Year: 2018

Union National Bank continues to play its part in the success of the UAE’s banking sector

Posted on by Max Tomlin

Following two challenging years of crude market volatility, 2018 has marked something of a turning point for the UAE economy. With oil prices now rebounding, the nation’s financial deficit is projected to reverse by 2020, with both the federal government and individual emirates adopting a more expansionary fiscal stance.

Compared with some of its GCC neighbours, the UAE is less dependent on crude oil and boasts an impressively diverse economy

While the pick-up in crude oil prices certainly bodes well for the UAE’s economic outlook, there are important lessons to be learned from the market’s two-year slump. Indeed, the turbulence of the past two years has explicitly exposed the Gulf Cooperation Council (GCC) members’ vulnerability to oil price volatility, and has put more focus on the diversification drive across the Arabian Gulf. Compared with some of its GCC neighbours, however, the UAE is less dependent on crude oil than in previous years, and already boasts an impressively diverse economy.

With a booming tourism industry and flourishing construction, industrial and pharmaceuticals sectors, the nation’s high-performing non-oil markets are set to be the main drivers of growth in 2018 and beyond. What’s more, as the country prepares to host the highly anticipated Expo 2020, infrastructure spending is set to ramp up in the host city of Dubai, creating a wave of new jobs and economic opportunities in this fast-growing global emirate.

23

Number of domestic banks currently operating in the UAE 2013

29

Number of foreign banks currently operating in the UAE

As the UAE presses ahead with its economic diversification plans, one sector in particular continues to drive growth: banking. Boasting high profitability and showing remarkable stability in testing economic circumstances, the nation’s banking industry has emerged as one of the UAE’s most prominent non-oil sectors. Home to one of the region’s largest banking sectors, the UAE is fast becoming a global financial hub, attracting stakeholders, partners and clients from the GCC and beyond. Leading the way for financial innovation and stability is Union National Bank (UNB), one of the UAE’s top financial institutions. With a consistently strong financial performance, impressive credit ratings and a number of prestigious accolades, UNB is going from strength to strength. While we are certainly proud of our achievements so far, we also understand that the key to sustained success is innovation and reinvention, and we are therefore committed to developing new strategies as we look to grow our business for the future.

Ahead of the competition
With the banking sector playing an increasingly important role in the UAE’s economy, it is vital that banks learn how to distinguish themselves from their competitors. The industry is fast becoming a crowded market, with 23 domestic banks and 29 foreign financial institutions operating within the UAE, as well as a number of alternative banking and finance companies that serve various segments of the economy. In this dynamic and competitive business environment, the UAE’s financial institutions are now implementing innovative strategies to ensure success
for years to come.

At UNB, we are committed to supporting the country’s economic, social and environmental development, in addition to creating value for our customers and stakeholders. We are the bank that cares, and it is this unique, nurturing approach that truly sets UNB apart from its competitors. Our customers are at the heart of everything we do, and we are committed to enhancing their banking experience. In order to ensure our services suit our clients, we encourage customers to express their opinions through multiple ‘customer voice’ channels. We use the feedback that we receive from our clients to improve, innovate and expand our range of products and services, as well as to ensure excellent customer service in all aspects of our business. With this customer-focused approach in mind, UNB has recently launched a customer service award, which aims to further enhance the service culture and excellence mindset across our network of UNB branches. Highlighting the importance of customer satisfaction, this new award supports our mission to become the bank of choice for all stakeholders in the UAE.

In addition to enhancing the customer experience, we are also dedicated to creating a more sustainable community. Our commitment to corporate social responsibility (CSR) matches our business tagline – ‘the bank that cares’ – and we understand the importance of effecting positive change in the wider community. Our CSR initiatives focus on four key areas: education, community, climate change and the environment, and the sustainable development of local talent. As we look to create a more sustainable future for the UAE, UNB has partnered with respected organisations such as the Emirates Wildlife Society in association with the World Wildlife Fund, and the Ministry of Environment and Water, signalling our commitment to driving sustainability both internally at UNB and externally in our community. What’s more, UNB donated over $8m to the Sandooq Al Watan community initiative in 2017, as part of our continued effort to support the development of local entrepreneurs in preparation for the post-oil-dependancy era. We are conscious of the influence that we have in wider society, and always strive to create a positive impact in all aspects of our business.

Employee wellbeing is key
As businesses grow and bring more members of staff into their teams, it is vital that they recognise the importance of prioritising employee welfare and wellbeing. In the financial sector, this is no different, and many banks across the globe are taking measures to ensure that their employees feel happy and motivated at work. Indeed, this is particularly crucial in the post-crisis era, as increased scrutiny and pressures may easily have an adverse effect on staff wellbeing and engagement.

The link between employee wellbeing and business effectiveness has long been established, with an improvement in workplace welfare resulting in improved performance and engagement. As such, improving staff morale is as beneficial for the employer as it is for the employee; enhanced wellbeing is known to positively impact productivity, growth, bottom-line performance and even a company’s reputation within the industry. At UNB, employee wellbeing and engagement form the core of our business philosophy. In an effort to boost employee happiness and drive success among our staff members, we have launched the innovative and award-winning Tahfeez HR transformation strategy. This focuses on the building of existing and future capabilities of our people and the retention of talent, paying particular attention to quality of life, work-life balance, physical and mental health, and social, financial and spiritual wellbeing.

The Steps of Giving initiative and the New Me healthy lifestyle campaign have also been well received within the bank, with staff members responding positively to our engagement efforts. Alongside these ongoing campaigns, UNB aims to boost employee motivation through a number of unique and exciting events. In April 2018, for instance, the staff fishing club organised a pilot fishing trip, which proved extremely popular. As a result of the overwhelmingly positive response to this event, similar trips and excursions are now being planned for later in the year and in 2019.

Following the success of these wellbeing initiatives, UNB is keen to maintain its upward momentum and continue to make progress in this crucial area. In November 2018, we will be launching a new wellbeing campaign – ‘the fitness challenge’ – which will be open to all UNB staff. Taking advantage of the cooler temperatures , we will be encouraging all of our employees to participate in a range of outdoor activities, like running and cycling, as well as organising a variety of team sporting events.

An evolving market
Despite our recent successes in areas such as employee wellbeing, shareholder satisfaction and CSR, UNB is aware that the future holds many challenges for the UAE’s established financial institutions. As the nation looks to further diversify its economy and prioritise non-oil sectors, technology is set to revolutionise the way we do business in the UAE. The country’s economy is due to undergo a significant technological transformation over the next five to 10 years, with a rapid uptake of artificial intelligence (AI) and robotics across the nation’s flourishing domestic sectors. These new technologies will undoubtedly begin to change the face of the UAE’s banking sector, and the nation’s financial institutions must keep up with these technological transformations if they wish to remain relevant in the digital age.

At UNB, we understand that technological innovation is the key to our future success, and we have therefore made digitalisation a key component of our mid-to-long-term strategy. In order to adapt to our customers’ rapidly evolving tastes and demands for innovative digital products, we are now focusing on expanding our AI technology and robotics capabilities – from voice biometrics to the state-of-the-art online banking platform. With this digitalisation drive, we hope to enhance the customer experience through a range of practical and original digital solutions. Furthermore, as technology continues to reshape banking across the GCC, our digitalisation initiative is set to aid our vision of expanding our international footprint in the region, attracting tech-savvy clients from around the Arabian Gulf.

From technological innovation to ground-breaking CSR initiatives, UNB is fully committed to creating a brighter future for the UAE. As well as meeting the needs of our customers, staff and stakeholders, we are dedicated to effecting positive change in the communities we serve. Thanks to this unique, caring vision, UNB has established itself as one of the leading banks in the UAE’s rapidly evolving and dynamic financial market.

Institutional investors sue 16 banks in US over currency manipulation

Posted on by Max Tomlin

A group of institutional investors, which includes BlackRock and Allianz, has sued 16 major banks in US district court for allegedly rigging Forex currency markets.

The banks stand accused of violating US antitrust laws by conspiring to rig currency benchmarks, including the WM/Reuters closing rates, for their own benefit by sharing confidential client orders and trading positions.

The banks stand accused of violating US antitrust laws by conspiring to rig currency benchmarks

The manipulation reportedly took place in chat-rooms such as ‘the cartel’ and ‘the mafia’. Traders used coded language including ‘banging the close’ and ‘painting the screen’ to conceal their illegitimate activities.

The banks named in the case are: Bank of America, Barclays, BNP Paribas, Citigroup, Credit Suisse, Deutsche Bank, Goldman Sachs, HSBC, JP Morgan Chase, Morgan Stanley, Japan’s MUFG Bank, Royal Bank of Canada, Royal Bank of Scotland, Sociète Genérale, Standard Chartered and UBS.

The complaint, which stretches over 221 pages, states that banks “injured” plaintiffs by “colluding to manipulate FX prices, benchmarks and bid/ask spread”. This had the effect of restricting trade, decreasing competition and artificially increasing prices, according to the papers.

Norway’s central bank Norges Bank and public pension fund California State Teachers’ Retirement System are also among the plaintiffs. The lawsuit was filed on November 8 on behalf of the group by law firm Quinn Emanuel Urquhart & Sullivan.

This case is the latest in a string of global litigation relating to rigging of the $5.1trn-a-day foreign exchange currency market. 15 of the 16 banks named have already settled to the tune of $2.31bn with various individual investors and governmental bodies in the US. The largest individual settlement so far topped $402m, paid by Citigroup.

Worldwide, over $10bn of fines have been issued across several banks, and traders from Barclays, RBS, JP Morgan and Citi have been convicted of currency rigging.

