Archive for the 'Banks' Category
October 20th, 2011 by Tom Minney
Moving back to Cote d’Ivoire may be on the agenda for the African Development Bank (www.afdb.org), according to an interesting story on the website www.devex.com (you may have to sign in to read it?). The bank fled from Abidjan in a rush in 2003, as rebels advanced on Abidjan in the brutal and all-encompassing civil war. Now the new Cote d’Ivoire President Alessane Ouattara wants it back. and it was on the agenda at the bank’s AGM in June in Lisbon, although it may take up to 3 years before this happens.
The article also notes that the bank is increasingly important and playing a bigger role as an African institution in channeling funding to African projects.
In January 2011, the bank lived through Tunisia’s jasmine revolution, although one bank staff member told me that it did not much affect the area around their building, as street action was mostly concentrated in other parts of town. They did miss a few days work, before bosses had them back in action.
According to the article, AfDB president Donald Kaberuka said uncertainty over the permanent location of the bank had a “significant effect” on morale, frustrated “horizon planning” and was difficult for the human resources department. Some bank staff may be happy to leave Tunis, others not.
Ouattara, who got into power in April 2010 after being blocked by his predecessor, Laurent Gbagbo who disputed the election result, is moving fast to re-establish Abidjan as the financial hub for West Africa and has been lobbying hard for the bank. It is not sure what the criteria for the move are, but it is possible they will need to see at least another successful multi-party election and a period of stable government.
The AfDB attended Ouattara’s inauguration and was a leader in an accelerated package of loans to help the new administration and initial renovation has started for the bank’s headquarters in Plateau district, according to the article.
New confidence, bigger role going forward
Then bank also led multilateral lenders to sign of $1 billion in loans to Tunisia’s new administration. Kaberuka, a former finance minister from Rwanda, reportedly says that after the political shocks, swift intervention can limit collateral damage. The African Development Bank is credited for its role after the 2008 global financial crisis in encouraging African states to apply fiscal restraint but to ease potential economic disruption through investment in infrastructure, and many countries are praised for successful countercyclical interventions.
The article also argues that the bank is increasingly the biggest and best bet for Western donors who are its principal shareholders. Experienced author Mark Ashurst writes: “As the bank’s loan book grows bigger and more diverse, donors, including the United States, Germany and the United Kingdom, are keen to devolve the task of managing their African exposure to an African institution.” He adds that the bank has done a skilful job of developing a terminology that avoids words such as “conditionalities” and uses “policy-based lending” and success in developing the skilful balancing acts required to work with nations. It also reflects aspirations for greater African voices in international development policy and it is likely that more international financial institutions could devolve administrative work to the AfDB.
In 2010 the African Development Bank passed the World Bank and became the leading source of multilateral financing for new African infrastructure. The same year, the bank’s sixth general capital increase included pledges to treble the bank’s reserves to $100 trillion by 2021, signalling new confidence. The bank’s loan book is stsill less than the sum of China’s resources-for-infrastructure swaps but the AfDB is much more closely involved than other lenders in African institutions such as the African Union and the Economic Commission for Africa and has a unique standing in the regard with which it is seen in Africa.
The article goes on to argue about the bank’s changing role as growth of 5% a year or more becomes the norm in Africa for coming years. This includes work to support bond and capital markets and leveraging private capital (20%), infrastructure (40%), budget support (20%), industries, including mining and manufacturing (20%). It is well worth reading Mark’s article in full here.
September 8th, 2011 by Tom Minney
[SPONSORED STORY] Banking is changing fast and nowhere more than in the African markets, where growth opportunities are huge with some 250 million households still unbanked, but only for banks with the skills and technology to chase them. Banks are expanding fast across Africa, heralding new competition. Innovative banks are seizing opportunities served up by technology to reach out to millions of new customers and find ways to offer financial services that will help them increase bank revenues, through agency or branchless banking, microfinance, SMME lending, or mobile money, e-wallets and biometrics.
Banking strategies for the future revolve around “base of the pyramid”, “technology convergence”, “cloud” and “inclusive banking”. In order to grow against competitors, banks are moving into technology, from core banking systems, adding a range of user interfaces, including Internet, mobile phones, call centres. In 2011 banking leaders are moving to agency banking and branchless lending. Lessons can be learnt and the future charted for emerging markets, including India, South Africa, Kenya and Malaysia.
