Eurobank Cyprus leads the way for Cypriot banks

In the aftermath of the 2008 financial crisis, Europe was hit by sovereign debt burdens. Following Greece, Ireland and Portugal, in 2013 Cyprus – which had adopted the euro just months before the crash – became the fourth country to receive a bailout from the European Commission, the European Central Bank and the IMF.

The Mediterranean island’s economy shrank, and its banking industry suffered a major collapse, with the two biggest banks taking or cutting their savers deposits. The system’s credibility had been substantially undermined.

Eurobank Cyprus not only resisted those tough days, but emerged stronger. Now, 10 years since the bank started operations in Nicosia, Antonis Houry, Manager of Strategy and Business Development for the bank’s wealth management department, reflects on the bank’s strategy during the crisis.

The bank has evolved a great deal over the past decade, and now plans to exploit the opportunities in the wholesale sector. Following a strong economic recovery in a relatively short period of time, the future seems brighter for the financial industry in Cyprus.

How has Eurobank evolved since it started its operations in Cyprus?
Eurobank started offering banking services in the country in 2007, after opening an office in Nicosia, the largest city in Cyprus. Just 10 years on, it has eight banking centres in the main cities of the island. With the focus on the wholesale sector, the bank has grown significantly over the last decade while maintaining healthy profitability, a solid capital base and strong liquidity.

Eurobank’s success is due to its commitment to relationship management, achieved by offering high-quality services and solutions along with innovative products.

How do you ensure that your clients all receive the best service?
Over the years, the bank has developed a model based on four pillars. The first is corporate banking, which provides companies with a set of comprehensive financing solutions and banking services, such as lending and deposit products. We customise our offers, taking into account the unique characteristics and needs of each organisation.

Second, we offer wealth management for individuals and institutions, including a wide range of investment options, in line with an increasingly sophisticated environment. The third pillar is focused on international business banking as a gateway for companies to find international success.

And finally, the bank provides access to a broad range of financial instruments, specialised products and integrated strategies through its division of treasury and global capital markets. This service allows clients to take advantage of opportunities in currency markets, fixed income securities, commodities and energy products.

How did Eurobank Cyprus manage to navigate the 2013 Cypriot financial crisis?
Of the challenges the bank has faced over the last few years, the crisis of 2013 – which saw the banking sector in the island suffer a major setback – was the biggest. While Eurobank was not hit as hard as other financial institutions, the turbulence that plagued the industry created a big challenge for the bank. However, the bank perfectly managed to weather the storm, not just retaining clients, but multiplying them.

Because Eurobank had adequate provisions in place for NPEs, its ratio is approximately 10 times lower than the country’s average

Since it was founded, the bank has performed strongly, with excess liquidity, low operational costs and a commitment to excellence and transparency that drove the institution through difficult times. Furthermore, long-term relationships with clients based on professionalism and trustworthiness have enhanced Eurobank’s growth.

What is the current burden of non-performing exposures?
Although many banks in Cyprus faced a high volume of non-performing exposures (NPEs), Eurobank’s model allowed it to maintain, at 5.5 percent, the lowest ratio in Cyprus. Because Eurobank had adequate provisions in place for NPEs, its ratio is approximately 10 times lower than the country’s average, which is a sound indicator of the bank’s responsible operations.

How is the bank supporting the Cypriot economy?
Eurobank is contributing to both economic and social development in the country. Apart from being a source of jobs, the bank is supporting companies in other economic sectors.

Our corporate department is committed to granting small businesses loans that will facilitate investment projects, thereby promoting economic growth in the country. For example, the bank is supporting the construction of new hotels, which are creating both temporary jobs and permanent positions.

What is the bank’s approach to good corporate governance?
Since it arrived in Cyprus, Eurobank has always maintained very strong corporate governance. For example, the majority of its directors are non-executive independent directors.

The role of these external directors is to make strategic contributions, as they are looking at the big picture, not the day-to-day running of the company. These directors are important to good corporate governance because they provide a neutral point of view. Each independent director at the bank chairs one of the committees that make up the bank’s corporate structure.

How does technology help the bank cater to its clients?
Our main goal is to provide excellent service to our clients. In order to achieve this ambition, we need to have clear and open communication to assist them. Technology has been the bridge to reach and serve our clients. This is the reason we invest heavily in tech and new systems.

What kind of digital tools does the bank offer and how do they benefit customers?
Our wealth management department is a good example of what clients can do with our digital tools. Through the bank’s website, we can fully customise services both for individuals and institutional customers. For instance, they can access and monitor their portfolio online. The toolkit for Eurobank’s clients also allows them to open accounts without visiting branches and to make electronic payments.

What new technology is the bank currently working on?
We have added more services to our mobile application so that our clients can satisfy even more of their banking needs on their devices. Keeping up to date with technology and new developments requires continuous work. We are dedicated to improving our current services and are particularly aware of the risks posed by cybercrime.

We are taking all the necessary measures to ensure that all the technological tools we use are secure. This represents an important part of Eurobank’s investment in technology.

What predictions do you have for the future of the industry?
Banking is facing a number of challenges. The biggest one has arisen as a consequence of the banking crisis in 2013. Regulatory demands have been multiplying since then, imposing greater costs on banks as more employees and extra work are needed to deal with additional legal processes. For example, banks have to produce more reports and follow ‘know your customer’ rules to prevent crimes and control risks.

Increased regulations will eventually drive a consolidation in the banking sector, with a rising number of mergers and acquisitions likely to happen in the short term.

What are Eurobank’s plans for the coming years?
Developments in digital technologies have brought more competitors to the industry. Fintech companies have come into play, disrupting the sector with new facilities and pushing banks to evolve. This has been a challenge for traditional banks, which have to keep up to date with new technology so as not to be left behind. This is why Eurobank is heavily investing in technology.

Besides digital expansion, is Eurobank opening new brick and mortar branches in the country?
Over the last 10 years, Eurobank has experienced organic growth, increasing the number of banking centres on the island. We will continue to expand following the same strategy of opening new branches gradually – one or two per year – to meet growing demand in the wholesale sector.

Specifically, we look forward to expanding our services for investment funds, which are a flourishing niche market in the country. Furthermore, we plan to take advantage of opportunities in wealth management and affluent banking.