Lawyers for the plaintiffs said in a statement: “This lawsuit comes on the heels of investigations by governmental regulators from around the globe, including the US Department of Justice, the UK Financial Conduct Authority, the European Commission, as well as authorities in Asia, Switzerland, and South Africa.”

The plaintiffs in this case have elected to file their own individual lawsuit against the banks, rather than participate in national litigation, in the hope that they will recover more funds. This lawsuit solely relates to the banks’ dealings in the US; many of the plaintiffs also plan to pursue litigation in London for currency manipulation in Europe, according to the complaint.

“The European Commission is expected to impose further substantial fines when it concludes its investigation, which is expected to happen this year,” the plaintiffs’ legal counsel added.

US midterm results spark positive reactions from global markets

Posted on by Max Tomlin

Global markets cheered as midterm election results demonstrated the restoration of checks and balances in the US Government. Democrats took control of the House of Representatives, gaining 26 seats, but Republicans consolidated their hold on the Senate with a two-seat gain.

The ‘blue wave’ within the House will have significant implications, as it will make it near impossible for the US president to push through controversial fiscal policies

European markets have reacted positively to the results, with London’s FTSE 100 index, Germany’s DAX and France’s CAC 40 all up more than one percent in early trading. Both the euro and the pound also posted gains this morning. Asian shares were largely flat as the election results came in, but gains are expected when markets reopen.

The division of Congress is likely to lead to a period of government inactivity, as policies become more difficult to pass and debate becomes more drawn out. This will give markets a chance to recover after a tumultuous October, which saw tech firms such as Amazon and Netflix lose 20 percent of their value. Key US indexes also experienced dramatic dips, with NASDAQ falling nine percent, the DOW shedding 1,300 points, and the S&P 500 experiencing its worst month since September 2011.

“A divided Federal government could actually be the ideal outcome for corporate America. They’ve had a bumper tax cut from Donald Trump, and congressional gridlock from here should mean business can get on with things without too much political interference,” said Nicholas Hyett, an equity analyst at investment firm Hargreaves Lansdown.

The ‘blue wave’ within the House will have significant implications for Trump, as it will make it near impossible for the US president to push through some of his more controversial fiscal policies on trade. Trump’s foreign policy stance is likely to be scrutinised, particularly with regards to the on-going trade war with China. In September, the White House imposed tariffs of 10 percent on $200bn of Chinese goods, which is set to increase to 25 percent by the end of the year if a deal is not reached. Beijing responded by imposing tariffs on $60bn of US goods. The two nations are now locked in a stalemate ahead of the G20 negotiations at the end of November.

Alec Young, Managing Director of Global Market Research at FTSE Russell, believes that the election results may increase the odds of a US-China trade deal. “With President Trump now less likely to pass economically stimulative legislation thanks to the Republican loss of the house, he is more likely to double down on ensuring a trade deal with China,” Young told World Finance. “Trump will want to ensure economic stimulus heading into his re-election in 2020 and trade is a great way to do that.”

A softened trade strategy would also be good news for Asian markets, which collapsed amid the conflict. The Shanghai Composite lost eight percent in October, and the IMF downgraded China’s economic outlook from 6.6 percent to 6.2 percent growth for 2019. An end to the tensions would also allow the US to focus on its own economic growth, rather than concentrating attention on strained international relations.

A blue House of Representatives could prove positive for national infrastructure, as Democrats in particular are keen to push for greater spending on machinery manufacturing, steel producers and oil and gas providers. HSBC chief US economist Kevin Logan wrote in a note in October: “Republicans have generally opposed Democratic plans on the issue, but President Trump has expressed support for infrastructure spending and might be willing to help.” Shares in major steel manufacturer Nucor and industrial conglomerate Honeywell both rose 0.1 percent in overnight trading, with further gains expected when markets open.

The greatest source of relief is likely to have come from the accuracy of polling.

According to a Morgan Stanley note seen by World Finance, “the only surprise is the lack of one for investors conditioned to expect it after Brexit and 2016”. Pre-vote polling surrounding both of those events turned out to be spectacularly inaccurate, causing market hysteria and damaging losses. After such turbulence, both in long-term geopolitical events and recent market activity, many will be reassured by the prospect of a return to stability.

The Brightline Initiative is exploring how humans can thrive in the digital age

Posted on by Max Tomlin

In the 1970s, there was talk of an ‘age of technology’, in which work would be all but eliminated and people would live in comfort while mundane tasks were completed by machines. But this life of leisure never arrived. Indeed, what is interesting is that most people are still working long hours; according to a 2015 study by the Bureau of Labour Statistics, people in the US work an average of 1,800 hours per year, with many forced to take on two jobs or work in excess of 70 hours a week.

The challenge is to understand the potential for technology to reshape businesses and to introduce the right technologies at the right time

There is an array of new technologies having an impact on the workplace and the nature of work today – such as artificial intelligence (AI), blockchain and robotics – but we are still figuring out how humans can excel in the technological age. How we maximise technology for the benefit of humanity – and the betterment of our daily lives – is a question that is still in the process of being answered.

Technology’s transformative effect
In recent years, the initial reaction to new technologies has been one of fear. There has been talk of hundreds of thousands of jobs simply disappearing as they fall victim to automation. However, this belief underestimates a number of things. First, work has always been in a state of flux; where people work and how they work is constantly changing. Think of how the advent of the internet has changed the nature of work. The organisations people work for and the environments in which they work have changed, too. Second, people are highly adaptable; individuals and organisations pick and choose from the technologies at their disposal. The challenge is to know enough about the available technologies to make the best selection for your situation both now and in the future.

59%

of leaders acknowledge a gap between their strategy design and implementation

Undoubtedly, the future of work will be different. Decisions will be made and strategies created in incredibly information-rich environments. In the past, having the facts at your fingertips was difficult work – numbers were hard won. Now, thanks to big data analytics and various other technologies, a huge amount of data is at our disposal. How to use it wisely has become the next big question.

Leaders involved in strategic changes should consider three insights. First, humans will always be in control. No matter how advanced the technology is, we will still have humans behind it. The number one barrier in strategy implementation is cultural attitudes, not the lack of technology applied in strategic initiatives. Second, technology is an enabler. In many ways it helps humans to answer questions faster and more effectively, but humans are the ones thinking and asking the right questions in the first place. Third, organisations and leaders should focus on discussing how to become better at strategy implementation, and choose technologies wisely for every condition and challenge they face.

Embracing tech potential
But how can executives be sure to implement successful strategies around the role of technologies like AI and robots in the workplace? They can never be 100 percent sure, but they have to ask whether any particular technology will improve individual and organisational performance. Will it make things better today or tomorrow? If it won’t, why are they using it?

At the same time, executives have to be open minded. Business history is littered with the remains of corporations that refused to embrace new technologies as soon as they emerged – and paid the price. Executives need to understand what technology might mean for their companies and for those who work with them. They need to make informed decisions – and that is harder than it seems.

For instance, sometimes it is not the first to embrace or understand the technology that wins, but the one capable of bringing the technology to the mass market or embedding it in their products with the quality and features customers want. Amazon wasn’t the first online retailer, but it was the first to really understand the potential of the internet and make it accessible.

So the challenge for executives is to understand the potential for technology to reshape their businesses and then to introduce the right technologies at the right time.

Clearly, technology is going to take a leading role in things like gathering market intelligence. This is already pretty well established in many companies. But it is also increasingly clear that there are areas where technology simply cannot yet play a role. The clearest area is that of judgement. Executives now make decisions based on reams of fantastic data, but they still need to be able to sort the wheat from the chaff; they need to be able to make the right call.

Look at sport, for example. A modern football coach has a lot of data about the fitness of their players: whether they kick the ball more with one foot, the areas of the pitch where they make the biggest difference, and so on. But when losing by one goal to nil with five minutes left, a coach has to instantly gauge who is the most tired, which player appears injured, what formation is now needed, among other things. All the data in the world is not going to help; the coach has to reach a judgement and make the right decision fast.

Other necessary skills and areas where robots might not be as good as humans are creativity, empathy and planning. All of these are essential for strategic thinking and implementation. Strategy implementers themselves cannot be automated or replaced by a machine or algorithm.

The key to implementation
Most strategic initiatives fail because of flawed implementation, resulting in a waste of both time and resources. The dynamic interplay between strategy design and delivery starts at the moment an organisation defines its strategic goals and investments. Most leaders appear to understand the importance of implementation and acknowledge that they need to upgrade their delivery capabilities.

At least 59 percent of respondents to the most recent Economist Intelligence Unit (EIU) survey, which was conducted in partnership with the Brightline Initiative, acknowledged a gap between their strategy design and implementation, and recognised its negative impact on organisational effectiveness. That is barely an improvement on the 2013 EIU survey, in which 61 percent of respondents admitted to performance-sapping shortfalls in implementation.

There is, however, no single true path to implementation excellence. That is because there are several frameworks for strategy design and implementation, and every organisation needs to craft its own recipe for strategic success. We believe this recipe will be more effective when it adheres to a set of core principles.

Getting things done is hard work. It requires constant communication, focus, transparency, honesty, feedback and much more. But fundamentally it is about people – bringing the best possible people to the task and maintaining their motivation and enthusiasm to promote team engagement and collaboration. Technology can help here; repetitive tasks that do not require strategic thinking, creativity, management or empathy can be automated.

For instance, executives and their teams usually spend a great deal of time and energy preparing status reports, as well as analysing their strategic initiative programmes and projects. While finding, compiling and grouping that data can be automated and perfected by machines and algorithms, the most critical part – the strategic insights and decisions – will be based on the judgements and contributions of humans.