Speakers at a top conference “Technology Innovation for Banks in Growth Economies” set for London from 28-30 November include global banking leaders in development, SMME and micro-finance institutions such as Anil Kumar, (CEO of IFMR Rural Finance, India), Yolanda van Wyk (CEO Smart Services at First National Bank, South Africa), Sandeep Indurkar (Head Mobile Payments – Internet Banking and Mobile Banking, ICICI Bank, India). Technology and finance expert speakers include Gerhard Romen (Director Mobile Financial Services Nokia), Dr Tim Kelly (Lead ICT Policy Specialist, The World Bank) and Menno van Doorn (Director VINT Research Institute for the Analysis of New Technology). The agenda covers software-banking partnerships, the impact of broadband, government pressures towards financial inclusion, biometrics including fingerprinting, cloud-based technology for banking, e-wallets and banking in growth economies and technologies for scale.
The conference is aimed at banks across the emerging and frontier markets, particularly where their growth will be linked to new customers with growing incomes, also technology experts and banking system vendors, development finance experts, policy-makers and leading commentators.
Together they will discuss potential solutions to challenges such as:
• Poor connectivity – satellites, cable and changing national and regional regulation
• Central and development banks plans to upgrade current ICT infrastructure
• Infrastructure of tomorrow being prepared for the next stage of branchless banking
• Understanding infrastructure needed to support the alliance between telecoms and banking providers
• Can microfinance banks be a delivery channel hard-to-reach regions?
The first day, 28 November, consists of workshops: i) the fast-track on how ICT creates better delivery channels for financial products to reach the unbanked and ii) branchless banking – seize opportunities and mitigate risks.
The conference website http://technologyinnovation-banking.com gives details and bookings. Or call: +1 212 537 5898 or email: info@hansonwade.com. Early bird discount of up to GBP300 expires in 8 days.
August 25th, 2011 by Tom Minney
As the East African region moves towards faster integration, Tanzania is preparing to ease controls on the amount of shares foreigners can buy, in line with changes in the rest of the region. The Dar Es Salaam Stock Exchange (www.dse.co.tz) is also hoping to increase from 15 to 18 listed companies and is preparing for an initial public offering (IPO) for Precision Air (www.precisionairtz.com) during September and cross-listings of 2 mining firms listed in London.
Gabriel Kitua, CEO of the Tanzanian bourse, told Reuters on 24 August at a meeting organised by the Nairobi Stock Exchange: “Tanzania is not exactly a closed market. Up to 60% of any listed security is available to any citizen of the world, 40% is reserved for Tanzanians… with time, the control will be erased especially as we go to the regional monetary union where free movement of funds across the countries will automatically be there.”
Reuters says the 5-nation East African Community (EAC) bloc of Rwanda, Burundi, Uganda, Tanzania and Kenya aims to have a monetary union in place in 2012 and move to a political federation by 2015. It reports that Tanzania has the tighter capital controls, including barring foreigners from investing in government securities.
Kitua also said that the approval of the cross-listing of African Barrick Gold Corporation (www.africanbarrickgold.com) is advanced: “The approval process is almost complete”. He added “The other one is in very initial stages … it is a mining company,” according to Reuters.
Barrick (ABX, listed on the Toronto and New York stock exchanges) owns 73.9% of African Barrick Gold and raised $884 million through offering the rest of the shares in an IPO on the London Stock Exchange in March 2010. Barrick describes itself as “the gold industry leader, with a portfolio of 26 operating mines and advanced exploration and development projects located across 5 continents”.
Precision Air’s listing application was received and being considered by the Capital Markets and Securities Authority (CMSA) in February, according to local news reports. At the time it was reported that Precision Air sought to raise $25m (about TSh38bn) in the IPO. Kenya Airways owned 49% and Michael Shirima, the founder and chairman of the airline, owned 51%. The IPO would see their stakes diluted to 34.2% and 34.6% respectively.