BCI Mozambique is helping to restore Mozambique’s international credibility

In 2007, the World Bank celebrated Mozambique’s “blistering pace of economic growth”. However, a recent slowdown now threatens to undermine the country’s progress. Higher-than-expected government borrowing has shaken confidence in Mozambique’s economic prospects, with foreign direct investment falling 20 percent in the past year.

There are, however, signs of improvement. The discovery of 20 billion barrels of natural gas in 2011 promises to transform the economy, but there are still many challenges that must be overcome if the country’s economy is to continue to develop.

In light of Mozambique’s recent economic troubles, World Finance spoke to Paulo Sousa, CEO at BCI Mozambique, about the company’s leading role in the domestic financial sector and how international partnerships could hold the key to a brighter future.

How has the banking industry in Mozambique fared in recent years?
Mozambique’s economy has contracted significantly over the past few years, owing to a drop in commodity prices and a significant reduction in international aid. This has been reflected in the sharp depreciation of Mozambique’s currency (the metical) and a fall in business revenues.

In the hope of avoiding a systemic crisis, the Bank of Mozambique has decided to intervene, taking over the management of one financial institution and liquidating another. Tighter regulations should also help to stabilise the currency market, increase the shareholder equity required of operators and enforce more demanding solvency ratios.

However, there were signs of economic recovery in the first half of 2017, with GDP growth standing at 2.9 percent and strong performances by extractive industries, financial services and trade. The metical, in response to the restrictive monetary policies adopted by the Bank of Mozambique, has also shown signs of stability. This has helped to reduce inflation in addition to increasing international reserves.

BCI Mozambique is strongly committed to exploring alternative financial channels, including the formation of partnerships with public and private institutions

The government of Mozambique has adopted more restrictive fiscal policies to repair its relationship with the IMF and resolve liquidity problems, but challenges continue to complicate recovery. Primarily, Mozambique must restore its international credibility in the eyes of investors. Negotiations with creditors, whether relating to the restructuring of foreign debt or the IMF’s financial aid programme, must also be tackled as a priority.

How are developments at BCI reflecting the market’s evolution?
BCI has been adapting to the country’s economic challenges by improving its analysis of credit risk, developing better management of foreign currency flows (particularly with regard to the US dollar) and implementing a raft of measures to assist customer debt servicing. The bank’s commitment to innovation is also evident in its adoption of digital technologies, particularly its mobile banking solutions.

As mentioned previously, BCI has been adjusting the structure of its shareholders’ equity with the aim of meeting new prudential regulations. With the support of our Portuguese shareholders Caixa Geral de Depósitos and Banco Português de Investimento, we have been adopting the best international practices at all levels of our activity.

We are also strongly committed to exploring alternative financial channels, including the formation of partnerships with public and private institutions. Providing financial services to major projects, such as those involving oil, gas and other locally sourced materials, is also one of our main objectives.

Why are partnerships like the one with American Express so important to BCI’s long-term strategy?
American Express is one of the largest financial services companies in the world, currently accounting for two thirds of the world market for corporate cards. Since 1997, the company has been entering into partnerships with a select group of banks and financial institutions.

BCI became a member of this exclusive group last March. In addition to the prestige involved, this partnership reinforces our own position as the largest card issuer in Mozambique. It also boosts our contribution to the development of Mozambique as a tourist destination, as many American Express cardholders are associated with the tourism and business sectors.

What else does BCI have planned for the future?
BCI will continue to be the benchmark operator in the domestic banking system by providing our customers with a first-class service and maintaining a focus on our ongoing staff training programme. Innovation will be a key concern, with particular attention being paid to our electronic services.

We will continue to adopt a customer-centric approach based on a vast network of sales outlets in both urban and rural areas. By endeavouring to achieve the highest levels of professionalism, while continuing to value ethics and transparency, we can ensure that we protect the interests of the bank, our customers and society in general.

RCBC understands the importance of making personal connection with customers

The most effective brands are those that evoke an emotional connection or response. Banks, however, often lack a strong brand image or a connection with consumers. Nearly a decade after the global economic crisis, the banking industry’s reputation remains damaged. Yet, rather than excusing banks from working on their brand image, this should motivate them to improve how consumers view them.

Banks play a crucial role in modern life; they are a channel through which people can achieve their dreams, be it saving for a holiday or borrowing to start a business. By taking the time to assess how modern customers perceive banks, the Rizal Commercial Banking Corporation (RCBC) has uncovered an opportunity to connect with its customers on an emotional level.

Today’s customers want an approachable bank that not only responds to their needs, but also believes in the value of their dreams and aspirations

A meaningful connection
Recently, RCBC conducted market research into the way that customers perceive banks. Interestingly, the results showed that customers tend to notice very little difference between banks in terms of their overall service adaptability, trustworthiness, network size, access and uniqueness.

What stood out, however, is that those who bank with RCBC stated that they were proud customers of the brand. The findings also showed that RCBC ranks particularly highly when it comes to brand awareness, meaning that it is a recognised market leader.

This research made it clear that RCBC’s biggest challenge would be to convert those who are aware of the bank into actual clients. Hence, the rebranding campaign focused on making the step from awareness to patronage. It became clear that in order to achieve this, RCBC needed to forge meaningful relationships with its customers.

Through its efforts to understand its target market, RCBC discovered that today’s consumers want an approachable bank that not only responds to their needs, but also believes in the value of their dreams and aspirations.

With this in mind, the bank decided to shed its traditional image and create a more contemporary brand, while continuing to inspire trust among its customers. The brand reboot culminated in the launch of a new corporate logo and the tagline ‘we believe in you’.

A powerful message
The tagline does more than pledge to support to customers’ dreams and needs; the message also tells customers, ‘it’s not about RCBC, but what RCBC can do for you’.

RCBC’s rebrand presents banking as something that should be associated with optimism and aspiration. Stating ‘we believe in you’ shows the bank’s unwavering support of the indomitable Filipino spirit.

Furthermore, RCBC hopes that its new corporate focus will encourage Filipinos not just to dream, but to pursue their passions and turn their dreams into reality – whether that means travelling, venturing into a new business, or purchasing a house or car. This is particularly important in such a strong and growing economy (see Fig 1).

The brand relaunch was rapidly picked up by the press, and stories surrounding it found their way into key publications and TV stations, generating media coverage worth millions. What’s more, close to five million people were reached via Twitter, while organic views of the material on Facebook reached 50,000.

