector but for Jordan as a whole, in bringing a greater measure of sustainable prosperity to a region that is otherwise characterised by instability. The part played by corporates, therefore, and particularly the banking sector, is key, and only by fostering a culture of openness and acknowledging responsibility for the communities in which it operates can Jordan’s banking sector and economy go on to achieve even greater things.

JIB's total assets

JIB’s achievements are far from excluded to environmental and social gains, however, and without an impressive financial showing the bank would not be able to pursue such ambitious social and environmental goals. JIB has the best return on equity in Jordan and one of the best non-performing loan percentages, and is even trusted with the task of training staff of Islamic banking institutions in countries apart from its own.

In committing to a philosophy of continual improvement and innovation, JIB has improved its performance year-on-year, and has continuously demonstrated that it’s capable even of meeting ever-changing and always-complicated market requirements. For example, the bank has implemented a new banking system that offers faster and more accurate services to clients. By incorporating the latest technological advances and developing new products, such as financing solutions for those completing holy rituals and students, JIB can more easily meet the needs of its customers.

This focus on continuous improvement is important for any firm in the financial services community, but even more so in Jordan, where developments come at a faster rate than they would in more mature markets. The example set by JIB, therefore, is an important one for both the banking sector and the economy, as each looks to a future of sustainable prosperity.

In the future, JIB plans to continually diversify, develop and improve the quality of its banking services, expand the issuance of sukuk, and strengthen and develop its operations to meet the Basel II requirements, as well as make preparations for Basel III. The bank will also expand its programmes for financing professionals, craftsmen and SMEs, while also attracting new customers from both the public and private sectors.

In the meantime, JIB will continue to diversify its banking services, namely by expanding financing and leasing, and by issuing tradable Islamic bonds. The bank is currently looking to expand its network of branches to 86, bringing Islamic finance to a much wider section of the Jordanian population.

By contributing at length to the country’s national development, JIB’s place in Jordan’s banking community is key not just for the economy, but for the long-term social and environmental wellbeing of those in the community.

Sarasohn-Kahn: We don’t believe in healthcare for everyone

Posted on by World Finance

World Finance speaks with health economist Jane Sarasohn-Kahn on how affordable the Affordable Care Act really is.

Obamacare: the Affordable Care Act implemented in 2010 is now in full swing. But is it the success the president of the US would like us to believe? Joining me down the line is health economist Jane Sarasohn-Kahn.

World Finance: Well Jane, the Affordable Care Act. Is it affordable?

Jane Sarasohn-Kahn: Well, it’s in the eye of the beholder, affordability! The one big thing the Affordable Care Act did was to cover people who had been refused insurance before, with pre-existing conditions. And if you live in the US, and you have a pre-existing condition, you would likely have fallen into financial ruin if you got sicker. Health costs are the number one cause of bankruptcy in the US.

If you’re young, however, and don’t perceive any health risks, it seems quite unaffordable; and you might take the risk of not being insured, or being self-insured and take the penalty.

World Finance: Where’s the money coming from to cover the extra people?

Jane Sarasohn-Kahn: Right: so, it’s $934bn. Almost half of that comes from cuts, or moving Medicare moneys from one pot to the Affordable Care Act. Some of that is moving money from our Medicaid plan – that’s care for lower income American health citizens. Also the penalties for employers and individuals who do not get insured. And finally, revenues from health plans, medical device companies, and pharmaceutical companies.

World Finance: It’s estimated that around 30 million people still don’t have coverage at all; what happens to them, and wouldn’t it just be cheaper if something does go wrong for the government to cover them from the beginning?

Jane Sarasohn-Kahn: It is a political will question. We have not had the conversation in the US that Beveridge had in your country in the 40s, when the NHS was established.

We really don’t believe in healthcare for everyone in the US! If you look at our congress, there is not consensus about that.

As a health economist, my arithmetic tells me that it would be cheaper absolutely to cover people with a basic health plan, and that conversation I think will happen in the next year, two, or three, as more Americans are paying more out of pocket, and understand the true cost of healthcare.

World Finance: So what problems has Obamacare alleviated?

Jane Sarasohn-Kahn: There’s more prevention covered now; there’s more mental health benefits covered, which typically have not been covered. The ACA also mandates that prices are not different for men versus women, and for the sick versus the not sick.

Finally, it’s starting to drive down the big problem we have in the US, which are racial and other health disparities: between rich and poor; black, white and hispanic.

World Finance: People are still opposed to it; is that purely politically motivated then, and what alternatives are they calling for?

Jane Sarasohn-Kahn: President Obama has really created a whole new level of vitriol between people who don’t like him, and people who do like him.

However, the ACA naysayers haven’t offered a really comprehensive solution; except for, maybe, health tax vouchers: premiums, as they’ve done for schools. But that really doesn’t solve our problem of high cost healthcare.