Reuters also adds that East African Breweries Ltd of Kenya is expected to offload its 20% stake in Tanzania Breweries Limited in a public offering. Kitua rejected claims in a regional paper earlier this year that EABL had been compelled by Tanzanian authorities to offer the shares at a set price: “In capital markets there is no compelling of people. This is a free market economy and decisions are done by the board of directors of the companies and no one can interfere with that.”
The agency says the most heavily traded shares on the DSE are banks such as CRDB and National Microfinance Bank and manufacturer Tanzania Cigarette Company. TBL is the biggest by market value.
“For the last 12 months the Tanzania share index has risen by 17% and the all share index by close to 7%. The market has been growing,” Kitua said. The Tanzania share index excludes shares cross-listed from the NSE, including Kenya Airways. Kitua said the postive performance is due to good earnings by listed companies and the stable Tanzanian economy: “There are signals that the trend will be on an increase for the next 6 months.” He warned that inflation is past 10% and is emerging as a challenge.
The DSE delisted the National Investment Company (NICOL) with effect from 6 July after a 1-month suspension from 6 June and it become the first company in the 12-year history of the Tanzanian bourse to be delisted. This was on account of the firm’s failure to submit 2009 and 2010 financial results, and failure to comply with a directive from the DSE Governing Council about plans to sell 22m shares it owned in National Microfinance Bank (NMB), which is also listed.
August 8th, 2011 by Tom Minney
The Nigerian Stock Exchange (www.nigerianstockexchange.com) has placed 24 companies on full suspension for failing to submit their financial statements for the year ended 31 December, 2010 (including some since September). The NSE is reported in Nigerian media as making the suspension effective from 2 August, after the companies were given a 1-month technical suspension from 1 July. The NSE has also suspended trading in 3 nationalized banks with effect from 5 August.
In addition, 9 companies were placed on technical suspension for failing to submit their audited accounts for the year ended 31 March, 2011. This means trading is allowed, but no price movement. Further action could be taken if they do not submit results.
Full suspension means there are no transactions on the shares of the companies until the suspension is lifted. Initially 48 companies were placed on technical suspension on 1 July, but 24 of them had submitted their account statements and the technical suspension was lifted. The compliance rate is now 89% of listed companies.
According to reports, affected companies include Dangote Flour Mills, African Alliance Insurance, UNTL Textiles Plc, Daar Communications Plc, Omatec Computers, African Alliance Insurance Plc, Great Nigeria Insurance Plc, Guinea Insurance, Standard Alliance Plc, MTI Pl, and Investment & Allied Assurance. According to one report, Omatek and UNTL had submitted results on 3 August, within 24 hours of being suspended.
The bourse CEO, Oscar Onyema, was reported as saying it was painful to place companies on suspension, but that the exchange would ensure that it enforces its rules.
3 banks suspended pending delisting
The banks were suspended after being sold to the Asset Management Corporation of Nigeria (AMCOM). According to an announcement by the NSE: “Pursuant to the nationalization of AfriBank Plc, Bank PHB Plc, and Spring Bank Plc by the Nigerian Deposit Insurance Corporation (NDIC) on Friday, August 5th, 2011 and subsequent purchase of the banks by AMCON, the NSE has placed the shares of the affected banks on full suspension as a first step towards their delisting from the Daily Official List. “This means that no trading will occur in the shares of these banks as these banks no longer exist following the revocation of their licenses by Central Bank of Nigeria
The Central Bank of Nigeria on 5 August revoked the 3 banks’ licenses and the Nigeria Deposit Insurance Corporation (NDIC) transferred their assets and liabilities to newly-formed “bridge banks”, which were then bought by AMCOM, which is to provide enough capital to restore the banks to capital adequacy. According to news reports the AMCOM statement read: “AMCON has identified independent and credible persons with significant and required experience to fill the board and senior management positions for the banks and will be seeking the approval of the CBN for their appointments. AMCON is confident that the new teams will manage the banks to establish strong market positions and effectively compete in the Nigerian banking sector, providing quality service to their customers and value to shareholders.”
AMCON would evaluate its options and consider the optimal exit strategy to maximize returns. According to a breakdown, AMCON would inject N285 billion into Mainstreet Bank, formerly Afribank, N283 billion into Keystone Bank, formerly Bank PHB, and N111 billion into Enterprise Bank, formerly Spring Bank.