Supported by investments in people and technology, RCBC is fast expanding its reach. With its new philosophy, it is sending a clear message that it stands firm in its mission to help its clients achieve their dreams.

Egyptian Steel CEO: Investing during tough times is the right thing to do

Ahmed Abou Hashima is CEO and Chairman of Egyptian Steel, which he co-founded in 2010. By continuing to invest in the business through Egypt’s 2011 revolution, he has grown the company into one of the most important – and sustainable – steel manufacturers in the country. He explains the growth of Egyptian Steel, and the foundation of his new buildings material complex. This video is mostly in Arabic with English subtitles.

World Finance: Talk me through the growth of Egyptian Steel.

Ahmed Abou Hashima: Egyptian Steel was established in 2010, before the revolution. After the revolution everyone expected that we would halt our operations. But I persisted. I had faith in my country, and I believed in what I was doing; and that the right decision is to invest during rough times.

Now we have 4 steel plants, producing 2.3 million tons of steel annually. We chose a prime location for each: Port Said, Al Ain Al Sokhna, Alexandria and Beni Sueif. They’re also equipped with the latest of the latest technologies. I’m proud of what we achieved. We reached this level during a time where no one else was investing. The future is ours, and I never regretted investing during this time.

World Finance: Most recently you’ve been creating a building materials complex, to act as a one-stop shop for the construction industry.

Ahmed Abou Hashima: Yes, now we have Egyptian Cement and Egyptian Building Materials. I want to adopt this new approach to have the industries of all building materials under one roof. The contractor of the construction company can buy everything from us: cement, steel, blocks, lime, gypsum, everything.

I see this as a new model, probably not available elsewhere in the world, where your shareholders have all these industries within the same group. This is a new ideology, and it reduces the risk: if one company makes gains and the other doesn’t, they complete each other.

By the end of 2018, this whole dream will be realised, as the cement factory and the seven factories of the building materials complex will be complete and operational by the end of next year; or by the beginning of 2019 at the latest.

World Finance: And what other expansions or projects are there in the pipeline?

Ahmed Abou Hashima: I am always keeping an eye on new business fields that we can venture into. For example, we are interested in hotels, since in my opinion tourism is the fastest method to regain the strength of our economy, because this is hot money entering directly.

Any other opportunities that arise in Egypt will be of interest to me. I believe in this country and its market, which I invite all investors globally to consider. Egypt has a high demand and potential in so many fields. It can reach a high economic growth rate in a very short time. I invite them to enter this market with no fear.

Egypt promises that the return on their investments will be very high; and I’m saying this out of my first-hand experience in investing in Egypt. I invested during a very rough time, right before the first revolution; then a second revolution happened. Now the atmosphere is much more stable on both the political and economic fronts. I’m not from the government, I’m from the private sector; and I’m telling them to come to Egypt, have no worries: you will make good money with a very decent ROI.

World Finance: Ahmed, thank you very much. Shukran.

Ahmed Abou Hashima: Thank you Paul, thank you.

Bank of the West is bringing new ideas to a new world of banking

In today’s complex and fast-changing business landscape, it is more challenging than ever to stay ahead of the curve. Many CEOs agree that we are living in a period of unprecedented flux that will have significant effects on the future of their companies.

KPMG’s 2017 Global CEO Outlook – a survey of nearly 1,300 CEOs in 10 of the world’s largest economies – highlights disruption and uncertainty as unavoidable realities all businesses must face today.

But the same survey reveals that 65 percent of corporate leaders view disruption as a business opportunity, not a threat. To identify opportunities early and minimise uncertainty, most CEOs are doing their best to stay attuned to shifts and trends, with 64 percent saying they are effective at sensing market signals.

In today’s market, businesses need to be more forward-thinking, vigilant and agile than competitors to stay ahead and plan for future growth. To do this, companies can benefit from working with an innovative commercial bank that has a vision for the future and will help them in three essential ways.

Thoughtful outreach
For some companies, key business functions are managed from a single headquarters with secondary support from local satellite branches. For others, that approach has shifted, as many business leaders see the importance of maintaining a balance between having both a clear global strategy and an appropriate on-the-ground regional presence or coordination.

This is becoming even more critical given foreign exchange rate volatility, interest rate variability, evolving compliance requirements, expanding counterparty risks and changing geopolitical risks.

An effective commercial banking partner should deliver practical support and intelligence to help an organisation identify and support the optimal geographic structure for its treasury function and financing strategy, which will enhance competitiveness today and fuel growth for tomorrow.

The majority of corporate leaders view disruption as a business opportunity, not a threat

A company’s approach should be consistent with the overall global business strategy as well as individual market strategies, tailored to economic and liquidity conditions and compliance developments.

A commercial banking organisation should serve as a thoughtful advisor to the treasury team, drawing on its experience, technology and knowledge of best practices to recommend the best treasury function system and supporting cash management solutions.

Doing so maximises a treasurer’s visibility and control, produces accurate reporting, and enables a team to establish internationally reliable treasury forecasts.

This includes deciding whether to centralise the treasury function in one location or decentralise it across regional hubs, considering a company’s business strategy and objectives, size, budgets and other key factors. A banking partner should always adapt to a business’ model and goals, not the other way around.

With BNP Paribas as our parent company, Bank of the West taps into an expansive global network and international cash management offering to help mid-sized and large companies set up an effective treasury footprint and supporting solutions around the world.

This includes: helping our clients increase control by unifying their treasury function and liquidity in the US and across the world; implementing cash management solutions across their global footprint; establishing a treasury centre in a particular region; or setting up an integrated treasury structure across a large group of countries.

For example, we worked with a leading global company that has a US headquarters and a presence in more than 40 countries, including 24 countries across Europe, the Middle East and Africa (EMEA).

In addition to helping our client control and secure its cash, our primary goal was to help them strategically pool its EMEA liquidity and manage one currency position in euros.

We helped the company centralise its EMEA liquidity in a single regional location and implement a multi-currency solution in one European market with all its EMEA entities participating.

Guarding against cyber threats
As companies focus more on innovation to gain a competitive edge, there is more emphasis on speed. Consumers want to obtain information, take action and receive products and services quickly.

This puts pressure on companies to speed up their processes in order to deliver products and services faster than their competitors.