World Finance: A big concern when it came out was that it would cost a lot of jobs; has this been the case?

Jane Sarasohn-Kahn: We’ve had consistent job growth over the last couple of years, since the ACA has kicked in. In fact, last week a Bloomberg review came out on Bloomberg News, and they looked at a poll of employers in the US asking that very question. And it was kind of a big corporate shrug! So far, it’s not made a material difference.

World Finance: So, the goal was to get six million uninsured to be insured. But the cost to businesses has definitely increased to accommodate the rise in costs for those uninsured; so has the incremental cost in mid-to-large size businesses thwarted growth a bit, or at least delayed economic recovery or growth in the US?

Jane Sarasohn-Kahn: It’s really had to parse out the direct effects of the ACA on economic growth.

For now, we’re seeing the lower cost of energy improving consumer spending, we’re seeing home sales going up; we have a lot of positive indicators now.

But again, hard to parse out the impact of these insureds, newly-covered, and the ACA impact on economic growth. So Ill say the jury is out on that so far.

World Finance: Up until Obamacare begin its enrolment, American healthcare was run by multi-million dollar private companies, which sold health insurance policies for the most amount of profit they could make. What’s happened to the insurance industry now, and the knock-on tax effect?

Jane Sarasohn-Kahn: If you look at the insurance industry, the big players, the big national players: United, Aetna, Cigna-Humana; many of the blue cross plans like Anthem; the profits are quite healthy.

From 2014 they’ve been living large based on the ACA new enrolees volume going up, with these newly insureds. And it’s good to remember that the ACA was written heavily in parts by our insurance industry lobby AHIP, and the pharma industry lobby, PHRMA.

Now, the pharma industry isn’t faring so well – not necessarily due to the ACA – but the insurance industry has benefited from new volumes of people coming in.

World Finance: So overall, Obamcare: has it cost the US, or saved it money?

Jane Sarasohn-Kahn: Hard to say. Early days right now, and we are spending upwards of $900bn on it.

We do have to solve the problem which the ACA does not solve, or lowering the cost of care, and changing workflow, and how we deliver care in America. That’s not in the ACA.

However, the private sector, and the way we’re starting to pay more on the basis of outcomes versus volume – that is, paying for everything we do – is going to shift that.

So I’d say, call me in a couple more years and I’ll answer that question.

ADCB: UAE’s finance sector enters new era of responsibility

Posted on by Ashton Wenborn

Those with a stake in the UAE’s financial services are growing increasingly confident that the market will continue on its good run of form, spearheaded by the country’s leading banks, whose aim it is to show that they can foster the industry onto greater things. In a time when corporate governance controls are testing the resolve of major banks in mature economies, UAE-based Abu Dhabi Commercial Bank (ADCB) is proof that its banking sector is entering a new era of responsibility.

The impressive performance of the UAE’s banking sector is there for all to see, though some have called into question the ability and willingness of the country’s banks to match rising corporate governance standards. “We are not regulated in terms of corporate governance”, says Rami Raslan, Vice President and Senior Corporate Secretary of ADCB. “Banks were exempted from the culpability of the code scope, and are waiting to be regulated by the central bank in that regard.” However, the example set by ADCB shows that there is a desire to match the progress made in governance by international banks on the global stage, and an understanding that, without sound corporate governance controls, the banking sector will struggle to sustain the impressive performance of years past.

The impressive performance of the UAE’s banking sector is there for all to see

Ahead of the game
Even in the years prior to the final implementation of the Securities and Commodities Authority’s (SCA) Corporate Governance Code, ADCB was formulating a strict corporate governance code of its own. “We worked with external specialists, including IFC, to help us comply with best practice standards and devise an action plan”, recalls Raslan. “Now we have a capable corporate governance framework in place and comply with the local regulation and, to a very far extent, International standards.”

As the winner of World Finance’s Best Corporate Governance in the UAE, 2015 Award, ADCB has demonstrated to others in the market that good governance brings material gains. “If a company is well governed, it will usually outperform its competitors”, says Raslan. And by looking to international standards and adopting them as its own, ADCB has attracted a considerable amount of international attention and investment.

The steps taken by ADCB prove that the UAE’s financial sector is beginning to come to terms with the importance of independent risk management, transparency, full compliance and a host of important governance concerns. And by looking to corporate governance success stories elsewhere in the world, the example of ADCB shows that there is a willingness to enact the necessary governance changes and improve the financial services sector’s reputation on the world stage.

“We have kept on self-regulating and kept an eye on what’s happening out there in terms of corporate governance codes. I appreciate that the culture is different, the market is different, not everything is applicable here, and we apply to the extent possible, but we maintain really high standards in that regard.”

As one of the UAE’s leading financial institutions, ADCB has been a fixture of the country’s financial services landscape for over 30 years now, and, in that time, managed to build an impressive reputation as a profitable and responsible enterprise.