Dr. Kingsley Moghalu, Deputy Governor, Financial System Stability, was reported as saying the move was to ensure all 9 banks rescued would be recapitalized by 30 September. The banks had failed a 2009 stress test. Recapitalization agreements signed with investors by 4 of the other rescued banks would solve around 80% of the banking crisis and the bailout package would be recouped from all rescued banks: “We believe we have drawn a line under the banking crisis. By September 30, all banks in Nigeria will be fully capitalized.”
Several organizations, including Nigerian Shareholders Solidarity Association, Afrinvest Research and Chartered Institute of Bankers of Nigeria (CIBN), were reported to have criticized the CBN move and said it should have waited until the 30 September deadline.
June 15th, 2011 by Tom Minney
Commiserations on the passing of Tayo Aderinokun, CEO and MD of Nigeria’s Guaranty Trust Bank plc (www.gtbank.com), listed on the Nigerian and London stock exchanges, who died from cancer in Paddington hospital, London on 14 June, two months after he took sick leave and at age 56 years. He was a co-founder of the bank in 1990 and grew it to a top bank that has high regard across world markets, picking up many international banking awards on the way. The bank said in a statement on its website that Segun Agbaje, who was named acting managing director on 20 April, will continue to manage operations. Nigerian papers have published obituaries, such as this one in This Day.
May 19th, 2011 by Tom Minney
The Rwandan Government plans to raise Rwf25 billion ($42.2 million) through the sale of its shares in Bank of Kigali Ltd (www.bk.rw) and telecom company MTN Rwanda (www.mtn.co.rw) in coming months.
The bank is Rwanda’s biggest lender by assets and it said the Government will sell a 20% stake to private investors in an Initial Public Offering (IPO) scheduled for June, according to a report on Bloomberg. In addition the bank will offer 25% of its shares to the public, according to the report, citing Chief Operating Officer Lawson Naibo. The Government owns 66.3% and will anticipate selling the rest of its stake later, according to John Rwangombwa, Minister of Finance and Economic Planning, during a press conference on 9 May on the budget framework. He is quoted in the New Times newspaper as saying: “BK is confirmed; we are to sell our shares through an IPO. We started the process and it’s expected to be concluded by September, including listing BK on the Rwanda Stock Exchange (RSE).”
Minister Rwangombwa said there is expected to be strong demand. Last November 2010, the Government sold 25% of Brassieries et Lemonaderies du Rwanda SA (BRALIRWA), a unit of Heineken NV (HEIA), and the IPO was 174% oversubscribed. BRALIRWA shares closed at RwFr 228, up 68% on the January launch price of RwFr 136.
BK plans to open 44 branches across Rwanda in 2011, and the stock should be attractive stock given its rapid growth and stability.
The Minister also said Government is in negotiations with MTN Group regarding its 10% stake in MTN Rwanda. MTN Group is majority shareholder and has the right of first refusal on any share sales. The Minister reportedly said: “We have two options; if MTN gives us (Government) the price we want, we will sell the shares to them directly while the other option is through an IPO depending on the other investor.”
The Treasury will include the expected proceeds in the budget for the next fiscal year. The Minister said: “This is part of the Government commitment to promote accelerated economic growth under its five year plan of EDPRS (Economic Development and Poverty Reduction Strategy 2008-2012) but also its the approach to liberalise the market.” Rwanda is a high-growth country and a top performer in improving its business and economic climate. It is working towards an ambitious long-term Vision 2020 that seeks to transform the country into a middle-income economy.
The Government remains keen to use IPOs to support the growth of the Rwanda Stock Exchange launched on 31 January by boosting market liquidity and ultimately supporting the country’s economic growth through attracting more inventors and increasing national savings.
The RSE has so far mainly attracted Treasury and corporate bonds, and 2 cross-listed Kenyan companies, Kenya Commercial Bank (KCB) and Nation Media Group. BRALIRWA is the only local listing.
May 16th, 2011 by Tom Minney
Nigeria’s Guaranty Trust Bank (www.gtbank.com) is coming to the market with a $500 million Eurobond, which could potentially roll out into a $2 billion offering, according to sources in the last few days. The bank is listed on the Nigerian and London Stock Exchanges.