We take a holistic approach to fraud prevention, maintaining open communication channels with law enforcement organisations so we stay aware of developing risks and educate our clients about them in real time.

Cybercriminals are trying to take advantage of this speed-focused business environment by finding gaps to access a company’s sensitive information and systems. It is a grim reality that a cyberattack is now a strong possibility for all businesses.

Executives understand this new reality. According to PwC’s 2017 20th CEO Survey, which polled 1,379 CEOs across 79 countries, 91 percent of corporate leaders believe cybersecurity breaches affecting business information or critical systems will have a negative impact on stakeholder trust levels in the next five years.

Furthermore, 61 percent believe cyber threats will pose dangers to their own organisation’s growth prospects.

An effective corporate banking partner should equip the leadership team with decision-making tools and information that enable a business to move quickly while staying as secure as possible.

This includes delivering treasury solutions that are transparent and time-effective, protecting a business’ cash flow, and individual transactions. In terms of payables, multi-level authentication and tools such as Positive Pay are essential protective measures to ensure not only the accuracy of the transactions, but also the accuracy of the settlement of those transactions.

Though these features add more steps to a treasury process, any trusted banking partner will recommend them as must-haves to guard against mounting cyber risks.

One specific trend that has been gathering steam is cybercriminals hacking into identities within the C-suite, posing as an executive through an email address that appears to be authentic but is really ‘masquerading’.

This can take many forms: criminals can hack into companies’ email systems or pretend to be senior executives or direct employees to make fraudulent financial transactions. They instruct the employee that these are important and create urgency around the request.

The employee may follow through using typical processes to initiate the fraudulent transaction. Criminals may also send a direct instruction to their bank partner with similar urgency, instructing them to go around defined processes such as multi-level authentication.

Bank of the West works with our clients to thwart such fraudulent attempts, training our entire support team on how to identify and protect against these threats.

Being a forward-thinking organisation
With so many businesses focused on innovation to capitalise on new trends and enhance competitiveness, an effective banking partner needs to be dedicated to delivering tools and data that help an entire organisation be more forward-thinking and proactive, not reactive.

This includes using a company’s historical data and industry information to do smart predictive modelling that more accurately predicts businesses’ future cash flow needs in an evolving landscape. The goal is to help treasurers plan more effectively by maximising the value of data.

Bank of the West takes a progressive approach. We are positioned in the heart of the tech industry, which offers insight into key market innovations. Our treasury team is constantly analysing these market innovations, industry benchmarks and segment-specific trends, and employing predictive modelling to offer the best financial solutions for growth.

We understand the significance of the client’s historical transactions, but to truly help our clients plan for the future, we also focus on the future: we present new solutions and strategies they can adopt to position their organisation more optimally for future growth and keep pace with industry changes.

For example, real-time payments with real-time settlement and information are emerging as a new payment type that is changing the dynamics of treasury management, enabling businesses and consumers to send and receive payments instantly and directly from their accounts at financial institutions.

As an owner bank of the Clearing House Association, Bank of the West is very involved in the real-time payments initiative currently in development. On the consumer side, Bank of the West also participated in this year’s pilot of Zelle, a new person-to-person payments network in the US that enables 86 million users to move funds in minutes.

We are now speaking with our commercial clients about whether real-time payments could benefit their business today, or in the future, so they can prepare for its arrival across their footprints.

Being part of the BNP Paribas network enables us to look at our clients’ operations in the US and around the world, and discuss how specific innovations can be applied across regions.

In a rapidly changing world, a strong commercial banking partner can serve as a company’s industry advisor, sharing and supporting the use of innovative solutions, keeping a business ahead of the curve.

Top 5 trends that will drive Africa’s private equity market in 2018

For a general view on the likely global trends in the private equity market in 2018, we need look no further than the developments of the past few years. As growth rates around the world declined, Africa and other emerging markets took on ever-greater significance, and are now pivotal in global private equity activity.

According to Quantum Global’s Africa Investment Index, in 2015, the top five African investment destinations – including Botswana, Morocco, South Africa and Zambia – collectively attracted foreign direct investment of $13.6bn. This was a testament to international players’ growing interest in the continent.

It is true that some of the world’s developed markets will return to growth in 2018, and private equity investors will turn their attention towards them once more. However, Africa’s long-term growth and increasingly transparent and stable geopolitical and economic landscape will continue to support the expansion of private equity across the region.

Private equity has taken on a greater share of public sector financing in developing markets such as Africa

Private equity has also taken on a greater share of public sector financing in developing markets. Some of Africa’s largest economies have ventured into their first ever public-private partnerships (PPPs), and interest from limited partners and general partners has grown significantly over recent years.

However, the importance of private equity in Africa’s economic development is underpinned by an annual funding gap of around $100bn in the region, along with a soaring youth population. Private equity has also helped to drive much-needed development of the region’s capital markets, which are slowly maturing.

Here we consider the five key trends that are most likely to occur in Africa’s private equity space in 2018.

1 – Increased deal flow
Despite political uncertainty in countries such as Zimbabwe and South Africa, there is significant deal appetite and interest in quality assets in Africa. Further north and west, democratic elections have passed in multiple countries, including Angola, which saw its first transfer of power to the opposition party since peacetime in 2002. This should provide investors in those countries with much greater confidence than in previous years.

Deal flow remains high and, given the region’s economic growth, is likely to remain so in 2018. The challenge is one of quality and bankability: management in Africa remains complex for financial, structural and political reasons. These complexities are inherent in all developing markets and will continue in 2018 and beyond. Growth trends in 2018 will demand that general partners deploy highly specialised teams with expertise in specific sectors, in addition to a deep understanding of African markets.

2 – Economic recovery in West Africa
Improvements in commodity prices combined with the region’s expected economic recovery will drive further investment in West Africa. Nigeria and Angola will benefit from analysts’ forecasts that oil prices will rise to around $58 per barrel in 2018, easing public expenditure pressures. Private equity investors and other state players, such as China, will also benefit from a potential uptick in public sector spending on important infrastructure works, and we may see greater appetite for PPPs and general private capital in government-led projects.

GDP figures also recovered across most of West Africa in 2017, and in some cases are forecast to surge in 2018. The IMF’s most recent World Economic Outlook (released in Q3 2017) has projected growth of almost nine percent for Ghana in 2018, with an overall rise of around 3.4 percent for sub-Saharan Africa. 