ADCB

Headquartered in Abu Dhabi, the bank is today a diversified full-service one, working in consumer banking, wholesale banking, and treasury and investment groups. As of December 31, 2013, the bank had a branch network of 50 in the UAE and over 560,000 retail and corporate customers to its name. With assets totalling AED 183.1bn ($49.8bn) and a net profit of AED 36.2m ($9.8m) in that same year, ADCB’s business is on a steep upwards curve as it looks to realise its ambition of becoming the number one bank of choice in the UAE. “In addition to its financial assets, there are certain intangible qualities that a bank has to have if it really wants to deliver sustainable returns for shareholders and play a valuable role in the lives of its customers [see Fig. 1]”, according to ADCB’s 2013 annual report. “At ADCB, we believe that few qualities are as important – especially when combined – as ambition and discipline. The way we understand it, ambition is the desire for achievement and the willingness to strive for its attainment.”

In short, the success of ADCB is rooted in its commitment to sustainability, which the bank sees as going beyond conventional business conduct and working continuously to support all stakeholders. Both integrity and innovation are vital parts of the bank’s corporate vision to become the number-one bank of choice in the UAE.

Internationalising the UAE
In a bid to support the bank’s vision, ADCB is taking major strides to bring sustainability management into the mix, chiefly by promoting accountability to and engagement with stakeholders. By ensuring the bank’s strategy is in keeping with its vision, agenda and operating principles, ADCB is a major part of a national push to ensure the Emirate becomes a shining example on the international business stage.

Whether for customers, employees, shareholders or the country at large, the bank strives to meet and even exceed stakeholder expectations, using sustainability as a catalyst for innovation and growth. In doing so, the bank also keeps to a number of guiding principles: responsibility, accountability, transparency and fairness, which each inform its approach to good corporate governance.

“I think our distinguishing factor is that ADCB focuses on governance because we want to and not because we have to, and this is what has kept us growing all the time”, says Raslan. “I see that people don’t correlate governance to money, but you can see that we’re totally transparent with our stakeholders and shareholders, which results in stakeholders trusting us. We see the business and commercial value of strong governance practices.”

A clear support framework
The corporate governance code at ADCB in itself is proof that the bank is committed to upholding high standards of corporate governance, and shows an in-depth understanding of how a framework of this kind can provide a basis for sustainable development, greater trust and financial success.

ADCB's assets in focus

“From day one, we had great support from the board, who have backed us ever since. As we made our way further down the line of building a corporate governance framework, the benefits have been greater than we’d envisioned”, says Raslan. “Our meetings are transparent, the decision-making framework is transparent, and everyone knows who does what and when.”

Not only does the board meet regularly to communicate the bank’s goals, the information passed to them goes through rigorous checks to ensure it’s both relevant and easily digestible. And by ensuring that this level of transparency is in place at the top level, the rest of the organisation can more easily follow suit and, likewise, make responsible and transparent decisions. In essence, keeping to such high standards of corporate governance means that ADCB can more effectively foster a culture of openness and demonstrate to stakeholders that it can be trusted.

ADCB’s success is closely in keeping with a willingness to keep abreast of the latest developments in corporate governance and to introduce the parts that best serve the UAE market. And ADCB is proof that running a business responsibly with high governance standards brings value.

Continents Insolites on adapting to the changing travel market

Posted on by Ashton Wenborn

The luxury travel market is undergoing a decisive transition. Once associated with poolside holidays where leaving the vicinity of the hotel was a rarity, travellers are now seeking more immersive, cultural activities. That’s according to Jean-Christophe Guerin, CEO and travel designer at luxury travel service Continents Insolites. “The traveller is looking more and more for experience”, he says. “That is why, today, Continents Insolites is increasingly sought after by a high-end clientele that wants to experience a whole world of discovery trips. A trip with Continents Insolites is a nomadic journey filled with cultural discoveries and outdoor activities that tap into the local culture.”

That shift, combined with rapid growth in the luxury travel market, is shaping and driving Continents Insolites, which offers tailor-made holidays to a high-end market. The luxury travel agent is carving out a niche that is distinguishing it from the larger players, whose pre-made packages can leave customers yearning for a more unique experience.

€11.6m

Continents Insolites turnover, 2011

€14.5m

Continents Insolites turnover, 2014

By going beyond the basic elements that most travel agents focus on – namely flights and hotels – Continents Insolites is able to create a personalised package for travellers. Taking care of everything from meals to airport transfers, activities to trains and tour guides, the travel agent prides itself on helping customers by taking away the hassle that organising a complex trip can entail.