Enduring human qualities
In a world where humans will have machines as co-workers, Brightline’s mission remains as relevant as ever. We develop and provide a holistic knowledge and networking platform that delivers solutions and insights to successfully bridge the expensive and unproductive gap between strategy design and delivery.

All the technology in the world does not necessarily mean that strategy design and delivery will become effectively aligned or completely automated. Technology only gets you so far.

“The reason strategy execution is often glossed over by even the most astute strategy consultants is because it’s not a strategy challenge – it’s a human behaviour one,” argued Peter Bregman in a Harvard Business Review article, titled Execution is a People Problem, Not a Strategy Problem. “To deliver stellar results, people need to be hyper-aligned and laser-focused on the highest-impact actions that will drive the organisation’s most important outcomes. But even in well-run, stable organisations, people are misaligned, too broadly focused and working at cross-purposes.”

For example, Brightline’s sixth Guiding Principle is to “promote team engagement and effective cross-business cooperation”. Focusing on gaining genuine buy-in from middle and line managers by engaging them as strategy champions requires empathy, communication and planning – all human traits.

Technology presents huge leadership challenges, as well as great opportunities. It allows leaders to make decisions based on clear evidence and communicate with colleagues 24/7. But at the heart of leadership are human factors such as trust, empathy and a sense of community, all of which are essential for leaders in the age of technology.

UOB Asset Management Thailand is setting the standard by prioritising sustainability

Posted on by Max Tomlin

Thailand has quickly progressed from a low-income country to an upper-income one, with citizens experiencing declining poverty, increasing levels of educational attainment and rapid economic growth over the past few decades. Tourism and manufacturing exports have played a significant role in the country’s success story, but the financial sector has also proven to be important. UOB Asset Management Thailand (UOBAM Thailand) is one of the industry’s leading lights.

In an effort to capture a larger online customer base through a first-mover advantage, the financial sector has begun to offer an expanded suite of digital products and services

With more than 20 years of experience, UOBAM Thailand advises its clients to carefully assess wider economic conditions before committing to an investment. It continues to seek innovative investments across different asset classes in line with its active investment strategy by exploring new fund ideas that are appropriate for different market cycles. So far, the asset management firm has established a variety of funds – including foreign investment funds – which have been launched to capitalise on income trends and investment opportunities. For example, in 2017, UOBAM Thailand also launched a United Global Income Strategic Fund for retail investors seeking a steady interest income and a diverse portfolio of fixed-income investments, including mortgage-backed securities and asset-backed securities.

Furthermore, UOBAM Thailand’s United Fund-Linked Complex Return (UFLINK) enhances returns by investing in options connected to PIMCO’s Global Investors Series income fund. UFLINK is the first fund in Thailand to enhance returns on fixed-income investment through a derivative instrument, and has successfully raised the fund size to $147.25m. At the end of 2017, UOBAM Thailand managed to grow its business – particularly in the areas of mutual funds, private funds and provident funds – to reach assets under management (AUM) of $8.6bn. World Finance spoke to Vana Bulbon, CEO of UOBAM Thailand, about the company’s success so far and what the future holds for Thailand’s financial services sector.

UOBAM Thailand has launched a number of funds recently. What new opportunities will they bring to clients?
UOBAM Thailand is always monitoring the market so we can foresee upcoming investment opportunities and identify innovative investment products for our clients. For instance, although the market has exhibited a measure of volatility this year, we have launched the United Global Equity Absolute Return Fund (UGEAR) to enable less risk-averse clients to make the most of these market conditions. UGEAR is also the first absolute return, long/short strategy mutual fund in Thailand to offer retail clients who invest over THB 1m ($30,000) life and health insurance benefits from Prudential Life Assurance (Thailand). At UOBAM Thailand, we believe there’s a lot of opportunity in every market situation.

$8.6bn

UOBAM Thailand’s total AUM

15,000+

Number of UOBAM Invest downloads (first six months)

How does UOBAM Thailand help to promote sustainable investing?
At UOBAM Thailand, we employ a fund management team with more than 20 years of investment experience to closely monitor market conditions and offer the right investment recommendations to our clients. We routinely encourage and recommend that our clients plan their investments for the long term. We have designed our investment strategies to ensure that our clients’ portfolios are accompanied by a level of risk that they are comfortable with. We also prioritise investment schemes that will have a long-term positive impact on the environment and wider society.

How has the asset management market in Thailand changed in the years that UOBAM Thailand has been operating?
In recent years, Thailand has witnessed an increasing number of users accessing the web, primarily via their smartphones. In an effort to capture a larger online customer base through a first-mover advantage, the financial sector has recognised these developments and begun to offer an expanded suite of digital products and services. This includes the introduction of online and mobile banking platforms, which have proliferated as Thai consumers have become more familiar with the innovative trends brought about by digitalisation, such as cashless payments.

The UOBAM Invest mobile app was successfully launched in November 2017 as an online digital investment advisory service for retail investors in Thailand. The app offers an advisory function, which creates a portfolio allocation suited to a client’s desired level of risk and is based on a proprietary investment tool. Clients can buy and track their investments, as well as update their personal information, 24 hours a day.

UOBAM Invest was downloaded more than 15,000 times on both iOS and Android systems during the six-month period following its launch. The application has garnered positive reviews, with transaction numbers and AUM having both grown as a result of the mobile platform. UOBAM Invest has outshone its competitors, with clients now gaining access to real-time alerts that provide updates on their funds, as well as periodic overviews of the market and fund investment strategies.

How does UOBAM Invest help Thailand’s retail investors?
UOBAM Invest is the first asset management mobile application in Thailand with full functionality regarding mutual and pension funds. The interactive and user-friendly app essentially allows clients to conduct transactions more easily through multichannel payments. In addition, the foreign investment fund calendar has become a popular tool for clients wanting to follow the progress of their funds. UOBAM Invest delivers prompt and functional asset management advisory services. It is designed to serve retail clients and savvy digital investors by enhancing the clients’ investment experience through mobile trading.

The app provides features that complement a digital lifestyle. This includes a portfolio recommendation tool, a profit and loss tracker, and a multi-method payment channel that includes direct debits, online payments and credit cards from six major banks in Thailand. An interactive access feature keeps clients engaged with fund information, net asset value movements and holiday notification updates associated with foreign funds.

Corporate governance and social responsibility are important values for modern businesses. In what ways does UOBAM Thailand support this?
One of the key milestones in the mutual fund business was the launch of a new fund with tax benefits – the Good Corporate Governance Long Term Equity Fund (CG-LTF). The fund mainly invests in listed companies with good corporate governance and sustainable growth potential. With profound investment management expertise, CG-LTF has recently been ranked as the best performing fund among 62 long-term equity funds for its five and 10-year track records, and was given a four-star rating by Morningstar Thailand. We also provide our Corporate Good Governance Retirement Mutual Fund for retirement planning proposes.

Moreover, we recently launched the United Thai Equity CG Fund (UTHAICG), which invests in Thai-listed companies that have been awarded a corporate governance rating of four or above by the Thai Institute of Directors and have been certified by the Private Sector Collective Action Coalition Against Corruption. The launch of UTHAICG is part of UOBAM Thailand’s participation in the Association of Investment Management Companies’ campaign to promote sustainable investing. The campaign also aims to encourage listed companies to improve their corporate governance and social responsibility. Therefore, UOBAM Thailand has launched the fund in order to ramp up investment in stocks that promote good corporate governance.

Regulations are forever changing in the financial sector. How does UOBAM Thailand ensure it always meets legal requirements?
At UOBAM Thailand, we place a strong emphasis on risk management and ensure that all company activities adhere to in-house regulations. The company’s compliance and risk management programme covers not only the legal requirements encompassing the business, but also best practices regarding the internal development of business systems, as well as the education, training, monitoring and discipline of our employees. By meeting our reporting requirements and valuing transparency, we are helping to create a more accountable and responsible investment climate in Thailand.

How important is customer satisfaction to UOBAM Thailand? How do you ensure that the highest possible standards are maintained in this area?
We continue to place a great deal of emphasis on customer satisfaction. We are constantly exploring new product distribution channels and investment innovations to ensure that our highly professional team delivers the excellent service that our customers deserve. Our business utilises knowledge sharing and cutting-edge technology to provide better returns for our shareholders, employees and the community.

Our efforts have resulted in UOBAM Thailand receiving a number of awards over the years and being recognised as one of Asia’s leading asset managers. We are uniquely positioned to provide a wide range of financial investment solutions to cover local and foreign investment. We have more than 20 years of experience investing in equities and fixed-income instruments across regional and global markets. Through our strong alliances, we offer a comprehensive suite of investment products to our clients, both individual and institutional.

What does UOBAM Thailand have in store for the future?
As market conditions are always changing, we will continue to use our in-house expertise to keep a close eye on developments and provide the best possible advice to our clients. We believe that our experience and knowledge means we can provide investment solutions to suit all market conditions. Also, UOBAM Thailand will continue on its digitalisation journey, offering customers the online and mobile solutions they need to stay informed and connected in the modern world of investing.

US awards eight nations oil waivers under Iran sanctions

Posted on by Helen

The US has agreed to allow eight nations including Japan, India and South Korea to continue purchasing oil from Iran after the reimposition of sanctions on November 5.

According to a senior White House official, the waivers have been awarded in exchange for continued import cuts to avoid driving up oil prices.

China, the leading importer of Iranian oil, is still in discussions with the US regarding the terms of the waiver. Two anonymous officials have confirmed that Japan, India and South Korea are among the eight nations, while the other four countries have not yet been named.