3 – Improved global liquidity conditions
With projected higher oil production and oil prices predicted to rise throughout 2018, foreign exchange liquidity rates are also expected to grow globally. Private equity in Africa will therefore offer a much higher rate of return compared with cash and fixed income assets.

Around the world, borrowing rates and inflation remained stable throughout 2017. This was also the case in many parts of Africa – even in countries that struggled with low forex reserves and the slump in oil prices. Some of the region’s biggest economies, such as Angola and Nigeria, have reined in spending and demonstrated fiscal restraint, including introducing currency controls. These measures have contributed to greater liquidity.

4 – Nigeria attracting more investments
With the value of Nigeria’s economy projected to grow to $650bn by 2022, medium to long-term prospects look optimistic, with solid fundamentals underpinning growth expectations, particularly in the non-oil sectors of the economy. However, the country also faces an $878bn infrastructure investment gap between now and 2040. This figure (which pertains only to infrastructure) is based on forecasts of an annual GDP rise of 4.1 percent and a population that is rising by 2.4 percent per year at current trends.

5 – Chinese asset diversification
The slowdown in China’s economy is likely to lead to Chinese investors further exploring opportunities in emerging markets like Africa. Such investors are also likely to pursue increased collaboration with credible private companies and institutions. China has a track record of investing across diverse asset classes in Africa, particularly in infrastructure: as far back as the 1970s, China helped to build one of Africa’s longest railways, the 1,860km TAZARA Railway from Tanzania to Zambia. China is already investing heavily in diverse asset classes across the continent, including Angola’s first ever PPP. The inherent Chinese appetite for diverse assets in Africa spells good news for African governments, many of which have redoubled their efforts towards major infrastructure works over recent years.


As we look ahead to 2018, there is clear evidence that the global economy is improving, even though there are new geopolitical issues on the horizon: namely Brexit, the Chinese slowdown and Middle Eastern security concerns. Despite these issues, Africa faces a year of growth, and will continue to act as a promising destination for private equity investors.

Baiduri Bank is taking care of Brunei’s SMEs

Brunei, a small South-East Asian nation on the coast of Borneo, is undergoing a massive shift in development and growth. This comes in light of continuing low prices for oil and gas, which are the country’s chief source of revenue. The low-price environment has affected GDP, which has fallen annually since the 2012 peak.

Fortunately, the country has other strengths. In 2007, the Sultan of Brunei announced the formation of a council for long-term development planning. This resulted in the creation of Brunei Vision 2035, known colloquially as Wawasan Brunei 2035 – the country’s long-term development plan, comprising 13 distinct strategies.

Faced with the current low oil and gas price environment, the government has intensified efforts towards diversification, as outlined in Brunei Vision 2035. Furthermore, in early 2016, with the objective of accelerating economic diversification and helping to build capacity for micro, small and medium-sized enterprises (MSMEs), the Brunei Government implemented another development plan – Darussalam Enterprise (DARe).

In support of these initiatives, Baiduri Bank offers a wide range of financial products and services specifically designed to help businesses. The bank is constantly looking for ways to improve its offerings and services, in order to support not just local businesses, but potential overseas investors too.

SME commitment
In the effort to create a healthy and financially sustainable nation, one of the key strategies is to expand business opportunities within Brunei through the promotion of foreign and domestic investment, both in downstream industries and in economic clusters beyond the oil and gas industry.

“We are eager to finance the short and long-term needs of companies in Brunei, be they new or well-established corporations,” said Pierre Imhof, CEO of Baiduri Bank. “With the creation of DARe and its assistance in the development of MSMEs, I hope to see the MSME market develop. In pursuit of this goal, we have introduced a variety of innovative products to cater to the sector.”

Among these innovations, Baiduri Bank has launched its MerchantSuite service. MerchantSuite allows very small businesses and individual sellers to issue invoices and receive payments online without setting up a website, which is often costly and beyond the reach of many start-ups.

“Given the rapid rise in the popularity of e-commerce in Brunei, particularly on social media sites such as Facebook, MerchantSuite is especially useful for businesses requiring a secure and reliable card payment channel, as well as other digital features to help manage billing and receivables,” said Imhof.

In further support of MSMEs, Baiduri Bank, through its relatively new business banking unit, launched its unique Micro Current Account. This account caters to small businesses that do not meet the requirements for a normal business account. It also enables MSMEs to subscribe to and reap the benefits of MerchantSuite.

Though MSMEs are a primary target, Baiduri’s focus is also on serving foreign direct investors. With Brunei having a strong banking system and the bank itself possessing a strong capital and liquidity position, as evidenced by its BBB+/A2 rating from Standard and Poor’s, Baiduri is able to assure foreign direct investors that the bank is able to support them. “We provide a wide range of products and services at an international standard which we feel will help boost investor confidence,” added Imhof.

The Brunei Government has made significant advances in terms of digital and online payment infrastructure

Technological forefront
The Brunei Government is also taking steps to make the nation more consumer-friendly and business-friendly by implementing projects such as the real-time gross settlement system, payment mechanisms based on newer technology such as the automated clearing house, and various other projects and initiatives from the e-Government National Centre (eGNC). The eGNC’s key purpose is to meet the challenges of globalisation by being more efficient and transparent.

The initiatives it offers will help to reduce the cost and difficulty of running a business in Brunei. What’s more, there have been significant advances in recent years in laying the foundations for modernising payment arrangements in Brunei. These developments are intended to facilitate better international integration and the ability to adapt to evolving payment instruments and methods.

With a growing customer information database, data protection is at the top of Baiduri’s priorities. “Our clients need to know that their data is protected and secured to an international standard,” said Imhof. “To date, Baiduri is the only bank in Brunei to obtain PCI-DSS certification.”

PCI-DSS is the payment card data security standard used internationally by entities that process, transmit or store cardholder data. Baiduri first received its PCI-DSS 2.0 certification in December 2014, and this was further upgraded to version 3.1 in November 2015.

Another achievement that demonstrates Baiduri’s commitment to innovation is the fast development of the payWave feature on Visa cards. The bank first introduced payWave in 2014 for Visa debit cards, but the service has since been rolled out to all tiers of Baiduri Visa credit and debit cards. With the payWave feature, small purchases do not require the buyer to sign or enter a PIN, but simply to wave a card over the contactless reader.

