Here's teaming up with you

Bank feels local knowledge gives it an inside edge to channel Chinese investment into Africa

As China grows its trade and investment links with Africa, the 110-year-old Attijariwafa Bank of Morocco has its eyes on opportunities in offering trade and investment finance services and in sending remittances.

"From the standpoint of China, Africa is a big opportunity, but at the same time is a difficult market to address," says the bank's co-chief executive officer Ismail Douiri.

"There are many different languages, regulations, and cultures, and it is hard for China to deal with so many individual strategies and situations."

Douiri was speaking during this year's City Week, an annual London-based international financial services forum held from March 31 to April 2.

Attijariwafa Bank's local knowledge gained through its operations in 13 African countries would help Chinese customers smoothly function in local markets, he says.

Attijariwafa Bank, the result of a merger between Banque Commerciale du Maroc and Wafabank, had more than 16,000 employees and assets of 384 billion Moroccan dirhams ($47 billion; 34 billion euros) in December. Its headquarters is in Casablanca.

Already the largest bank in Morocco and the third largest in Africa by net banking income, Attijariwafa Bank is making the best of China's growth, having formed a strategic alliance with Bank of China last year.

"Bank of China has a long presence internationally, and they understood what they could gain from partnering with us," Douiri says.

One important area of partnership for the pair is trade finance. When African customers of Attijariwafa Bank import products from China, payment needs to be guaranteed to Chinese producers and suppliers. Attijariwafa Bank can act as a guarantor for these payments. Bank of China, as one acquainted with Attijariwafa Bank, can then reassure the Chinese exporter that payment will be made after the goods arrive.

And if the Chinese exporter requires a certain percentage as a deposit before goods are shipped, Bank of China can help facilitate the transaction in renminbi.

In fact, renminbi invoicing is now offered as a choice for Attijariwafa Bank's customers. Often when African importers pay their Chinese counterparts in renminbi, it avoids exchange risks for the Chinese exporters. In this respect, access to renminbi from the Bank of China has proved useful, Douiri says.

Attijariwafa Bank also provides renminbi forward transactions for its customers. If export transactions are happening a few months in advance, Attijariwafa Bank can buy the renminbi in advance and hold the amount for the customer.

At the agreed time, Attijariwafa Bank will then sell the renminbi to the customer at the pre-determined price, and charge the differences in interest rates between renminbi and local currency.

Having worked well in partnership on trade finance, Attijariwafa Bank now hopes to work more with Bank of China on remittances.

For example, when Chinese expatriates work in Africa and wish to send money home, they can send their remittance through Attijariwafa Bank, which has the advantage of a wide retail presence across Africa.

Attijariwafa Bank then transfers the money to the Bank of China, which has a wide retail presence in China, covering both big cities and small towns, so the families of expatriates can easily collect the money no matter where they are.

"We've been strong in migrant banking, as 10 percent of the Moroccan population lives in Europe," Douiri says. "They send money back to Morocco, so it would be good to use our expertise in this field to help Chinese migrants."

A third area of opportunity related to China that Douiri hopes Attijariwafa Bank can capture is financing Chinese investment into Africa, which the bank does little of. This is because many Chinese investment projects are led by the Chinese government, so financing is likely to be done by Chinese banks, including The Export-Import Bank of China, Industrial and Commercial Bank of China, China Construction Bank, among others, he says.

At other times the deals can be done on a barter basis, whereby Chinese companies build infrastructure for African countries, and in return African government offers them natural resources deals, so little bank financing is involved.

"As local banks we get a very small part of the deals, like paying the salary of local employers," Douiri says. "But our hope is to do more investment financing, perhaps with private sector Chinese investment into Africa."

In fact, Attijariwafa Bank's primary advantage in securing these contracts is not the bank's financing capacity, but the local knowledge in helping to realize the contractual aspect of the deals.

"On the one hand you have a country that needs the infrastructure, and on the other you have a country that can provide it," he says. "But you also need to understand who pays whom and when, and the risks involved. In order to provide that, you need to be close to the local situation."

Attijariwafa Bank's local knowledge in how to help with an infrastructure deal and see it through to completion gives it a distinct advantage from Chinese banks that operate in Africa, he says, adding that in this niche market its closest competitor would be Standard Bank of South Africa.

As Chinese companies continue to expand into Africa, some have become Attijariwafa Bank's customers. Notable among them are the Chinese telecommunications giants Huawei and ZTE, Douiri says.

Attijariwafa Bank would typically help these Chinese companies to channel funds between their headquarters and local base, and help the local office carry out a range of retail banking activities, including paying local employees.

Douiri says Attijariwafa Bank is a good banking choice for Chinese companies in Africa, compared with French and US banks that are also established on the continent because Africa and China are emerging economies and have cultural similarities.

"We have a lot of things in common. One of the biggest is acknowledging the role of the informal sector in a developing country."

Although some people regard that sector's activities as questionable, if not downright illegal, Douiri says it should also be considered as a source of employment and future growth. In addition, it is a transient phase businesses go through before becoming a structured corporate entity.

Douiri was born in Morocco in 1970 and went to France to study at the age of 15. He trained as an engineer and started his career at Westinghouse, the electric company now owned by Japan's Toshiba.

He later shifted his career focus into consulting and banking, and has worked in many different places, including Britain, Morocco and the US.

In 2004, Douri joined Attijariwafa Bank as vice-president of strategy, and stayed on in the bank to eventually become co-CEO. He says he is happy in his current role as it enables him to help Morocco and neighboring countries grow.

He says his long-term goal is to help make Casablanca a prominent financial center for Africa, and the natural choice for international companies to locate their African headquarters in.

"We feel we have a good combination of control, safety, and transparency to the rest of the world but also growth and vision. And as for our Moroccan banks, we'll never reach the size and complexity of large international banks, but we'll better integrate with the world and continue to grow."

cecily.liu@chinadaily.com.cn

(China Daily European Weekly 04/11/2014 page23)