The Trump administration must weigh its options carefully with regards to the sanctions, given that Iran is one of the world’s largest oil suppliers

The Trump administration must weigh its options carefully with regards to the Iran sanctions, given that the country is one of the world’s largest oil suppliers. This will involve ensuring that there is adequate supply in the global market to prevent a damaging spike in fuel prices, while also guaranteeing that Iran’s government still feels the pinch from US sanctions.

Aside from the oil industry, the US president has also applied penalties to the shipping and financial services sectors. More than 700 individuals, entities vessels and aircraft are now subject to sanction, including major banks and shipping firms. US Secretary of State Mike Pompeo said in a briefing on November 4 that over 100 large international firms had already withdrawn from Iran due to the threat of sanctions.

A balancing act
In May this year, crude oil hit its highest price per barrel since 2014 due to a spike in demand that was not matched by increases in production. Price hikes such as these can have devastating effects for smaller nations that rely on imported oil for their energy needs.

Following rumours of the waivers, global benchmark Brent crude fell around 15 percent from last month’s high of $85 a barrel. There has also been increasing speculation that other oil-producing nations will pump more to offset the supply gap.

The waivers awarded are temporary, and the US has stated previously that it expects these nations to minimise their reliance upon Iranian exports as much as possible. US Secretary of State Mike Pompeo said the exempted countries had already made “significant reductions in their crude oil exports” but needed “a little bit more time to get to zero”. He also recognised that it was not always possible from a logistical point of view for certain nations to cut trade ties when they have nowhere else to turn for raw materials.

One such example is Turkey, a key destination for Iranian crude oil. Turkey has few oil and gas reserves of its own and, as such, imports around 90 percent of its national demand for these two materials. Energy Minister Fatih Donmez told reporters in Ankara last week that the Middle Eastern nation could be one of the four unnamed countries to receive a waiver from the Trump administration. Of the 830,000 barrels that Turkey imported daily last year, over a quarter came from Iran.

A long time coming
Oil sanctions have been looming over Iran for the past six months, ever since Trump decided to pull the US out of the 2015 nuclear deal between the Middle Eastern nation and six other global powers including France, the UK, Russia, China and Germany. The sanctions have been used as a threat by the US in an attempt to constrain Iran’s oil exports. Although this tactic has been unpopular with the other nations involved in the nuclear deal, it has delivered impressive results, with Tehran’s exports falling from 2.3 million barrels a day to 1.5 million in just three months, according to internal estimates.

Robert Palladino, Deputy Spokesperson for the US Department of State, said at a briefing on November 1 that the US was feeling “quite confident” that the sanctions would help to “exert maximum pressure against the Iranian regime”.

“This leading state sponsor of terrorism is going to see revenues cut off significantly that will deprive it of its ability to fund terrorism throughout the region,” Palladino said.

Under the terms of the waivers, countries must pay for Iranian oil using escrow accounts in their local currency. These accounts will be managed by western banks, which will ensure that the money can only be used by Iran to buy food, medicine or other non-sanctioned goods. By not handing the cash directly to Iran, Trump’s administration is attempting to constrain the country’s economy and prevent the government from using the money in any nuclear development programmes.

At a meeting of economic officials on November 5, Iranian president Hassan Rouhani said that Iran would “continue selling oil” and would “proudly break the sanctions”.

Eurobank is helping Greece’s SMEs thrive for the good of the whole nation’s economy

Posted on by Max Tomlin

SMEs are the backbone of the Greek economy, contributing 87 percent of the workforce and 73 percent of value added. After many years of economic crisis, the long-awaited rebound of the Greek economy now relies heavily on the activities of SMEs, the growth of which will reduce unemployment, increase private consumption and benefit the country’s GDP.

After many years of economic crisis, the long-awaited rebound of the Greek economy now relies heavily on the activities of SMEs

Nonetheless, Greek SMEs continue to face challenges, many of which intensified during the financial crash. Indeed, the recession affected SMEs far more severely than it did larger enterprises. Despite efforts to increase exports, the main activities of SMEs remain focused on domestic demand, which has unfortunately declined considerably in recent years.

In light of SMEs’ importance to the Greek economy, World Finance spoke with Iakovos Giannaklis, General Manager of Retail Banking at Eurobank, about the sector’s challenges and how financial partners can help to overcome them. Eurobank was named best retail bank in Greece in the World Finance Banking Awards 2018, and has extensive expertise in supporting SMEs.

What are the most pressing challenges facing SMEs in the Greek economy?
Competitiveness in the EU is high, with many businesses bringing agile, tech-based solutions to the market. Traditionally, Greek SMEs are family-run businesses, operating with high flexibility and low productivity. Due to their size and structure, they cannot afford to employ specialised staff in key positions. Meanwhile, the employment of digitalisation, modern management models and advanced banking solutions, all of which enhance operational efficiency, remains low among SMEs. At present, product output lacks technological content and, subsequently, added value. Finally, there is not a strong culture of business collaborations, and clustering remains fragmented, thus limiting potential success in big export markets.

SMEs that managed to survive the crisis are a brilliant example of creativity, tenacity and business instinct, leading us to be confident that they will thrive as the Greek economy bounces back.

What role does Eurobank play in the support of Greek SMEs?
At Eurobank, we believe each customer is unique and has their own needs. Our small-business banking managers approach every client profile by responding to their individual requirements in order to develop a long-lasting and mutually beneficial relationship. Having consolidated high-quality client relations with the implementation of a horizontal service model, we have developed a concise strategy to help businesses overcome their biggest challenges.

We provide requisite financing for working capital and investments in favourable terms. We also offer a holistic solution to businesses eligible for funding within the National Strategic Reference Framework.

We promote extroversion; even though the number of exporting businesses has risen in recent years, the overall percentage remains extremely low (see Fig 1). We therefore need to encourage the business community to collaborate, participate in networks and look for new opportunities abroad. Finally, we encourage technological advancement through innovative solutions.

In terms of products and services, we provide an integrated approach, offering tailor-made solutions to suit every client’s needs. Eurobank’s offering includes a wide range of specialised products. Taking advantage of state-of-the-art technology is also essential, so we offer the innovative ‘v-banking’ service – a first in Greece – which allows customers to communicate digitally with their business banking consultant.

What financial tools does Eurobank offer to SMEs to boost their competitiveness?
At Eurobank, we always strive to ensure that business financing has as few barriers as possible by approving seven out of every 10 requests. Our commitment is that we will find a way to fund all business plans with substance, prospects and a strong foundation. Meanwhile, to ensure low-interest financing, we offer programmes through collaborative agreements with national, European and international institutions, such as the European Investment Fund, the European Bank for Reconstruction and Development, the International Finance Corporation, the European Investment Bank and the Hellenic Fund for Entrepreneurship and Development.

87%

of Greece’s jobs are in SMEs

73%

of value added comes from SMEs

Furthermore, the relationship managers in Eurobank’s small-business banking division use tools such as the Business Check-Up, which allow them to determine a client’s strengths and weaknesses, as well as areas for improvement in comparison to their local competition. Having made this assessment, we then recommend the most appropriate products and services in order to manage coverage and securitisation against any operational risks arising from the client’s business activities. Essentially, we help businesses identify the banking products that cover all of their needs. We even compare the company with the rest of the sector in terms of key performance indicators.

Finally, capitalising on our extensive experience as a servicing bank in previous cycles, we have developed a tailored solution for companies eligible to receive funding through the National Strategic Reference Framework. We offer free eligibility checks, which can be carried out in one of our branches or online, as well as financing for equity contributions and the option to collaborate with a leading financial consultancy firm at a discount.

What non-banking services does Eurobank provide?
Eurobank helps SMEs to counterbalance their lack of specialised staff by offering non-banking services in key management positions. The bank identifies the areas in which its clients require specialised staff and selects the most appropriate partners to support their ongoing growth. Eurobank uses its bargaining power to secure discounts on such partnerships.

The bank offers non-banking services in the tourism sector too, including: discounts on digital media, website and e-commerce development costs; revenue management consulting services for hotels; specialised training programmes for the hospitality industry, which can be taught both online and in person; and credit checking services on foreign tour operators for hotels and travel companies.

Following the success of such non-banking services, Eurobank plans to expand its offering.

What steps is Eurobank taking to help develop the export sector?
For years, Eurobank has invested in the export sector. Success in this extremely competitive environment requires a long-term, consistent and collective effort. We support SMEs seeking to expand their activities abroad. Our main vehicle for this is Exportgate, an electronic gate to global trade and business networking. This is further enhanced by Eurobank’s strategic agreement with Banco Santander as part of the Spanish bank’s Trade Club alliance.

Furthermore, in collaboration with a number of exporters’ associations, we organise Go International trade missions, which are structured business-to-business meetings that bring exporters and potential buyers together. A Go International trade mission will take place this November in Thessaloniki.

In terms of banking products, we offer exporters an array of financial tools to support them in every step of their transaction cycle. Eurobank always aims to offer the most cutting-edge trade and supply chain solutions. It’s also worth mentioning that the bank was recently named Best Trade Finance Provider, Greece, in the Global Finance 2018 awards.

How is Eurobank contributing to the digitalisation of Greek SMEs?
Eurobank has made a strategic choice to embrace digital technology in a bid to become the premier digital retail bank in Greece. We aim to exploit the vast opportunities offered by technology and innovation to ensure absolute efficiency and an omnichannel experience for our customers. At the same time, it is our priority to encourage entrepreneurs to upgrade their businesses by offering simple, user-friendly digital solutions that will make a significant difference in their everyday activities.

In 2017, we launched v-banking, a breakthrough alternative service channel, which offers a full banking experience through video calls. This innovative service channel assigns the client a relationship manager whom they can contact as often as needed, while also ensuring security, speed and technical functions to simplify everyday transactions such as cashing cheques and making loan applications. Companies that do not wish to visit physical branches can complete all of their banking transactions through this new channel.