As well as saving time, this allows for lower transaction costs between buyer and seller. “The cost of handling cash for merchants can be quite high,” Imhof explained. “To address this, payWave encourages card utilisation as the preferred payment method, reducing both risks and costs for businesses.”

Baiduri Bank also offers an internet banking service and a smartphone application for customers wishing to carry out their banking needs on the move. “In light of the shifting trend towards more non-cash payments and the use of online platforms for an increasing number of banking services, we understand the importance for our customers to be able to manage their finances as and when they need,” said Imhof. “We offer an internet banking service for individuals, known as Personal i-Banking, and a service for businesses, known as Business i-Banking. Our Personal i-Banking service is also available as a mobile app, making it readily available for our customers.”

Product range
Finance is a key ingredient of long-term economic growth. History has shown that an expanded financial sector is linked with sharply increased growth in the early stages of credit and stock market development. For Brunei, therefore, with a stock market coming to fruition in the near future, financial development is crucial.

The Brunei Government, in its efforts towards improving the online payment landscape, has made significant advances in terms of digital and online payment infrastructure. “These initiatives are leading towards the smooth implementation of a stock exchange,” said Imhof. “Baiduri Bank, through its wholly owned subsidiary Baiduri Capital, is well equipped to handle this.”

Baiduri Capital was established in September 2015, and was set up to cater to clients looking to diversify their investment portfolios. “The objective is to create a bigger, more developed and, crucially, more diversified capital market environment. From what I understand, the authorities are making significant progress on the technical and infrastructural aspect of developing the stock exchange. This aspect is part of a more global approach to develop the exchange’s capital market activities,” Imhof explained.

Attracting the interest of companies, both local and international, is fundamental to the success of a stock exchange. Baiduri Bank is well positioned in this respect, and can help clients move towards a stock exchange listing thanks to a wide market reach and extensive local knowledge, coupled with international expertise.

“Through our online trading platform, our customers can already trade online on various international stock exchanges, such as those in Malaysia, Singapore, Hong Kong, China and the US,” said Imhof. Baiduri Capital can play an important role here, educating and building the Brunei population’s experience of stock trading in preparation for the establishment of the country’s own exchange.

The Baiduri Bank Group also includes Baiduri Finance, the company’s first wholly owned subsidiary. “Baiduri Finance is ranked as the leading finance company in Brunei, having acquired more than 65 percent of the local automobile finance market and covering a full range of products and services for our customers,” said Imhof.

Forward motion
Economic diversification is now one of the most important challenges facing Brunei and its financial industry, in light of the changing economic situation. Baiduri Bank, being the leading local conventional bank, is at the core of this effort, and is fully committed to helping the country achieve its aims.

The bank will face the coming challenges with a sense of responsibility befitting its leading position in the market. Baiduri’s main priority will be to remain at the forefront of innovation with regard to the retail market and in anticipation of the establishment of the stock market. With is strategic focus on developing MSMEs, Baiduri Bank will certainly be one to watch out for in the coming years.

Bank of the West: Enhancing global solutions with local relationships

International business brings international complications. That complexity brings uncertainty, disruption, and events we can’t control. Jean-Marc Torre, senior executive vice president and commercial banking group head for Bank of the West, explains how the bank works with customers to ease those complications. Offering a global network through BNP Paribas, Bank of the West also works to develop local relationships – and to this end has established a number of new commercial banking centres in key commercial locations of the US, to offer closer, more customised support to new geographies and industries.

Jean-Marc Torre: Why business is so complicated? I think in the business environment, everyone understands that we live in a complex world where there’s a lot of uncertainty, possible disruption, and events we can’t control.

It has been the case before, but I think it’s never been that much, and with that frequency, as it is today.

We are now in an environment where more things happen that we cannot predict than before. So in the business community, how we can deal with it is by collaborating, discussing, and looking at all the facets of it.

We have to be ready to deal with what we cannot predict, so how to deal with it is to have flexible solutions: being clear on what you want to achieve, but being flexible in how you do it.

World Finance: How are you collaborating with your partners to help them identify opportunities for growth?

Jean-Marc Torre: The business community, working particularly internationally, have developed different models. But one key is to have strategic and trusted partners. Selecting the right ones, and having the right level of dialogue, is I think critical.

When you talk about growth, particularly internationally, one essential aspect to make the difference between global and local is having global solutions but being also able to leverage the local possibility and solutions you have.

One example is cash pooling: people talk about this as a global capability that companies internationally need. You can see cash pooling as a way to centralise treasury. Then you have control globally. But this is not a substitute, to multi-currency liquidity management. This is where you design that you may want to keep dollars in the US, because interest rates are better than in Europe.

Again, you have to go into understanding what you want, and go beyond the solution to achieve your strategy. This is possible only because you have a strategic relationship with a bank that has got not only the capabilities, but also the ability to balance the local and the global.

World Finance: Innovation is also incredibly important; how do you work with clients to help them identify ways to innovate, and gain a competitive advantage?

Jean-Marc Torre: To become a competitive advantage, I think it’s a question of more developing a culture of innovation, rather than finding the innovation that will change the world or your business immediately.

The question is, not to be innovative for the sake of being innovative. I’ll give you the example of real-time payments: it’s a great advance, and who doesn’t want it? But at the same time you need to be thoughtful of, do you need that for everything, and do you have the level of control of the processes that allow you to take the maximum benefit out of it?

It’s a combination of having the products; but you must also have the dialogue, or be open to the discussion, to see what is best for you, and what are the consequences to make best use of them?

World Finance: You’ve established a number of new commercial banking centres to help grow Bank of the West into some new markets; tell me more.

Jean-Marc Torre: We again want to build relationships. So if we develop product capabilities or new geographies, it’s because there’s a need in our customer base, and we see that we can bring new services or new support to help our customers grow. Because this is how we’re successful: only if our customers are.

It’s all about how we can be a global and local effective partner. If I take the example of Cleveland, our latest office, we have important international customers that had a local office there. The company globally had great ideas about how to optimise their treasury and their various products. So the local management of our customer and the local manager of Bank of the West there developed a relationship and understood that there were interesting and local solutions that could improve the structure they had.

And I think this exemplifies how important being nimble, being local, and building relationships at all levels between the bank and international companies makes it work.

World Finance: Jean-Marc, thank you very much.

Jean-Marc Torre: Thank you.

