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TRADE & INVESTMENT FORUM UK-COTE D’IVOIRE PERSPECTIVES ON BANKING AND FINANCE LONDON 30OCT2013 MACRO ISSUES THE OPORTUNITIES ARE CLEAR TO SEE • There have been challenges. Let’s not dwell on them now • This month’s feedback from the IMF is more interesting . . . . Macroeconomic performance in the first half of 2013 was better than expected, with continued strong gross domestic product (GDP) growth, and moderate inflation despite increases in some food product prices . . . . Clear progress has also been made in the implementation of structural reforms, especially to improve the business climate and strengthen the energy sector • Forecast growth is very strong, whoever you listen to :Growth 2 2012 2013 2014 Government Forecasts 9.8 9.8 9.1 IMF Forecasts 9.8 8.5 8.0 (Real GDP % change) MACRO ISSUES FOREIGN DEBT / BANKING SECTOR • Given concerted effort, debt now appears manageable.. ..and the market agrees Arrears cleared up with external creditors Private creditors agreed a combination of rescheduling and new money The price recovered from 35% in March 2011 to as high as 97.4% since • Banking sector is in recovery mode Source : Bloomberg 29/10/2013 Legacy of non-performing loans but relatively well provisioned Capital-adequacy ratios remain above the prudential threshold African Development Bank is returning to its rightful home 3 IVORIAN BANKING SECTOR REGULATORY ENVIRONMENT • Banks in Cote d’Ivoire come under the prudential supervision of the Banque Centrale des Etats de l’Afrique de l’Ouest (BCEAO) which is Headquartered in Dakar • BCEAO is integral to the West African Economic and Monetary Union - WAEMU • Economic and monetary union across 8 states • Fomenting stability and market discipline • Single currency 4 Member Countries of WAEMU Source : BCEAO website Diamond Bank’s technology platform makes banking operations seamless between the four WAEMU states in which it operates today EXPORT TRADE IMPORT AND CURRENCY CONTROLS IMPORT CONTROLS There are clear rules which must be adhered to governing what can be imported and the forms that need to be filled in. CENTRALISED MANAGEMENT OF FOREIGN EXCHANGE > The XOF is pegged to the Euro The link has been clear and steadfast over many years as the chart opposite shows Source : OANDA (January 2009 – date) > Whilst the peg is not a BCEAO-wide solvency guarantee Contracts can be negotiated with some price certainty and for imports priced in €, eliminate hedging costs XOF is a managed currency. The importer’s bank (wherever situated in WAEMU) must wait for BCEAO to release FX. Banks can help here 5 IVORIAN BANKING SECTOR OFFSHORE Several of the Ivorian Banks have associates operating offshore although very few banking groups have a full presence in both Abidjan and London. > > > > > > 6 DBUK is a UK company with its own capital and governance arrangements It was the first bank to be authorised by the new UK Prudential Regulation Authority (PRA) DBUK’s parent is one of 8 systemically important banks operating in Nigeria, public quoted, profitable and growing strongly Focus on retail expansion in its home market and international presences in Benin, Senegal, Togo and of course Côte d’Ivoire and the UK For DBUK Côte d’Ivoire is a core niche market Our Ivorian value proposition is set out in one of the flyers that can be picked up at our stand STRUCTURED SITUATIONS STRUCTURED TRADE • Agri commodity financing Very big business Valuable and desirable export crops Well established financing mechanisms to cover annual trade cycle • Financing farmers locally • Using crop to secure loans against assigned contracts or spot market sales to global commodity firms • Other Commodities (e.g. oil) Similar arrangements and with financing linked to underlying trade cycle for product 7 STRUCTURED SITUATIONS FUNDING FOR INVESTMENT • Long lead times and repayment schedules Putting it out of reach for many commercial banks • Specialists exist to fill the gap Regional Development Banks – BOAD recent XOF 26m Theocratic Development Banks – IDB recent XOF 84m • And not just by lending money Investing in skills and governance 8 STRUCTURED SITUATIONS FUNDING FOR INVESTMENT • There is always a local funding need as well Local banks (e.g. DBCI) have a key role to play supporting local promoters and project partners • If there is an export credit agency involves there will often be a portion of residual country risk 5 – 15% of the amount being lent Term country risk weighted 100% for capital calculation purposes (vs 0% for export credit leg) Specialist and niche banks (e.g. DBUK) have a key role to play in taking on these risks 9 Please visit us • At our stand today • At our UK offices tomorrow Appointments can be arranged today • At our London and Abidjan offices any time in the future Rollo Greenfield CHIEF EXECUTIVE OFFICER Diamond Bank (UK) plc - London Isaac FOLY MANAGING DIRECTOR Diamond Bank SA, Côte d’Ivoire - Abidjan THANK YOU Please visit us • At our stand today • At our UK offices tomorrow Appointments can be arranged today • At our London and Abidjan offices any time in the future Rollo Greenfield CHIEF EXECUTIVE OFFICER Diamond Bank (UK) plc - London Isaac FOLY MANAGING DIRECTOR Diamond Bank SA, Côte d’Ivoire - Abidjan THANK YOU