A resilient banking sector is allowing Lebanon’s economy to endure regional strife

Posted on by Max Tomlin

Against the backdrop of prolonged regional instability, Lebanon has bucked the trend and resumed its institutional functioning. In line with recent presidential and parliamentary elections, the passing of a 2018 budget marks the beginning of a new political paradigm in the country. Indeed, the budget, which reduces the deficit by one percent of Lebanon’s GDP, serves as a crucial step towards unlocking new investment opportunities. This is especially apparent following the passing of a partnership law between the private and public sectors, as well as the approval of a petroleum tax law that completes the legal framework governing the oil and gas sector in Lebanon. Furthermore, the CEDRE conference, which was held in April and brought together 48 countries and institutions to support an ambitious capital investment plan by the Lebanese Government, is a potential game-changer for future growth opportunities through infrastructure investments.

Although some industries have taken a back seat amid regional disturbances, a robust banking sector remains the anchor of stability in Lebanon

At the same time as these developments, the prevalence of security in the country has contributed to an uptick in tourism, with the number of tourists exceeding 853,000 during the first half of 2018. Tourists from European countries reported the highest annual increase – 12 percent – to reach more than 300,000 during the aforementioned period.

Nonetheless, unrelenting regional tensions, coupled with a difficult internal operating environment, continue to burden the overall economic and operational environment in Lebanon. For the past seven years, Lebanon has been suffering from a protracted period of low growth, with the country’s GDP declining from over nine percent in 2010 to less than two percent currently. The traditional drivers of growth in Lebanon are subdued, with a slowdown in the real estate and construction sectors. Spillovers from the conflict in Syria, meanwhile, have also played a key role in today’s low-growth environment. The high influx of refugees has posed significant challenges to the Lebanese economy, weighing down the country’s already strained public services and infrastructure.

The first steps
For over a decade following the assassination of the late Prime Minister Rafik Hariri in 2005, the Lebanese Government has struggled to pass an official state budget. However, when a two-year presidential vacuum was filled with the election of Michel Aoun in October 2016 and the current government was formed, a new state budget was finally endorsed in late 2017, placing the country on a path to financial management and fiscal reform.

$16.6bn

Bankmed’s total assets

$13bn

Bankmed’s total deposits

$104.4m

Bankmed’s net income (2017)

Through this step, the government has demonstrated its commitment to instituting fiscal reforms and reducing the budget deficit. The state is also implementing a series of structural reforms in order to revitalise the fundamental drivers of growth by encouraging job creation, investment and productivity. Furthermore, at the CEDRE conference, the government pledged to reduce the deficit by five percentage points over a period of five years. This move is crucial to diminishing the country’s debt-to-GDP ratio, which stood at 153 percent in 2017. Fortunately, the 2018 budget achieved the first reduction in several years.

On another note, Lebanon has successfully maintained a stable peg against the dollar, supported by ample international reserves that exceed $44m, while gold is valued at $11.40 per gram. Thanks to the prudent measures adopted by Lebanon’s central bank, Banque du Liban, the local currency continues to be shielded from any impending challenges.

Anchor for stability
Although some vital industries have taken a back seat amid continued regional disturbances, a robust and well-regulated banking sector remains the anchor of stability in Lebanon. Indeed, the sector continues to exhibit a remarkable ability to weather shocks by capitalising on its high liquidity, solid capital adequacy and rigorous regulatory framework. As such, the banking sector continues to fund the public deficit and has stimulated lending activities for an increasingly dynamic private sector.

The solid performance of the banking sector is echoed through its maintained credit rating, which underpins its stability and sustained activity. In its recent report, Fitch affirmed a stable outlook for Lebanese banking, noting that its risk factors are low. The same stable outlook was also cited by Moody’s, which noted that the Lebanese financial system maintains considerable liquidity buffers. These buffers are driven by Banque du Liban’s large gross foreign reserves, which reached $44.4bn as of July 15, 2018 – a more than adequate buffer when matched against imports or foreign currency debt.

The banking sector has sustained this momentum thanks, in part, to the backing of strong quality assets, which exceeded 360 percent of Lebanon’s GDP. Aided by a vigorous funding capacity, total assets expanded by 12.3 percent to reach $232.3bn in May. In terms of liabilities, customers’ deposits recorded an annual growth rate of 3.3 percent during the same period. It is worth noting that customers’ deposits drive banking activity in Lebanon, meaning there is a low reliance on capital markets, with aggregate private sector deposits constituting 74 percent of total liabilities.

In view of the continued slowdown in economic activity, coupled with rising interest rates, the lending growth of commercial banks has decelerated, placing emphasis on maintaining strong liquidity, solvency and good asset quality. In addition, Lebanese banks will continue to strengthen their anti-money laundering efforts and take steps to counter the financing of terrorism in line with international standards.

Signs of growth
In 2017, Bankmed adopted a prudent financial strategy to serve as a road map for its operations. This strategy, coupled with a balanced-risk approach, enabled the bank to reinforce its standing among leading Lebanese banks, despite the domestic and regional adversities that continue to impact the Lebanese economy.

The bank’s total assets grew by 3.8 percent to stand at $16.6bn at the end of 2017, while total loans were valued at $4.4bn. On the liabilities side, total deposits expanded by around eight percent to reach $13bn, compared to a growth of 3.8 percent for the Lebanese banking sector more generally. This signalled strong customer confidence in the bank, underlining its impressive ability to attract new deposits in spite of challenging local and regional conditions.

In terms of profitability, Bankmed registered an increase in its net operating revenues, which exceeded $672m – an annual increase of 10.3 percent. This allowed the bank to increase its provisions for credit losses by approximately $115m by the end of the year, highlighting the management’s commitment to bolstering the bank’s position and strengthening its provisions. In parallel, the bank booked a $54.3m goodwill impairment on investments in its Turkish banking subsidiary. As a result, Bankmed’s net income for 2017 stood at $104.4m.

By the end of 2017, the bank’s capital adequacy ratio reached 15.8 percent, exceeding the 15 percent regulatory requirement set by Banque du Liban, while its foreign currency liquidity ratio stood at 43.9 percent, surpassing the 10 percent regulatory requirement. Accordingly, high liquidity and strong capitalisation remain among the key fundamentals that the bank’s management continually focuses on.

Brighter times ahead
The Lebanese Government recognises that the implementation of structural and sectoral reforms are critical to removing growth bottlenecks and supporting external balancing. Consequently, the government outlined its vision for stabilisation and growth at the CEDRE conference, which, as noted earlier, was held with the aim of supporting the Lebanese Government’s capital investment plan.

This vision, which rests on four main pillars, calls for: increasing the level of public and private investment; ensuring economic and financial stability through fiscal adjustment; implementing essential sectoral reforms; and developing a strategy for the reinforcement and diversification of Lebanon’s productive sectors.

CEDRE will allow funds for infrastructure, one of the country’s most prominent investment opportunities, without having to further burden the fiscal situation. If reforms are properly implemented and CEDRE is set forward, investment opportunities will ensue. This will reflect positively on real GDP growth, allowing it to reach 4.1 percent in five years from now. On the other hand, if these reforms and CEDRE are not put into place, growth is expected to slow further over the same period. The implementation will also reflect positively on the budget balance, which is expected to drop to 6.4 percent in the next five years, instead of widening to 13 percent in that timeframe.

Similarly, global consulting firm McKinsey has set out its vision for Lebanon’s economy, with recommendations ranging from building a wealth-management and investment-banking hub, to becoming a provider of medicinal cannabis. The report has also proposed some “quick wins” to ease the economic slowdown.

Moving forward, adopting McKinsey’s proposals and implementing structural reforms as per CEDRE’s requirements shall put Lebanon on the right growth path and pave the way for potential investment opportunities. Besides, the endorsement of the public-private partnership law will enable banks to take part in projects pertaining to infrastructure reconstruction. Likewise, the oil and gas sector harbours lots of favourable opportunities that Lebanon’s economy can capitalise on.

Puente recognises the need for IMF intervention in Argentina

Posted on by Max Tomlin

The first half of 2018 has not been kind to Argentina’s government, its assets or its investor base. At the heart of the problem is a change of priorities within the government’s economic policy, which has damaged investor confidence at the same time that the international context has become more challenging due to a stronger dollar and higher exchange rates.

The announcement of higher inflation triggered mass exits from the domestic currency market and a drop in demand for risky Argentinian assets

In a nutshell, the Macri administration – which during its first two years had decided to lower inflation at the cost of overvaluing the national currency – changed tack and became more tolerant of inflation, seeking a more competitive FX rate. This change in priorities had deep consequences for local currency assets. Their valuations had been primed over the two previous years by hawkish rates and low FX volatility.

That changed in December 2017. The announcement of higher inflation targets – an attempt to push Argentina’s central bank (BCRA) into lowering its rates – triggered mass exits from the domestic currency market and a drop in demand for risky Argentinian assets.

Of course, this is not the first time that Argentina has found itself in a perilous financial situation. Getting out of its current predicament will require President Mauricio Macri’s government to make tough, long-term choices. But help is at hand: at Puente, one of the highest-rated investment partners in South America’s Southern Cone, we believe that support from the IMF could provide the route to greater confidence in the Argentinian economy.

A helping hand
Due to a diminished appetite for Argentine assets, the government has decided to turn to the IMF for support. The ensuing programme brings Argentina’s macro rebalancing back to square one. The programme takes care of the central government’s funding through to the end of 2019, while setting the conditions for the country to return to voluntary markets by 2020.