Empresta Capital adopts SPM standards to gauge social investment impact

Investors in Brazil are looking to alternative investments for decent returns, as the government’s bond rates have dropped from 14.5 percent in 2016 to an expected seven percent by the end of 2017. One of those alternatives is Empresta Capital, which combines social impact with attractive returns. Founder and CEO Ricardo George Assaf explains that after the company carved out its niche – supporting underserved small and micro-entrepreneurs in the condominium sector – it realised that as well as returning good growth, its investments were having a good social impact. But how to measure that impact? Enter the Social Performance Task Force, whose standards Empresta is adopting in 2018.

World Finance: Introduce us to Empresta Capital: what do you do?

Ricardo George Assaf: Empresta Capital is a financial institution, regulated by the central bank, that mainly focuses on small and micro-entrepreneurs all over Brazil.

We’re almost like a private bank, but upside-down: offering highly specialised financial solutions, but to the bottom of the pyramid.

Back in 2004, when we started the business, microfinance wasn’t explored at all in Brazil – despite the size of the market. So that created an interesting opportunity for the sorts of company such as Empresta Capital.

Today we have a portfolio of roughly 12,000 active customers, and more than 70,000 credit operations. And we try to differentiate ourselves with the knowledge that we have in the niches where we operate.

World Finance: What are those niches? Who are the micro-entrepreneurs you’re working with?

Ricardo George Assaf: Empresta Capital focuses on one niche, which is condominiums. Because we noticed there were a lot of small and micro-entrepreneurs that were servicing those condominiums; so we decided to finance those kinds of projects.

To give you an example, we have companies that install alternative sources of energy in buildings, such as solar energy, or even wind energy in certain areas of Brazil.

We also do have not only the small companies, but also individuals that are not formalised, but have some sort of entrepreneurship within those condominiums, either in sustainability projects, or create a high impact on the community that they work.

World Finance: Now there is a misconception that social investments necessarily have a lower return than more traditional ones; how are you working to dispel this myth?

Ricardo George Assaf: You’re absolutely right. When you talk about social impact or sustainability, the first thing that would come to an investor’s mind would be an NGO, or donations. And the other way around is also true; when you talk about high impact investments, concepts such as social impact do not come.

We didn’t realise, to be honest that we were doing a lot of social impact investments, and also financing a lot of sustainable projects. So to answer your question, I think the first thing was to realise we were doing that; and the second was, how to actually show the investors, measure that?

World Finance: So answer that question for me; how do you show that to investors? How do you measure the social impact you have?

Ricardo George Assaf: We spoke to other microfinance institutions; developed microfinance institutions. And we came across a very interesting project called Social Performance Task Force. It’s actually an international organisation that sets standards on how to measure, and how to show social impact.

This is quite recent; we’re implementing it 2018 in Empresta Capital. And that goes from the customer level up until the board level. And it helps you balance the financial return that you have with the social impact you’re causing, or the sustainability you’ve been financing.

World Finance: What opportunities exist for Empresta on the horizon?

Ricardo George Assaf: We’re looking at two main areas. The first one being technology; a lot has been said about fintech, new technologies, new business models coming along with technology; but we believe the real value won’t come from the technology stand-alone, but by mixing those propositions or business models into a new customer value proposition.

So for instance, we’ve been investing in a self-service app, but we’re linking to a big data analysis solution. So mixing different kinds of business model into one customer value proposition.

The second area is services. There’s a lot of opportunity for us to cross-sell different kinds of services to our customer base, which is needy of financial, specified financial solutions. So for instance, micro-insurance, assistances; services that are quite cheap, with a high perceived value for the customer base that we have. That’s what we’re looking at right now as well.

World Finance: Ricardo, thank you very much.

Ricardo George Assaf: Thank you.

Grupo Financiero BOD is helping Venezuelan entrepreneurs find success

Over the past 25 years, the BOD brand has set standards in Venezuela by working closely with more than 8,000 entrepreneurs while laying the foundations for new businesses to boost the country’s development.

What began as a regional bank 60 years ago grew to become Venezuela’s fourth private bank and one of the financial holdings with the greatest potential in Latin America. This success has been in large part down to the vision of the bank’s president, Víctor Vargas.

In fact, the history of Grupo Financiero BOD is closely linked with Vargas, an experienced Venezuelan businessman who led the growth of more than 20 companies in Latin America while consolidating BOD as the bank of Venezuelan entrepreneurs. His success is the result of first-class customer service, an emphasis on finding new business opportunities, and social responsibility plans focused on entrepreneurship.

He told World Finance: “As an entrepreneur myself, supporting entrepreneurship has always been a priority in my life. Since I graduated from law school, my focus was to contribute to Venezuelan development through hard work and commitment. I decided to start a new business and bring opportunities to the Venezuelan people. Now, I am proud to say that over the past 34 years I have built financial companies with proven national and international profiles, which provide support for small business and entrepreneurs.”

A culture of innovation
Grupo Financiero BOD is an example of what can be achieved with dedication, sound financial footing and a commitment to the community. It has responded to the multiple economic challenges in Latin America while serving communities with determination to grow. The 21 companies and 14,000 employees of the group work with a corporate culture of innovation, excellence, commitment and customer service.

For Grupo Financiero BOD, to be an entrepreneur is to bet on making your dreams come true, to believe in your country as a place to take root and grow

“The expansion of Grupo Financiero BOD lies in the social commitment we have for our communities. We are proud to have favourable economic results but, above all, we celebrate our capacity to promote the development and growth of the countries in which we are present,” said Vargas.

The 21 companies of Grupo Financiero BOD cover banking, insurance, capital markets and investments, as well as health services in five Latin American and Caribbean countries: Antigua and Barbuda, Curaçao, Panama, the Dominican Republic and Venezuela. Each one of those businesses specialises in providing quality services to meet the needs of customers, shareholders and associates.

“Our primary goal is to drive the growth of our customers in all the financial areas we cover. In this way, we guarantee the sustainability of our businesses, and more importantly we help the development of the countries in which we are present,” said Vargas.

Entrepreneurship as a philosophy
For the last 10 years, the BOD Foundation, a social foundation belonging to Grupo Financiero BOD, has supported entrepreneurs’ initiatives in Venezuela with the main purpose of encouraging economic and social improvements, as well as development in the country. The foundation responds to the main goal of BOD: to reward the trust and loyalty of its clients.