According to a story on Reuters on 12 May the bank is about to launch the 5-year bond and the price could be set at 7.75%. The lead managers are to be JPMorgan and Morgan Stanley.
In January the Federal Government of Nigeria’s issued a $500 mn debut 10-year Eurobond at a yield of 7%, according to a previous Reuters story. The offer was apparently 2.5 times oversubscribed but the bond had been trading broadly flat at 6.9% ever since. It was not much shaken by the April elections, as it seems the market is betting on stability and growth going forwards and the price climbed to give a yield of 6.1% by last week.
Reuters reports that GT issued a $350 million bond in 2007 which matures in Jan 2012. The bond has a coupon of 8.5% and is yielding 4.8%.
A research note from Standard Bank also boosts the bonds. “We consider the new Notes due 2016 to be one of the best emerging market bank securities in our universe. GTB is one of the largest banks in Nigeria. It is well-capitalized and highly profitable operating in a market that is hugely underpenetrated. Liquidity is strong. Management is experienced and sophisticated and very importantly to us, experienced in successfully negotiating a banking crisis. During the 2009 Banking crisis in Nigeria, GTB was resilient and quite successfully underwent increased regulatory scrutiny.” The bank says the bonds are at a “significant spread” to the Government bond and compared to other emerging market financial institutions trade, they find the bonds “attractive” and add “with time and increased local participation, we would not be surprised to see the Notes trading inside of 7%.”
The bank was founded in 1990 and at the end of the last financial year was Nigeria’s fourth largest by assets, with market capitalization of $3 bn.
Broker Exotix has also praised its “diversified loan portfolio, conservative management and superior risk management” and says it has superior asset quality.
May 9th, 2011 by Tom Minney
The African Export Import Bank (afreximbank.com) has created a US$100 million facility to recapitalise Zimbabwean companies. Industry and Commerce minister Welshman Ncube is reported in local media as saying that 4 local financial institutions are ready to disburse nearly US$70 million as part of this. They are TN Bank, FBC Bank, BancAbc and NMB Bank.
According to a report in the Zimbabwe Independent newspaper, Ncube said: “These banks have already signed agreements with Africa Import and Export Bank (sic) on how to operate the facility. Local companies may access the funds through the Industrial Development Bank of Zimbabwe (IDBZ), Post Office Bank (POSB), Agribank and ZB bank. It is up to industry to use these financial institutions to access the resources.”
Ncube was addressing delegates at a conference at Zimbabwe International Trade Fair. He said companies should look at potentially large markets in the Common Market for East and Southern Africa and South African Development Community. The paper reports that COMESA and SADC are in talks on setting up a single monetary union and a free trade area by 2016. A tripartite summit is scheduled for South Africa this month.
He added: “Government appreciates the efforts of these banks in making lines of credit available. Internally government originally availed US$20 mn under the Special Drawing Rights (SDR) for distressed companies fund which was subsequently leveraged by US$50-70 mn and transformed into ZETREF (Zimbabwe Economic and Trade Revival Facility).”
Ncube said the current situation where 80% of retail shelves of basic commodities was taken up by imported goods was unsustainable in the long-term. Latest balance of payments projections showing total imports rising from US$$3.2 billion in 2009 to US$3.6 billion in 2010: “This imbalance is further aggravated by the fact that the composition of exports is highly concentrated on raw materials, with mining contributing 52% of total exports in 2009, agriculture 13% and manufacturing contributing 18% in the same year.”
Afreximbank was established in Abuja, Nigeria in 1993 by African governments, African private and institutional investors, as well as non-African financial institutions and private investors for the purpose of financing, promoting and expanding intra-African and extra-African trade. It is formed through an Agreement signed by member States and multilateral organizations (which confers on the Bank the status of an international multilateral organization) and a Charter, governing its corporate structure and operations, signed by all Shareholders. The authorized share capital is $750 mn.
May 5th, 2011 by Tom Minney
Standard Chartered Bank (www.standardchartered.com) has appointed Diana Layfield as Regional Chief Executive Officer, Africa, with effect from 22 June 2011. The bank has operated in Africa for over 147 years and has over 160 branches in 14 African countries and over 6,000 staff. Diana succeeds Mike Hart, who becomes Vice Chairman for operations in Africa.