In our view, a successful programme will need to be both economically and politically feasible. The first side of that equation means accelerating the country’s fiscal rebalancing and improving fundamentals significantly over the next 18 months. We believe that the programme has a good chance of accomplishing this. Under the agreed terms, the government will be able to slash the primary deficit and should balance the books by 2020. Additionally, the government has agreed to end monetary financing of the fiscal gap. The political side looks less clear-cut, though the fiscal targets for 2018-19 incorporate an increase in welfare spending to keep the social situation from derailing the government’s chances of re-election.

Where we feel the IMF programme is less clear is in the monetary policy/inflation/FX rate tandem. From the set targets, it appears that this will be a sequential programme, in which the government will begin by clearing the central bank’s balance sheet from low-quality assets parked there by the Treasury over the past decade. The second step will be to stabilise demand for real money balances in order to normalise rates, which currently exceed 40 percent, in order to keep retail investors from dollarising their savings. During these first two stages, the programme will be more tolerant of inflation, which is expected to end 2018 at approximately 30 percent. Clearing the BCRA’s balance sheet represents a good starting point – from a theoretical point of view, at least.

Ensuring stability
Since its introduction two years ago, BCRA’s monetary policy framework has been encumbered by the obligation to finance the Treasury, the desire to moderate FX volatility and the need to roll-over the growing central bank debt burden. Focusing on lowering the inflation rate is almost impossible under such conditions.

By eliminating monetary financing, imposing strict limitations to central bank FX market interventions and lowering the BCRA’s debt, the IMF programme will free the BCRA to concentrate on its inflation mandate starting in 2019. The challenge is navigating through the second half of 2018. Unwinding central bank debt is akin to lowering money demand; lower rates will not sustain appetite for local currency assets. A policy stance more tolerant to inflation will do little to anchor expectations.

In this context, despite the prospect of a steady flow of dollars from the IMF to prime the FX market supply, we believe that the risk of volatility episodes in the latter half of 2018 remains high. Looking beyond the second half of 2018, however, we have a constructive view of the outlook for Argentina, with an economy that will begin to recover in early 2019 and a decelerating path for inflation. In 2006, Argentina severed its ties with the IMF by paying off its $9.5bn debt. The fact that it has returned for further financial assistance is undoubtedly disappointing, but it need not prove a barrier to long-term prosperity.

Fintech disruptors are helping in the fight against financial poverty

Posted on by Max Tomlin

Financial poverty is defined by how deprived a citizen is in terms of their access to financial resources, and how much this impacts their standard of living. According to the World Bank, one in 10 people in the world live under the international poverty line of $1.90 per day. What’s more, there are a staggering 1.7 billion ‘unbanked’ adults across the globe – individuals with no bank account or access to financial support, such as loans. Furthermore, 200 million micro, small and medium-sized businesses in growth markets lack access to savings and credit, according to a recent McKinsey report.

While financial inclusion is on the rise, there is more to be done to help pull nations out of financial poverty and into a world that offers more equal opportunities

While financial inclusion is certainly on the rise, there is more work to be done to help pull nations out of financial poverty and into a world that offers more equal opportunities. Unfortunately, current banking infrastructures, particularly in developing regions such as Africa, are only now becoming equipped to create this new economic environment. Thanks to worldwide initiatives, spearheaded initially by the World Bank and now by fintech disruptors armed with new tools and techniques, the unbanked have a brighter future ahead. It all starts with the right foundations.

Laying the foundations
In April 2013, the World Bank set a goal– to have no more than three percent of the world’s population living on the international poverty line by 2030. Since then, the institution has been on a mission to implement poverty reduction strategies, which involve providing the necessary financial products and assistance.

Part of this strategy includes developing a more robust banking infrastructure, supported by private sector investors and the participation of local and foreign businesses, that can more appropriately support economic growth. The installation of credit bureaus, which provide advisory services, infrastructure, credit risk management technologies and support to central banks and other private sector stakeholders, has helped banks in many countries to make more informed decisions about lending. But what about unlocking the huge population of unbanked individuals? How can these credit bureaus help financial institutions cast a wider net for formal lending?

Bureaus with a difference
In essence, credit bureaus work alongside banks and other lenders in providing credit history information on citizens. Credit histories are usually a record of a citizen’s ability to pay back debts, with information sources including banks, microfinance, credit card companies and collection agencies. This aggregated data is then put through an algorithm which can tell a potential lender how likely it is that ‘Mr. X’ will pay back the loan he applied for. However, what happens if you don’t have information on the citizen or SME to start with?

In developing regions, many of the unbanked population have very little, or next to no, credit history. Also known as ‘thin file customers’, these individuals are screened out by traditional lending and underwriting methods because credit bureaus can’t provide an accurate picture of solvency to lenders. It’s a catch-22 as, without banks taking a leap of faith, these unbanked individuals can’t prove they are creditworthy. However, some forward-thinking credit bureaus are joining the new era of fintech companies, with a new approach to risk management. By unlocking new data sources, unbanked individuals can be afforded the same access to financial support that others across the world enjoy.

Gateway to inclusion
Believe it or not, personality can be a good indicator of how risk averse or risk tolerant an individual is likely to be when it comes to handling their finances. There are now solutions available, which are already being used by established credit bureaus and financial institutions, that use psychometric testing to generate information on potential customers. Individuals are presented with an image-based quiz, designed to deliberately trigger an instinctive and emotional response. Based on the responses, individuals are assigned a risk score, which highlights how self-disciplined the applicant is.

This new data generated on individuals’ personalities and their likely behaviour is combined with existing risk assessment processes to produce a rounder picture of a citizen. The psychometric test can also be expanded to business loans, allowing more companies to start and expand. By marrying psychology with a traditional approach to risk management, lenders can reduce their own risk with existing customers, as well as ‘bank’ the unbanked population that don’t have access to finance.

Building a data picture
It’s not just an individual’s personality that can provide insight into creditworthiness. In Africa, microfinance institutions can base their credit scoring on smartphone metadata. The lender can collect a wealth of information on call and SMS history, geolocation, contacts, and browsing history, which then adds to the package for the credit analysis of thin files. Mobile lending doesn’t require a smartphone, and in fact pre-dates the birth of the iPhone. However, given the increased functionality that today’s smartphones provide, lenders are able to pull from more data sources than ever before.

Some fintech companies are taking things one step further, with a new end-to-end mobile lending solution that can help tap into the global unbanked population. Presented as an app, the underlying technologies include a decision engine, that consumes data from credit bureaus, core banking systems, mobile wallets, psychometric testing and mobile phone meta data. Artificial intelligence then applies algorithms to the data, to present the lender with a user credit score, as well as the necessary fraud prevention checks. Other external data sources can be scraped and inputted into the platform for a more holistic view of creditworthiness.

For example, the app could take Google Analytics data, combined with financial data inputted into accounting software Quickbooks, to determine whether the owner of an e-shop would be able to pay back loans, based on the financial performance of the shop. Alternatively, lenders could determine the creditworthiness of a farmer based on agricultural data inputted into the decision engine – how much land the farmer owns, how much it costs to maintain the farm, the predicted prices in the market for wheat this year, and so on.

In short, the fusion of many different data sources, presented into an easy-to-use app format, will allow lenders to make better, more informed decisions on those individuals who previously might have been turned down for credit. The more data sources that can be plugged into the app, the more powerful the analysis for the credit lender.

Cashing in on the future
It’s not just the individual citizen or SME who is impacted by the lack of banking infrastructure and support. Countries the world over are being held back from furthering innovation, developing their economies and growing their workforces, because budding small businesses – with ‘unbanked’ entrepreneurs at their helm – are forced to fail, rather than thrive.

However, the recent wave of change in the credit risk management industry, facilitated by investment into new technologies by both disruptive fintech companies and more established, best-in-breed credit bureaus, promises to narrow the chasm between poverty and financial inclusion in the longer-term.

For more information, please visit the Creditinfo website

Mexican asset managers are poised to adapt to the new government’s agenda

Posted on by Max Tomlin

On July 1, 2018, millions of Mexican voters went to the polls to elect their new president, as well as other representatives across local and central government. As the polls had anticipated, the winning candidate in the presidential election was Andrés Manuel López Obrador, who is also known as AMLO. Andrés Manuel is a former Mexico City mayor, and won by a landslide, claiming more than half of the votes. His advantage was wide enough that the other three candidates quickly recognised they had lost and conceded defeat.

The strategies within the portfolios of SURA Investment Management have been characterised by the search for the best risk-adjusted performance

AMLO’s clear-cut victory gave the markets certainty about who the new president of Mexico would be, but it did not necessarily give away any hints about the new government’s agenda. After the results of the quick presidential vote count, AMLO gave a conciliatory and respectful speech, emphasising the autonomy of the central bank, the structural reforms by the outgoing government (with the important exception of the oil contracts, which will be reviewed) and discipline in public spending.

Other proposals, however, need further elaboration. Until now, AMLO had proposed some public spending plans without explaining their scope or how they would be financed. For example, AMLO has promised to double the pensions of the elderly and give economic support to young people who are not working or studying by as soon as next year. These policies generate pressure on the fiscal front, as AMLO is also proposing not to raise taxes or create new ones.

The need for clarity
While AMLO’s win did not come as a shock, the relatively surprising result was on the transformation of the composition of the country’s Congress. AMLO’s political party, the National Regeneration Movement, also known as Morena, together with its allies obtained a simple majority in both chambers. The coalition, called Coalición Juntos Haremos Historia, meaning ‘together we will make history’, won 24 seats out of 32 in the Senate of the Republic and 210 of 300 seats in the Chamber of Deputies.