Those different elements can quickly add up for those planning a long trip. “A journey around the world with Continents Insolites can involve anywhere between five and 15 different travel components per day”, says Guerin. “For a six-month trip, that could mean around 1,800 components.” By working closely with the customer to arrange the trip, usually over the phone or via a one to two hour consultation over coffee, Continent Insolites ensures each of those components are aligned with what the customer wants. During these meetings the agent’s dedicated travel designers are also able to share their expertise, on everything from the destinations themselves to hotels and specific activities.

Custom service
For Guerin, creating the perfect trip is an art form. “Our business approach is like that of an architect”, he says. The specialised travel designer will put together the basic details of the trip, which usually takes between a few days to a week, before checking it all over with the customer. “We will then work on a more detailed design, refining it and adding any specific elements to make the trip unique”, says Guerin. With 50 to 75 percent of customers booking a trip through Continents Insolites after a face-to-face meeting – compared with only nine to 10 percent following a web enquiry – it’s clear the agent’s unique strategy is working.

That strategy is one the company developed in response to fierce competition from big, package holiday travel agents. A couple of years ago Continents Insolites wanted to reach a target turnover of 30 percent, but it lost out to pure play companies whose sole aim was to capture as many customers, and thereby bring in as much profit as possible. The company soon realised that by branching away from the basic package market, and offering a more customised service, it could overcome such competition while helping those on the hunt for a hassle-free, more unique booking service. It also meant the company could spend less on Google Adwords – just 0.3 percent of its turnover, compared to the five to seven percent figure for pure play travel companies (equal to 35 percent of their gross margin, according to Guerin).

One major area where the company has come to distinguish itself from those is in the amount of time it dedicates to customers, according to Guerin. “Continents Insolites values the importance of taking time”, he says. “For pure play companies, it’s a case of the faster the better.” Customers therefore get more value for money, by being offered a more comprehensively thought-out plan.

Another key area helping Continents Insolites to stand out from the competitive environment is its ability to cater for different segments of the market. “We understand the market in which we operate is one with different customer segments and expectations, for which we need to make very clear choices”, says Guerin.

Big spenders
It’s perhaps those factors that helped Continents Insolites weather the storm of the economic crisis and come out stronger than ever. “The crisis in Europe actually had a positive impact on us”, says Guerin. It was then that the business shifted its focus from having a large customer base, and offering lower-cost travel options, to a smaller, but higher-spending, market. “From 2008 we lost a large quantity of our customers and focussed on those with the highest possible contribution”, says Guerin, “from whom we can expect real growth.”

Continents Insolites made several changes in order to achieve that goal, adapting its marketing strategy, offering more substantial training to its teams, and replacing its catalogue with a luxury travel book aimed at a smaller, more niche sector.

That strategy worked, with turnover increasing as a result. The number of people booking cheaper holidays through the company (under €4,000 per person) shrunk by 63 percent between 2011 and 2014, but turnover increased – from €11.6m and €14.5m. That was driven by a rise in the number of people booking more expensive vacations – bookings for holidays costing between €5,000 and €7,000 per person increased by 34 percent, and bookings for those costing between €7,000 and €20,000 rose 30 percent.

Guerin says that the crisis also created opportunity for Continents Insolites in that the number of professionals seeking luxury experiences as a form of escapism increased. “We noticed a growing demand from hyper-active customers interested in taking time for themselves, especially for longer journeys”, he says, adding that pure play travel companies benefitted in a different way and from a different market – namely cash-strapped consumers seeking more affordable travel options. By capitalising on the more niche trend, the luxury travel sector was able to pluck valuable opportunity from the challenging economic environment.

A focus on technology
Continents Insolites is plucking other opportunities too, not least in terms of capitalising on the most advanced technologies in order to ensure the highest standards of service. “New technologies are at the heart of our customer service”, says Guerin.

In 2014 the company brought its global phone system into the cloud, for example, helping its workforce to stay connected wherever in the world they happen to be. “Our teams are fully mobile, and every one of us can access our database via tablet”, he says. “This means we are able to recognise the customer before picking up the phone, so we can prepare by opening up their file – from anywhere in the world.”

A lodge in South Africa. Travel designers at Continents Insolites put together unique packages for high-end clients
A lodge in South Africa. Travel designers at Continents Insolites put together unique packages for high-end clients

Continents Insolites is also embracing technology in other ways, for example by presenting certain proposed trips in the form of a digital tablet, encased in a gift box. “We are also developing an angel-guards network with our database from the cloud, so we can follow our customers and be kept up to date with what is going on at all times. That ensures we can deliver the best service possible”, Guerin says. And a key area for focus in 2015 is on developing new technologies to assist with marketing – in order to provide a unique, exceptional service that distinguishes the company from others, from the very first point of contact.

In order to achieve that, Continents Insolites is focussing on communication – an area that will account for five percent (+70 percent compared to 2014) of its spending in 2015, according to Guerin. The company aims to further promote its services and to position itself as “an expert for travels around the world”, boosting investment to increase this long trip “product” to 30 and 50 percent of turnover in the next few years – compared with a current level of 10 percent.