V. Shankar, CEO, Europe, Middle East, Africa and Americas, said in a press release: “This is a hugely exciting time for our fast growing business in Africa. Diana and Mike will ensure we are well placed to take advantage of the many opportunities we see, including from deepening economic and trade relationships with Asia.”
Diana is currently Group Head of Strategy and Corporate Development – acquisitions, alliances, mergers and disposals – since 2009 across the bank’s global operations, and has previously held senior management roles since she joined the bank in 2004 as Chief Operating Officer for Wholesale Banking and as Group Head, Global Corporates.
Before that she was CEO of Finexia Ltd, a technology company providing outsourced services and software for the commercial finance industry (2000-2004), worked for McKinsey & Co (1995-2000), and piloted relief planes for the International Committee of the Red Cross / UN in Africa (1998-99). She was educated at the University of Oxford and Harvard University
Mike has led Standard Chartered’s franchise in Africa since 2006, delivering record results while growing our business, and has also been an active proponent of the Bank’s community programmes across Africa. He has been with the bank for 23 years and is stepping down from executive responsibilities.
April 24th, 2011 by Tom Minney
From the blog of Mark Mobius of Templeton Investments:
“While Africa does have challenges, I am encouraged by another side of Africa that is gradually emerging with the development of capital markets, consumerism and technology.
I believe the opportunities for the development of Africa’s markets are appealing primarily because of the strong growth numbers now emerging out of the continent.
Africa is expected to grow more than 7% annually in the next 20 years, due to an improving investment environment, better economic management and China’s rising demand for Africa’s resources. More than 100 African companies have revenues in excess of $1 billion. Africa also has impressive stores of resources, not only in minerals but also in food — 60% of the world’s uncultivated arable land is found in Africa. As global demand for hard and soft commodities continues to grow, I believe Africa is in an enviable position with its vast natural resources. The potential for long-term growth in consumer-related areas is also very attractive, with around 1 billion inhabitants on the African continent. These are people, just like many others all over the world, with aspirations to own their own homes and buy possessions such as cars, refrigerators, washing machines and the like.
Within Africa, Nigeria is one of the frontier markets that I like. The country has a population of about 155 million people. It is rich in oil and gas reserves and raw materials such as iron ore, coal and bauxite. In addition, its climate and large areas of fertile land lend themselves favorably to agriculture. Nigeria’s economy has benefited from strong commodity prices; it is estimated to have grown 7.4% in 2010 and is forecasted to grow 7.4% again in 2011. The highly-anticipated Nigerian presidential election may be seen by many as a measure of the country’s progress and stability despite the clashes and unrest running up to the election. Our local sources remain confident about the elections overall and are not expecting any significant derailing event. We share this sentiment for the most part, given the current positive economic environment, fueled by high oil prices, as well as more tangible reforms in the country. Moreover, banks in Nigeria are particularly interesting. In our view, the government’s recent bailout of banks has made the nation’s bank stocks cheap, creating some very interesting investment opportunities.
I also see a lot of potential in markets such as Ghana and Kenya. Ghana was the first sub-Saharan country in colonial Africa to gain independence. Although it endured an extended period of military rule, a new constitution and multi-party politics were introduced in 1992. Currently, Ghana is seen by many as one of the most politically stable democracies in sub-Saharan Africa. We are excited about the prospects for consumer-related sectors in this market, given its relatively young and dynamic population of more than 20 million. The country is also rich in natural resources such as oil and gold. Oil production in the offshore Jubilee field commenced in December 2010 and is likely to make a significant contribution to the country’s economic growth going forward. Of course, related investment in infrastructure is also likely to require financing, so we are looking closely at the financial sector as well.
The Kenyan economy appears to be doing well at the moment. The post-election violence in late 2007 and early 2008 took many by surprise, but it culminated in the establishment of a coalition government and the adoption of a new constitution in 2010, creating a solid foundation for future stability and growth. Kenya’s position on the east coast of Africa allows it to act as a hub for trade and investment flows from the east into the rest of the continent. Exports, predominantly tea and horticultural products, have recovered strongly, and the tourism sector is also seeing a strong rebound in the form of incoming foreigners.
There are also many challenges to investing in Africa.”