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Headline: Regional awards – Africa Source: Euromoney Date: July 2001 Author: Simon Brady Best bank: Citibank Honourable mention: HSBC Africa remains the most difficult and least transparent regional market covered by Euromoney. Although banking operations in the region can be extremely profitable in terms of margin, in absolute terms these profits are tiny in comparison with those made elsewhere. In 2000 for example Standard Chartered made £70 million in Africa – compared with £50 million in the UAE alone. The risks remain high. Few countries have functioning debt and equity markets, and most business is either with governments or the agencies helping them. Two of the largest markets, Ghana and Zimbabwe, are suffering severe problems and in any case are not self-sufficient economies, having been sustained by aid flows. Local institutions, many unlisted, almost all unresearched, act primarily as channels for donor financing and capital flight. And those foreign banks that do maintain local operations across the continent can be counted on the fingers of one hand. Barclays and Standard Chartered, operating in many of the same markets, had markedly different experiences over the past 12 months. In 2000 Barclays grew profits in Africa 24% to £122 million while Standard Chartered shrank theirs 33% from £105 million. Both banks though are falling behind Citibank and HSBC, largely because neither is a fully integrated global institution able to offer the full range of retail and wholesale services. HSBC – a bank that derives half its revenues globally from emerging markets – bases its presence in the region partly on the old Equator Bank network and partly on the acquisition of CCF’s operations in French-speaking Africa. Not only does the bank have a strong operation in South Africa it is also a major player in corporate finance throughout the region. Deals involving telecom companies in South Africa and Kenya line up with mining deals in Mozambique. CCF has added privatization expertise in the north of Africa. However, though probably the region’s top corporate finance house – major competitors are Deutsche and Merrill – it cannot boast the local presence or product depth of winner Citibank. Citi has the broadest network throughout the continent with a presence in 17 countries and it provides services in an additional 35. The bank provides secure and modern retail banking facilities that bring first-world products to the continent. In wholesale finance Citi is also a leader. In general the bank targets the top-tier local corporates, the subsidiaries of multinationals, financial institutions and the public sector. In particular it is the preferred provider of forex services for the large NGOs operating in Africa. Financings range from a $7.7 million medium-term loan for an Ivorian palm oil producer to buy back and restructure a distressed debt, to a $3 billion funding scheme for Nigeria Liquefied Natural Gas. The bank is a leader in vanilla and structured financing solutions in Africa. So, for example, as well as acting as joint bookrunner on a $400 million loan for Anglogold in 2001, Citi also structured a $60 million escrowed electricity payments backed guarantee for Nigeria’s National Electric Power Authority that has become the blueprint for infrastructure financing in the market and elsewhere. The bank is also the leading provider of transaction services – payments, domestic disbursements, global custody and clearing – and is increasingly the only choice in these product areas. As elsewhere, the Citibank/ SSSB combination is unbeatable. |