The company is also launching its “internal foundation”, a programme which will see it support 15 different sustainable projects on all continents – in areas as diverse as the environment, education, responsible tourism, preserving traditional cultures, and elsewhere. As part of the plans, the company is set to launch 15 projects in Africa, Asia and South America, with the goal of providing greater opportunities in education and preserving local wildlife.

That ethical focus is helping to further distinguish Continents Insolites out from the crowd. It seems only right that a company whose focus is on authentic, culturally immersive experiences should have as its ultimate goal a desire to help preserve local communities. Taking steps to achieve that aim, all while offering high-end consumers a chance to realise their travel dreams through tailor-made, personalised and unique experiences, is something helping to set Continents Insolites out from the rest, making the company an inspiring pioneer for others in the industry to follow.

Yamaha prepares to enter European car market

Posted on by Ashton Wenborn

The world’s second biggest motorcycle maker will team up with former Formula One car designer, Gordon Murray, in a move to diversify business to target fuel-efficient drivers in Europe. While motorbikes will still account for two-thirds of the company’s core business, the ambitious effort, which will involve building a manufacturing plant in Europe, will see Yamaha foray into a city car market that its rivals, including Renault, Daimler and Toyota, have yet to establish a presence in.

European minicar sales will only increase from 1.1 million units last year to 1.24 million in 2020

“In order to become a bigger company, we need to try something new in addition to our existing businesses”, said Hiroyuki Yanagi, Yamaha’s chief executive, speaking to the Financial Times, “I think we have a chance to capture this new market that is developing in Europe.”

The company’s prototype, the Motiv, was unveiled at the 2013 Tokyo Motor Show with development of the microcar based on motorcycle technology. The two-seater, available in both one litre and electric versions, will be sold to respond to the crackdown on carbon dioxide emission in European cities, with a view for sales to be considered in Japan and other Asian countries.

Rather than team up with Toyota, which is one of its biggest shareholders with a 3.6 percent stake, Yamaha has decided to venture into the market solo with the Motiv set to be its first car since the late 1960s. European minicar sales will only increase from 1.1 million units last year to 1.24 million in 2020, as estimated by IHS Automotive, and while Yamaha is more than capable of jumping the technological hurdles required to succeed, establishing a sales network will be difficult in an already crowded market.

As China booms, do you need renminbi insurance?

Posted on by World Finance

Hong Kong’s renminbi insurance market is rich with potential: and with the right knowledge, investors can reap its rewards.

Hong Kong’s renminbi insurance market is rich with potential: and with the right knowledge, investors can reap its rewards. I’m with Terry Lo of leading insurance provider BOC Group Life Assurance.

World Finance: Terry, why should international investors be looking into renminbi insurance? And what resources are available?

Terry Lo: Renminbi is backed by the strong economic performance of China. Our trading and investment activities across the border are increasing. Renminbi insurance has been and will remain a reliable vehicle for risk protection and liability matching.

Hong Kong has well-established financial and regulatory systems for international investors. We have extensive experience to fully take care of their insurance needs, as well as wealth management solutions.

World Finance: So how have China’s reforms been affecting the local industry?

Terry Lo: Like most other business space in Hong Kong, we have been benefited by our close tie to China both economically and geographically. The popularity of renminbi has an increasing impact on global economy, and Hong Kong has become the main offshore market to facilitate its globalisation.

By seizing these opportunities BOC Group Life has quickly built up its insurance portfolio in renminbi and has taken up a major share of the life insurance market.

World Finance: So what are your main product offerings today?

Terry Lo: We offer a full range insurance products to meet the needs of our customers at their different life stages. Home life protection, wealth growth, annuity income, to health insurance plans. Also, these products are available in all three of the most popular currencies – that is – Hong Kong Dollars, US Dollar and renminbi.

Innovation in products is very important to us: universal life insurance plan in renminbi, limited pay annuity plan, and critical illness plan, are just some of the very good examples of our innovation efforts that have delivered great value to our customers – and the sales of the company.

World Finance: And what is your current position in the Hong Kong life insurance market?

Terry Lo: BOC Group Life has been one of the top life insurers in the market led by our success in renminbi business.

When the renminbi insurance market opened in 2009, we were the first insurer moving into this space. We then launched a series of products tapping into the growing demand of our customers. Currently our market share of renminbi insurance business is over 50 percent. We are ahead of our competitors: this gives us a clear edge to lead the market.

 

Is Sheryl Sandberg’s ‘Lean In’ advancing the cause for women?

Posted on by World Finance

World Finance speaks to the chair of a female executive’s organisation as to whether tangible change has been achieved since Sandberg’s book, which has been a lightning rod for the gender conversation.