$31bn

SURA Asset Management Mexico AUM 1Q2018

7.3m

SURA Mexico clients

3,000

SURA Mexico employees

It will be important to observe how new alliances are created within these legislative bodies, since the electoral coalitions of the conservative National Action Party and the ruling Institutional Revolutionary Party – the party that has governed Mexico for 77 of the past 89 years – might now dissolve. This creates the possibility of an even more powerful Morena party.

Morena also won five out of the nine races for governors, including Mexico City. The party was able to win a majority in a large number of local Congresses. With this, Morena may have a real chance to configure a unified government with sufficient majorities to reform the constitution in the first half of its six-year term.

With the government changing dramatically, it is important for companies to review the income and expenditure budgets for 2019. Those will likely be the first acts of fiscal policy from AMLO, and they will give some indication of what to expect in the near future. Discussions for the budget agreement will start next September, and by then many market observers will have gained an idea of the impact on the markets that the new administration could have.

Shifts in the market
The exchange rate of the Mexican peso to the US dollar will continue to be the initial buffer in measuring the impact on the markets. After a brief, one-day spike of volatility, in which the peso first strengthened sharply and then dropped back down, the Mexican currency has been stable. It has even appreciated, behaving similarly to other emerging market currencies. This implies that the foreign exchange market was pleased with the outcome of the election.

The Mexican peso will move to the extent to which the impact on public finances can be quantified. This could affect the Mexican peso and may force Banxico to further increase the overnight rate. At the same time, it could be an additional obstacle to economic activity.

In recent months, portfolios at SURA Investment Management, one of Latin America’s biggest asset managers, have followed a cautious strategy, anticipating periods of volatility that were associated with uncertainty related to the North American Free Trade Agreement and its renegotiation, as well as the electoral campaigns.

Colombia-based SURA Asset Management was formed in 2011 when Grupo SURA agreed to buy the local operations of ING Group for $3.6bn. The company now manages assets worth more than $130bn, with over 19 million clients in five countries around Central and South America: Colombia, El Salvador, Peru, Mexico and Uruguay. With a market share of 22.9 percent, SURA Asset Management is the biggest operator of individual savings accounts for pensions in Latin America, a sector that has been shaken by political turbulence.

The company’s strength in the pensions sector is further consolidated by its affiliations. Grupo SURA has an 83% stake in SURA Asset Management, while it also works closely with Grupo Bolívar, Grupo Bancolombia and Grupo Wiese. Altogether, the group has more than 35 years of experience in the field.

In the first half of the year, SURA Investment Management México’s portfolios favoured the diversification of foreign currencies and international markets. In local equities, there has been an overexposure to issuers with a high revenue component from international currencies. Many of these issuers have become more attractive in valuation, despite having robust market shares and business models isolated from the political environment of the countries in which they operate, including Mexico.

Exposure to global equity markets was observed as a good refuge from the volatility caused by the electoral process in Mexico and the commercial negotiations in the first half of the year. This exposure to global markets, likewise, managed to diversify currencies in SURA Asset Management México’s portfolios (which includes Afore SURA, Pensiones SURA and SURA Investment Management). Consequently, SURA closed the first quarter of 2018 with over $31bn in assets under management, 7.3 million clients, 14.8 percent of market share and more than 3,000 employees.

Ready to adjust
So far, the effect of the election on fixed-income markets in Mexico has been accommodative and positive. The main medium-term concern is the expenditure for promised public policies and their effects on public finances. Even with a conciliatory speech there are still concerns regarding the independence of institutions, particularly Banxico, and the continuity of recent reforms that have favoured foreign investments towards the country. Moreover, the implications of the new government’s plans for companies with state participation – including the state-owned petroleum company Pemex and electricity utility CFE – deserve special attention.

Regardless of the concerns described above, the immediate post-electoral effect on Mexico’s risk, measured by the five-year government bonds, was a decrease from 140 basis points to 114 basis points during the two weeks after the election. Rates in US dollars also improved relative to other emerging countries and the region as a whole.

The 10-year USD Mexican bond rate improved around 20 basis points during the same period, from 4.4 percent to 4.2 percent. The local yield curve remains inverted, with short-term rates at levels of 7.9 percent, the belly of the curve at levels of 7.65 percent on average, and the long-term rates at around 7.84 percent. Liquidity in the market has also increased and operating volumes have also recovered after a period of
expectation during the weeks ahead of election day.

In terms of strategy, Sura Investment Management Mexico’s fixed-income portfolios remain defensive with durations close to neutrality. Portfolio strategies remain alert on key information regarding our new government’s agenda to position the portfolios for the second half of 2018.

The strategies within the portfolios of SURA Investment Management have been characterised at all times by the search for the best risk-adjusted performance. Sura Investment Management is committed to achieving the best risk-adjusted return, even in stressed scenarios such as the current one. All of Sura’s portfolios are aligned with this philosophy.

Kamakura’s Troubled Company Index shows trends in e-commerce, Brexit

Posted on by World Finance

The Kamakura Troubled Company Index started in 1990. It looks at the 38,000 companies in Kamakura’s coverage universe, and returns those businesses that are most likely to default in the next month. Kamakura President and COO Martin Zorn explains how the index demonstrates the stresses in the US retail sector caused by the risk of e-commerce, and how it shows the UK performing worse than any other EU country today. In the other half of this interview Martin discusses Kamakura Risk Information Services, and how it helps risk managers run financial simulations when there’s no historical precedent.

Martin Zorn: The Kamakura Troubled Company Index started in 1990, and what it measures is the percentage of companies in our coverage universe – which is 38,000 companies – that have a one month default probability that’s in excess of one percent.

So, in doing that, what it measures is the one percent of the total coverage of companies that at any point in time are the riskiest in our universe.

The use of it is really multifaceted. The simplest use is basically showing the state of the economy in the short-run, relative to default probability. So, default probabilities rise and fall with business conditions. Looking at the one month default probability shows the shortest measure of potential financial distress within the economy.

So you could look at it on a global basis, if you look at all 38,000 companies, because that’s incorporating data from 68 countries. It also allows you to focus in on specific countries, and it also allows you to look at certain sectors. So you could basically see which sectors have higher risk than others on a relative basis.

Over the last six months in the US, what you basically find is a couple of key trends. Most industries are doing very well, from a standpoint there is a very low probability of default. But having said that, there are clearly certain industries that have been under stress.

Probably the most obvious one is the retail sector. And it is not what you would necessarily, typically think the results would be. There are a number of the traditional, brick and mortar, retailers – like Home Depot, and Lowe’s, and Coles, that have very low default probabilities, which indicate that they are doing just fine, even in the world of e-commerce.

But then you also see a number of more traditional brick and mortar, retailers – stores like Seers, JC Penny – that definitely have felt the effect of Amazon, and have a very high default probability. Those firms that have not adjusted their strategies, to basically be relevant in an environment where people can order anything they want online.

The UK is actually quite fascinating. I had not really started noticing this until several months ago, where I attended a conference in Amsterdam. And there was a presentation made on how the various EU countries were performing. And economically, Great Britain was performing worse than any other EU country – including the usual suspects, like Greece or Italy!

And as a result of that I started looking more closely at our Troubled Company Index on the EU countries. And what I did find a disproportionate number of the high risk businesses within the EU tended to be UK firms. And in fact in the last two months, when we take a look at actual defaults, almost 80 percent of the global defaults have been from UK companies.

So, one of the things that the Troubled Company Index on a sector basis will do, is provide you with very good information on where various sectors are. So if we look at it today, what we find is that retail and telecommunications on a global basis are both in a downturn. We see that the energy and natural resource sectors are in a recovery position, where capital markets are lending money to them again, and we see certain sectors such as healthcare, utilities, and green energy very much in an expansionary mode, where there is lots and lots of capital available.

So then, longer-term expected cumulative default measure provides very good insight into not only what the short and medium term future is by sector, but also where the potential risks are, and where the potential spreads could be.

Simulation helps risk managers in a time ‘with no historical precedence’

Posted on by World Finance

Over the last 10 years, risk management has changed from a measure of statistical, historical measures of risk; to a simulation of how macroeconomic factors affect underlying asset prices and probability of default. Martin Zorn, President and COO of Kamakura Corporation, explains the skills that risk managers need today, and how Kamakura Risk Information Services can help. In the other half of this interview Martin discusses Kamakura’s Troubled Company Index, and the trends it’s revealed through 2018.

Martin Zorn: Over the last 10 years, risk management has changed from a measure of statistical, historical measures of risk; to a simulation of how macroeconomic factors affect underlying asset prices and probability of default.

While history is important, we are living in a time that really has no historical precedence. So, history doesn’t help us understand what does Brexit mean. History doesn’t help us understand what does it mean for the European Central Bank to stop their quantitative easing. Because those situations have never occurred before.

So what it really tells us is that a risk manager, or an investor, must be very good at financial simulation. Because they need to simulate events that have never occurred before, and not rest their decisions upon what their statistical history shows them.

KRIS is our Kamakura Risk Information Services. It’s our subscription product: it’s a risk portal that provides clients with multiple models of different asset classes. And it allows them to take a look at the counter-parties within their portfolio, and get early warning indications of potential financial distress.

It’s a… what’s known as a reduced-form model, which is a fancy way of saying it’s a multiple factor model, which incorporates financial information on the counter-party. So their net income, their balance sheet information. It includes macro-economic data such as GDP or unemployment rates. It includes market data such as interest rates, foreign exchange rates. And the clients basically get a measure of default probability, which ranges from zero to 100 percent; and they also get a term structure. And by that, what I mean is that they can take a look at a one month default probability, a one year default probability, all the way out to a 10 year default probability.