According to Vargas: “Through structured and well-organised work, we decided to focus the effort of the BOD Foundation on two main areas that are closely related: education and entrepreneurship. By providing an appropriate academic programme and financial support, the bank gives new entrepreneurs the opportunity to open their businesses or make them grow. We develop a formula of success for Venezuelan entrepreneurs.”

The BOD Foundation created the BOD Entrepreneurs Centre in 2008 with the purpose of supporting business growth in different sectors of the Venezuelan economy. “For the BOD Foundation, to be an entrepreneur is to bet on making your dreams come true, to believe in your country as a place to take root and grow. That is why, almost 10 years ago, we opened the Centro de Emprendedores BOD,” said Vargas.

Through its own academic and financial programmes, Grupo Financiero BOD seeks to strengthen new start-ups in innovation and business management: “When we founded the BOD Entrepreneurs Centre, we were convinced of the innovative and pioneering spirit of the Venezuelans. And so it remains. We believe in the skills and abilities of Venezuelan entrepreneurs for establishing profitable businesses that generate jobs in the country.


Investment loans granted to Venezuelan entrepreneurs


Entrepreneurial initiatives supported by the BOD Entrepreneurs Centre


Hours of free training given to entrepreneurs


Micro-entrepreneur fairs held

“Our figures show just that. For almost 10 years, working with more than 8,000 entrepreneurs, we have become the entrepreneurship bank in Venezuela – an achievement we are extremely proud of.”

Now, the BOD Entrepreneurs Centre is present in eight states of Venezuela. It has given 1,600 hours of free training with business training workshops to 3,500 entrepreneurs and has supported approximately 8,000 initiatives. Furthermore, VEF 214.55m ($21.49m) has been granted in investment loans, helping to create around 6,100 jobs.

On the subject of these achievements, Vargas pointed out: “The BOD Entrepreneurs Centre is a space for those who strive to be the success stories of the future: small entrepreneurs who, in crisis situations, do not see an opportunity to escape, but a reason to stay.” By working closely with start-ups and new business leaders, the BOD Entrepreneurs Centre develops its work through three types of activities.

The first type is know as ‘entrepreneurs’ encounters’. BOD has hosted eight of these meetings, reaching more than 4,500 attendees in the last 10 years. In addition to opting for financial plans for their business ideas, attendees have the opportunity to publicly present their projects, participate in TED conferences, and interact with other entrepreneurs and business allies.

The second activity is the business training programme: a series of specialised workshops in subjects such as administration, business, organisational skills, social media communication and technology for small companies are offered every year in several Venezuelan cities.

‘Give a green light to your idea’ is the third activity. This programme aims to boost business models through unique ideas and social innovation. The first category supports small entrepreneurs whose businesses meet the needs of the market, with innovative practices that contribute to the Venezuelan economy.

The second aims to identify and strengthen social initiatives that improve the quality of life for local populations by providing solutions to social problems and contributing to sustainable development.

Success stories
Yoanis Torres, Founder of Hallacas a la carta, a Venezuelan gastronomic endeavour, was supported by the BOD Foundation when she was setting up her business: “When we decided to create our brand, the BOD Foundation accompanied us through the process. We received training for writing our business plan, recommendations for marketing our product and preferential credit to help us fulfil our dream.”

Kenneth Lopez Key, Founder of the instant coffee brand Coffe Key, also started his professional journey as a BOD Entrepreneur: “It is essential to receive the academic support offered by BOD to new merchants. Being able to access professors who specialise in business, marketing and other areas allowed us to structure our brand efficiently.”

These testimonies are just two of the BOD Foundation’s many success stories. Both cases were presented during the latest workshop organised by BOD. That day, 120 new Venezuelan micro-entrepreneurs gathered to participate in a series of conferences about business management knowledge.

Beside the testimonies of Hallacas a la carta and Coffe Key, new entrepreneurs have access to business management advisors, competitive marketing tools and communications tips to help them launch their company.

The event, as well as the more than 100 other activities planned by BOD in Venezuela in the past 10 years, has helped Vargas realise his strategic vision in matters of entrepreneurship: to extend support to entrepreneurs throughout the process of developing their business.

That is why BOD’s commitment to pioneers and new merchandisers in Venezuela focuses on making a real and measurable difference to a community for whom opportunities are hard to come by. For that matter, Vargas concluded: “The BOD Foundation is responsible for making the dreams of more than 8,000 become a reality. We plan to continue supporting more entrepreneurs.”

The future for Grupo Financiero BOD is clear: it is now planning to extend its entrepreneurship programmes to also cover Panama and the Dominican Republic. Through AllBank and Bancamerica, two consortium banks in Latin America, the group is preparing to captivate customers and support new entrepreneurs in the region.

US lawmakers strike deal on tax cuts

After weeks spent hashing out their differences, Republicans from the US Senate and the House of Representatives have struck a landmark deal on tax reform, agreeing to a final tax overhaul bill that would cut corporate tax from 35 percent to 21 percent, and bring the top income tax rate down from 39.6 percent to 37 percent.

The head of the Senate finance committee, Orrin Hatch, has promised to push the mammoth bill through Congress before Christmas. It is currently being written into legislative text in preparation for votes in the Senate and House, which could come as early as the start of next week.

If it passes, the bill will constitute an overhaul of the US taxes, the likes of which has not been seen since Reagan’s 1986 Tax Reform Act

The size of the cuts has been substantially watered down since President Trump initially stated he wanted to bring corporation tax down to 15 percent. Nevertheless, if it passes, it will constitute an overhaul of US taxes, the likes of which has not been seen since Reagan’s 1986 Tax Reform Act.

There is a possibility that the bill will struggle to pass through the Senate, where Republicans hold only a slim majority. The recent by-election victory of Democrat Senator Doug Jones, which whittled the Republican majority down to just 51-49, could prove an additional obstacle.

If it passes, the bill would buoy business performance, as corporations would see a drastic reduction in their tax expenditures. It would also spur a slight up-tick in growth. However, this would come at the price of widening inequality, with the benefits skewed to those already in the upper echelons of income distribution.

Despite positive growth predictions, it will also make a substantial dent in public finances. It is predicted to deepen the budget deficit by an additional $1trn over the coming decade, according to estimates from the nonpartisan Joint Committee and Taxation committee.