Some call it a movement, others a divisive pitch. However you refer to Facebook Chief Operating Officer Sheryl Sandberg’s book ‘Lean In’, be prepared to get engaged in a fiery debate. But is encouraging more women to demand more in the office place really advancing the female cause? And are managers heeding the message? Rowena Ironside, Chair of Women on Boards UK, joins me with her thoughts.

World Finance: First Rowena, can you tell me what were the main takeaways for you in this book?

Rowena Ironside: What I liked was the fact that it was a really senior, really successful woman, talking about some of the challenges that women have, and some of the things that maybe individual women can do differently, and probably one of the most important is don’t check out before you leave, don’t start thinking that you need to step back because you’re planning a family in a few years time.

World Finance: Some critics have said that that actually places undue pressure on women who are maybe on the fence about having a family, maybe scaling back, is there really an issue in doing that?

Rowena Ironside: Well I think the point that Sheryl’s making is that if you take maternity leave when you’re senior, you’re probably going to have more choice than if you take it when you’re younger, and because you’re going to be so busy in those first three, six, nine months, juggling the two, that if you’ve got a job that really inspires you and maybe you’ve got a bit more support, you’re more likely to be able to stick it than if you’re still in a more junior role.

To see someone who’s been so successful exposing some vulnerabilities, exposing difficulties I think gives women hope, it encourages and inspires them, because they think “if she struggled, then I shouldn’t feel so bad with the fact that I’m actually having a hard time.”

World Finance: Beyond this conversation, all the noise that’s been created around her book, are we really seeing any tangible change? 

Rowena Ironside: I’m hopeful, because there is so much noise around it at the moment, I think there was the initial suffragette movement, there was a lot of progress, and then I think people started to take things for granted, they thought that we were on a roll and that things would happen naturally.

A lot of the problems that are faced by women are around how organisations are designed, and when they were originally designed it was mostly men, so you didn’t have to worry about flexible working. Organisations are slow to change, so the fact that they haven’t just changed just because more women are there, you look back and it’s not surprising.

So now we have recognised, ok, there are some sticking points, there are some things people need to be aware of to help people get through the organisation, and therefore I think the debate and the spotlight on it is really useful, because ultimately it is about talent, the hidden costs of the wasted talent, and the more visibility people have into that the better.

World Finance: So do you think that more men should be involved in this conversation as much as we have women engaged?

Rowena Ironside: I mean men are essential. I love Emma Watson’s He For She campaign, because it highlights the fact that we can’t do this without men, but I think it’s also very hard for men to imagine what it’s like to be a woman. We need them onside, we need them engaged, and the more everyone understands that they are very much a part of the solution, that will speed up the progress.

World Finance: European Commission, should it be involved in this conversation in a much more concerted manner?

Rowena Ironside: I think the role that it’s played so far, the threat of quotas, what that’s made happen in the UK has been very valuable, and clearly there are countries in Europe where having someone pointing out that something needs to be done is even more useful. So I’m glad they’re doing what they’re doing, it’s been a very useful stick to hold over the FTSE companies. We’ve achieved a lot just with the threat of quotas from the EU, so I’m happy with what they’ve done.

World Finance: Now of course the conversation never ends, there’s always things that can be done. Can you tell me, what else can corporates do to engage and promote women?

Rowena Ironside: There’s a huge amount still to be done. Going back to Sheryl’s book, one of the things that really struck me was her comment about, as a senior manager really, in the C Suite at Google, realising that as a pregnant mum, she needed to be able to park her car closer to the front door. That’s the difference that having a senior woman makes, because the guys weren’t opposed to that, they’d just never thought about it. Those sort of stories I think are just so telling about why we need more women, but also how much is still to be done.

 

China’s real estate slump worsens

Posted on by Ashton Wenborn

Prices for new homes in 66 of China’s major cities fell by 5.7 percent in February, compared with the same month a year prior, in what is the worst decline on record. January’s drop was 5.1 percent, indicating a continued downturn that has worsened each month since last September. Although this time of year is usually slow for the real estate market due to New Year celebrations, wider issues are also afoot, such as China’s slowing GDP growth and an oversupply in property.

Demand for houses in third- and fourth-tier cities also continues to fall, with the problem further exacerbated by the limited purchasing power of these areas.

The government has made recent efforts to boost China’s ailing property sector

The government has made recent efforts to boost China’s ailing property sector, such as cutting the interest rate by 0.4 basis points last November and by 0.25 basis points to 5.35 percent in February. Property regulations have also been eased and incentives for homebuilders in select cities have been offered. So far, such measures have yet to stimulate the industry, which accounts for around 20 percent of China’s GDP.

More customers, fearing the continuing devaluation, have been purchasing property abroad in order to protect their investments.

Despite the recent slump, many within the industry are hopeful that the recent pledge made by Premier Li Keqiang to support the economy and new government policies, such as reducing taxes and making mortgages easier to acquire, will boost China’s ailing property sector. “Although the overall market eased in the beginning of the year, as policies loosen further and new launches pick up in March, the property market is expected to see a recovery,” a consultant from China Real Estate Index System told Reuters.