The way that risk managers use this data is really one of two forms. One is looking at emerging patterns of where there’s increasing risk; that could be on a sector basis, it could be on a country basis, or it could be on a company basis. They could, for example, upload their portfolio and take a look at the relative change in the default probability of all of the investments or loans that they have in the portfolio on a daily basis; and see if the default probability is increasing or decreasing.

The second way they could use it is from an opportunistic standpoint. Because if you are investing in securities, the market is not always efficient, relative to the risk-adjusted return. So one of the other things that clients can do is, they can take a look at mis-pricings in the market, where a yield on a certain instrument may be higher or lower than it should be on a risk-adjusted basis, so they could have a good measure of relative value.

A good example is a company that trades on the Singapore Stock Exchange – Noble Group. Noble was one of the largest commodity traders in Asia.

Two years ago, we were at a conference of fund managers in Berlin, and we had three different fund managers come up to us and say, ‘Could you show us what your system says about Noble Group?’

And what had happened was that Noble Group was in discussions to renew a line of credit with their banks, and as a result of the uncertainty, the price of their bonds crashed. So they wanted to see what our system said. And our system showed a significantly high risk of default, and a risk of default that had been increasing for some time.

Noble Group filed bankruptcy in March of this year.

So going back to thinking about that conference; basically our system would have provided two years advance warning of the default that happened this year.

Access Bank is looking to the future by promoting sustainability in Nigeria

Posted on by Max Tomlin

For too long, companies all over the world have taken a short-term approach to business. Boosting revenues for the next quarter has taken precedence over long-term fiscal planning, while the environmental and social ramifications of key decisions are only given a cursory consideration, if at all.

Companies are placing greater importance on sustainability, whether it relates to the planet’s wellbeing or local community goals

In recent times, however, companies have accepted that this way of working can’t go on forever. Eventually, short-termism comes up short. Instead, firms are placing greater importance on sustainability, whether it relates to the planet’s wellbeing or local community goals.

This new sustainable ethos has spread across the world, not simply in order to meet an organisation’s moral obligation, but also because it can deliver business rewards as well. In Nigeria, Access Bank is taking a leading role when it comes to driving sustainability in the financial sector. Herbert Wigwe, Group Managing Director and CEO, spoke to World Finance about how his bank meets the day-to-day needs of its customers while simultaneously guaranteeing a brighter future for all its stakeholders.

One step at a time
For many businesses, sustainability has only become a recent priority. This is partly because corporate responsibility has not always been a major concern for customers, employees or management personnel. However, at Access Bank the journey to creating a sustainable future for Nigeria, and indeed Africa, began in 2008, after the establishment of the Corporate Social Responsibility function within the bank. Since then, the bank has continued to develop impactful initiatives that have strategically addressed the local community’s key social, environmental and economic challenges.

311

Access Bank branches powered by hybrid energy

92.64%

Reduction in landfill waste due to the bank’s recycling initiative

“Over the past decade, our sustainability journey has led us to restructure our business operations and develop new strategies that aim to create a brighter future for our customers and the wider world,” Wigwe explained. “This journey has not been easy, but our commitment remains unwavering. It is, after all, the only approach that can deliver long-term prosperity.”

In 2010, the bank undertook a cost-benefit analysis, which helped in assessing the aggregate expected expenses against the expected benefits of implementing environmental, social and governance considerations in project financing and other lending activities. This led the bank to take a step further to embed sustainability in its overall business strategy, thereby leading to a complete restructuring of its corporate philosophy. A new mission statement was created, said Wigwe: “Setting standards for sustainable business practices that unleash the talents of our employees, deliver superior values to our customers and provide innovative solutions for the markets and communities we serve.”

In 2012, Access Bank initiated and led the process that culminated in the development of the Nigerian Sustainable Banking Principles – a set of 9 principles that now guides the Nigerian banking industry to embed sustainability in their business operations and practices. In early 2018, Access Bank joined 26 other international banks and the United Nations Environment Programme Finance Initiative, on the Core Group for the development of the Responsible Banking Principles – a set of principles that is set to guide the global banking sector to embed sustainability in business, in line with the Sustainable Development Goals and the Paris Climate Agreement. “Access Bank remains committed to leading efforts in sustainable development across various industry platforms, forging new partnerships with the public and private sectors,” Wigwe said.

Economic footprints
One of Access Bank’s main goals is to facilitate and support financial sustainability throughout Nigeria. The bank is dedicated to creating shared benefits by delivering value-adding financial products and services to enterprise and personal customers. At the heart of Access Bank’s strategy is the strong belief that it can finance the futures of its numerous stakeholders – customers, employees, suppliers and shareholders.

“The markets in which we operate are among the most challenging in the world, with multiple developmental issues,” Wigwe explained. “While these challenges create opportunities, we are devoting our resources to achieving results and making an impact through the power of finance. As a result, we promote access to banking alongside social inclusion, while contributing to the development of the communities where we are present and preserving the environment.”

In 2017, the bank unveiled a new savings scheme, dubbed the Family Banking Scheme. Following this, the Save Today, Take Tomorrow campaign was launched to stimulate a savings culture among families. The scheme was designed to give customers a boost in their savings; this is in line with the bank’s commitment to boost the economy while driving financial inclusion. A gender-focused savings programme – Women! Let’s Save – has also been developed.

As well as being at the forefront of sustainable finance, Access Bank has proudly taken on thought leadership as a tool for advancing sustainable development. Through strategic partnerships with domestic and international organisations, the bank has shown its deep commitment to the principles and values of sustainable development. The bank sits on the board of the United Nations Global Compact Nigerian Local Network, serves as the co-Chair of the Corporate Alliance of Malaria in Africa, and chairs the Nigerian Sustainable Banking Principles Steering Committee, among many other leadership roles. Access Bank continues to provide leadership, guidance and assistance to other Nigerian firms regarding the importance of sustainability.

Green growth
As businesses grow, their resource consumption often grows as well. This can have a hugely detrimental effect on the environment, which must also bear the brunt of an organisation’s carbon emissions. Environmental protection, therefore, should feature heavily in any company’s sustainability programme. At Access Bank, this is certainly the case.

“Sustainable environmental management is not simply an afterthought – it is a core part of our strategy and business model,” explained Wigwe. “The bank’s commitment to fighting climate change is reflected in the ongoing measurement of our environmental footprint and many of our business processes.”

Also driving sustainable waste management, Access Bank launched a no-paper initiative to boost sustainability throughout its branches. Employees are supplied with paper-saving tips and an automated memo approval system to help them think more carefully about the implications of paper waste in the office. Collectively across all locations where it is being implemented, the bank’s recycling initiative has resulted in a 92.64 percent reduction in waste going to landfill.

In addition, Access Bank utilises LED lighting in all its facilities nationwide and has 311 branches that are powered by hybrid energy. Expanding the bank’s early closure policy has also proved effective in the campaign against unnecessary energy consumption. Collectively, these approaches have helped reduce the bank’s CO2 emissions from electricity across Nigeria by 63.4 percent, and from diesel by 28.8 percent.

“We recognise the responsibility that the corporate world has to our planet,” said Wigwe. “Because there is always more that can be done to cut carbon emissions and reduce waste, Access Bank will continue to champion green initiatives across our bank branches and throughout the wider economy.”

Investing in community
For a business to be truly committed to sustainability, it must look further than just environmental issues. Access Bank’s partnership with the Aspire Coronation Trust Foundation has provided funding for non-profit organisations across Africa to develop impactful community development initiatives. This has helped address key challenges in the areas of health, entrepreneurship, leadership and the environment.

Similarly, the bank’s employee volunteering programme – an initiative that empowers more than 11,000 members of staff at Access Bank to give back to their communities – has delivered a number of benefits, with more than 15,000 students, 1,000 vulnerable children and 4,000 hospital patients positively impacted. The Access Bank Lagos City Marathon, meanwhile, demonstrates the bank’s support for healthy living.

One of Access Bank’s most successful ethical policies has been the W Initiative, which has helped keep the bank as the number one choice for women in the markets Access Bank serves. Since 2014, it has helped the bank gain 870,000 new female customers, with 70 percent of them using the bank’s debit cards. By encouraging more female involvement in the domestic economy, the initiative is providing a significant boost to all Nigerians.

“Bridging the gender gap in the financial sector in Nigeria is something we’ve been addressing for a number of years,” explained Wigwe. “At the same time, our flagship Empowering Women with Technology programme has supported the development of thousands of female entrepreneurs and helped close the technological skills gap that still exists between men and women in Nigeria.”

Nigeria’s schoolchildren have also benefitted from Access Bank’s sustainability programmes. As a result of its adopt-a-school initiative, the Olomu Primary School in Lagos received renovation work on 10 of its lavatories, an entirely new plumbing system and clean water provisions that benefitted more than 1,000 pupils. The Bank’s partnership with Fifth Chukker for the UNICEF Polo Tournament was designed to raise more awareness on the plight of vulnerable children and orphans, especially the internally displaced persons across northern Nigeria. Now in its eleventh year, the 2018 edition raised over $2m for the support of underprivileged children in northern Nigeria.

“At Access Bank, we are extremely proud of our sustainability efforts,” Wigwe noted. “Last year, we were granted 14 awards in recognition of our initiatives, celebrating our achievements in the fields of corporate governance, environmentalism and female empowerment. Because we realise that there is more work to be done, we will not rest on our laurels. On the contrary, we remain more committed than ever to sustainable business practices.”

As a leading African financial institution, Access Bank has the required influence to drive responsible business practices internally, within the industry and for its clients. If the bank is able to successfully encourage sustainability, domestically and internationally, it can help create a lasting impact on the world around us.