Zenith Bank: Nigeria’s economy ‘healthier than ever before’

Posted on by Ashton Wenborn

“Nigeria has thoroughly recovered from the credit crunch, leaving its economy much healthier than ever before”, says Peter Amangbo, Group Managing Director and CEO of Zenith Bank. While the country sustained impressive levels of growth over the last decade, it was also badly hit by the 2008 global financial crisis. Foreign investors deserted the country, while exports predictably suffered as other countries reined in their spending.

However, the country has enjoyed a strong recovery since, thanks in part to a banking industry that is helping to finance a modern and dynamic economy. Zenith Bank has taken a central role in this recovery, helping to support individuals and businesses during this period of growth.

Established in 1990, the bank has its headquarters in Lagos, Nigeria and also has more than 500 branches and business offices in major commercial centres in all of the 36 states of Nigeria. The bank has an increasing international presence too.

Sustained growth
Although Nigeria’s economic recovery has been relatively successful, as a major oil producer it is inevitably susceptible to setbacks due to fluctuations in the global price of oil. Yet despite these fluctuations, Amangbo believes fervently in the fundamental underlying strength of the Nigerian economy. His loyal belief is shared by other observers and commentators on Nigerian economic matters. There is an overall consensus that Nigeria has excellent prospects for sustained economic growth, and that this potential sustained growth is driven by the key non-oil sectors. These include, in particular, agriculture, information and communication technology (ICT), trade and services.

5.5%

Estimated growth of Nigerian oil production, 2015

These non-oil sectors, just like the oil sector itself, naturally depend on a healthy financial sector to ensure an efficient and cost-effective banking and payments infrastructure. Zenith Bank is playing a crucial role in Nigeria’s successful economic recovery by bringing banking services – especially state-of-the-art electronic banking – to an ever-wider customer base in the country and so in effect is helping to ensure that the fruits of the Nigerian economic recovery are being felt by an ever-wider breadth of the population.

Currently the low global oil price is an unavoidable inhibiting factor in the Nigerian economic recovery. Nigeria’s finance minister, Dr Ngozi Okonjo-Iweala, said on December 17 2014 that she now expected the Nigerian economy to grow at 5.5 percent in 2015, rather than the previous estimate of 6.4 percent. Nigeria is currently, and understandably, trying to reduce its dependence on oil. In 2013, the estimated growth in real GDP in Nigeria was an estimated 7.4 percent, up from 6.7 percent in 2012.

Okonjo-Iweala urged Nigerians “to begin thinking of the country [as] a non-oil country.” Yet she pointed out that Nigeria’s oil production level is 2.27 million barrels per day and that even an estimated growth rate of 5.5 percent for 2015 “is still one of the fastest growth rates we’re experiencing in the world today.”

While acknowledging the influence the global oil price has on the Nigerian economy, Zenith Bank’s Amangbo sees the economic outlook for Nigeria as extremely positive, despite the fall in oil prices.

Investor interest
Nigeria’s population of around 174 million – making it the most populous country in Africa – means that the retail consumer market is clearly enormous and brimming with exciting opportunities.

Official figures for 2013, released by Nigeria’s Statistics Bureau, stated that the country’s GDP was $503bn in 2013, well ahead of South Africa’s GDP (admittedly for a country of only around 53 million) of $350bn.

Amangbo emphasises that Nigeria’s successful economic growth is occurring across commercial and industrial sectors. He is also excited by Nigeria’s investment potential for both domestic and foreign investors. “I don’t find it surprising that investors want to take part in Nigeria’s economy when you consider the exciting potential of our economy, our very high population, which means we have very substantial consumer markets, and our excellent infrastructures that make investment easy and ensure a good flow of information to investors themselves”, says Amangbo.

“At Zenith Bank, helping domestic and foreign investors is one of our strongest areas of activity. We think our devotion to customer service, our passionate enthusiasm for making sure that the services we offer are exactly what customers want and our ability to bring new services and new facilities to customers makes us the bank of choice for investors – both within Nigeria and beyond our borders – who want to maximise their knowledge of the investment potential of Nigeria and also maximise their returns.”

Certainly, Amangbo’s claims for his bank are much more than mere rhetoric. In 2013, Zenith Bank was chosen by The Banker magazine as Bank of the Year, by World Finance magazine as Best Commercial Bank in Nigeria, by CFI as Best Commercial Bank, and by KPMG as Most Customer Focussed Bank in Nigeria.

An area of the Nigerian banking sector where Zenith Bank has especially distinguished itself is in the huge contribution its commitment, energies and love of innovation have brought to the success of Nigeria in e-banking. Nowadays, Nigeria is being seen not only in Africa, but also worldwide, as a superb example of this success.

The e-banking impetus in Nigeria can be explained partly by the Central Bank of Nigeria’s encouragement of cashless transactions in order to reduce corruption. Yet the success of e-banking in the country is also partly explained by the hurtling transformation of the economy – especially in the power, oil, consumer good and agricultural industries – which is naturally increasing demands for banking services in general and e-banking in particular.

Yet there is a key third factor too: the success of e-banking in Africa’s most populous nation is also due to the sheer energy of Nigeria’s most influential and far-sighted bankers, like Zenith Bank’s Amangbo and co-founder of Zenith Bank Jim Ovia, who is now the Chairman of the Board of Directors.

Ovia has almost three decades of banking experience. He set out to create a bank that would become a major player and have a pivotal role in the Nigerian banking industry. His success in fulfilling this mission is very much the story of Zenith Bank’s success today.

Strategic banking
An important feature of Zenith Bank’s approach to its markets that is seen throughout its entire operations is the bank’s belief in the vital necessity for a bank to be completely customer-focused. Yet the bank goes beyond this, also projecting and communicating a clear and explicit recognition of the fact that customers are all different – as Zenith’s website says: ‘everyone is different so one size never fits all.’

Zenith Bank is renowned in Nigeria for the calibre of service it offers businesses, from small businesses to major corporations. Again, the range of bank accounts offered by Zenith caters to the correspondingly broad range of different types of business customers, ranging, for example, from sole proprietorship accounts to partnership accounts and of course, major business accounts for larger organisations.

The Zenith philosophy is that businesses should consider their bank account a business asset. The bank justifies this by saying that when a business organisation considers the advantages that come with a Zenith Corporate Account and the benefits this account offers to the business, along with the support and guidance the corporate organisation will receive from its Zenith Relationship Manager, the corporate organisation would be right to consider the bank account a valuable business asset.

This gentle, but compelling insistence on the part of Zenith that its accounts are not merely facilities but actual assets for its customers, is one more example of how the bank brings an innovative philosophy and approach to its entire operations and to customer service in particular.

Amangbo is especially proud of the bank’s highly successful record in pioneering digital banking in Nigeria itself. Zenith Bank has scored several firsts over its competition in the deployment of ICT infrastructure that deliver exciting and innovative products to meet the needs of its customers who are themselves, of course, increasingly active in using the widest range of ICT. Zenith Bank is a leader in the deployment of new channels of banking technology and that the Zenith brand has become synonymous with the deployment of state-of-the-art technologies in banking.

This kind of success, innovation and sheer commitment to meeting customer needs is, Amangbo argues, precisely why the bank has achieved such great success. He says that the organisation is driven by a culture of excellence, strict adherence to global best practice, and a complete commitment to customers.

“We at Zenith have combined our vision for what a major bank should be like with our banking expertise, our cutting-edge technology, our utter focus on the customer and the customer’s interests, and we have created products and services that not only meet customer’s expectations but actually anticipate them. This is exactly why this bank has thrived and why it nowadays grows wealth for its customers and also for its shareholders.

“At Zenith Bank we are already playing a major and crucial role in Nigeria’s economic recovery and success and I firmly believe that Zenith will make an ever-increasing positive contribution to the Nigerian economy.”

Deutsche Bank sets up African business hub in Dubai

Posted on by Ashton Wenborn

Since its launch in 2004, DIFC’s clientele has grown to include 21 of the world’s top 25 banks and connects the Middle East and African markets with the economies of Europe, Asia and the Americas. Deutsche Bank’s move is the next stage of that process with the new hub approved by the lender’s board, with Ashok Aram, CEO for the MEA region at the bank, set to take responsibility for the Africa business.

The German bank will follow in the footsteps of other institutions

Speaking to World Finance, Aram said: “We see this as a fantastic opportunity for our South African business to grow as the economic relationships between the Sub-Saharan Africa region and the Gulf Cooperation Council countries are constantly growing due to their geographic proximity, expanding logistical linkages and existing social networks. This is leading to expanding trade and investments including in partnership with Asian clients.”

The German bank will follow in the footsteps of other institutions that have focused their investment on African countries and expanded their footprint in the continent. Goldman Sachs and JPMorgan are among the international investment banks that take advantage of higher growth rates, when compared to many developed economies, and the demand for infrastructure spending.

While the expansion to Dubai will put Deutsche Bank closer to Africa’s fastest-growing economies, many banks have recently moved their business away from Dubai to Johannesburg – a move which Deutsche Bank may look to follow in the years to come. Rivals such as Citibank, FirstRand and Standard Bank have focused much of their attention on the sub-Saharan African region with minimal focus on the Middle East. In the past four years, both Standard Chartered and Barclays have moved their headquarters from Dubai to Johannesburg, with banks typically expanding to other African countries upon establishing a presence in the continent.