SEAMLESS TRANSITIONS

Mozambique 2013 | FINANCE | VIP INTERVIEW

TBY talks to Luísa Diogo, Chairwoman of Barclays Bank Mozambique, on the bank's rebranding strategy, the importance of retail products, and the attractiveness of the local finance sector overall.

To what extent has the rebranding of Barclays Mozambique shaped the bank's current operations, efficiency, modernization, and profitability?

The bank's rebranding was the beginning of a new journey for our business as we strive to ensure our alignment with the Barclays greater Africa strategy. The rebranding was characterized by investments in our workforce and systems, as well as a general harmonization within the wider Barclays Group. This rebranding is geared toward an enhanced customer experience with the bank, leveraging the Barclays Group's global credentials, tradition, experience, and expertise to deliver a seamless banking experience.

What is the projected impact of Barclays Bank PLC's increased ownership from 55.5% to 63.3% of Barclays Mozambique?

The proposed transaction is an important step in realizing our shared goal to become the “go-to" bank in Africa. It also presents a unique opportunity to leverage the integrated combined operations model across the continent, while at the same time enhancing collaboration on product innovation. The transaction is expected to bring about an opportunity for a uniform customer experience across Africa, as we continue to prioritize service quality and the delivery of a broader range of products to customers in all of our chosen markets, including Mozambique.

“The SME sector is a growing segment that is becoming increasingly well established locally."

Does retail remain Barclays Mozambique's chief focus?

Retail has always been and continues to be a fundamental component of our service and product offering, and we are placing even more emphasis on our retail operations in the coming year. In particular, we will focus on our “Prestige" and “Premier" banking products. The bank is also placing additional emphasis on new branch locations, paying close attention to the design and refurbishing of our older branches, coupled with the introduction of alternative delivery channels and improved technology to deliver our products. Additionally, our corporate segment is of fundamental importance, largely due to the significant growth of the Mozambican economy and banking sector. As a financial institution, we aim to cover all of the significant segments that contribute to the economy's growth and subsequently increase our business activity.

What is the bank's strategy to increase retail banking and lines of credit products for SMEs?

The SME sector is a growing segment that is becoming increasingly well established locally. We are investing in capabilities and competencies in this sector in order to effectively partner with customers and contribute to our clients' development.

How would you characterize the bank's position in Mozambique's increasingly competitive financial sector, especially with regard to the corporate segment?

Despite the increasing competitiveness of the local financial sector, Barclays still holds a considerable market share and is the fourth largest bank in the country. Barclays is the only bank in the local market with a truly global presence. Our short-term objective is to leverage this experience and capability to further enhance our relationships with multinational customers involved with large coal, oil and gas, and mining projects. We are confident that by being a global player in the market, we can optimize our global resources, develop international experience, and employ the necessary tools to deliver the value-added demanded by our customers. As a financial institution, we intend to get involved in every important project, which will enable us to become the “go-to" bank—not only in Mozambique, but in all of the markets in which we operate. We are improving our system as a way to take advantage of the country's development process and ensure that we capitalize on the ever-increasing number of business opportunities in the country.

To what extent is Mozambique a key emerging regional player in the insurance market for international investment?

We see Mozambique as an important market for insurance. Current penetration rates are low, and that presents an opportunity as the economy and awareness among potential customers grow. The group acquired a leading insurer, Global Alliance Seguros, in Mozambique in 2011. Together with the banking footprint, this alliance presents an exciting opportunity for the delivery of combined group products and services for our customers.

Do Mozambican sovereign bonds present an attractive investment opportunity for both domestic and international investors?

The global financial crisis has created an interesting dynamic for first-world governments, which continue to face declining incomes brought on by relatively stagnant or shrinking economies and higher expenditures as they try to keep their social systems and banking systems together. Fortunately for these governments, funding costs have declined materially as investors have sought refuge at the expense of returns. The BRICs (including South Africa) have experienced similar substantial slowdowns as export markets have dried up and commodity prices remain benign. As a result, nominal bond returns have declined and risk has increased, leading investors to accept lower returns and the relative safety of low-yielding debt. Although African economies have suffered in the wake of the global financial crisis, economic growth levels have consistently remained above world averages. The economic growth in a number of African economies relates to rapid population growth, strong infrastructure development, and affordable labor. Ongoing interest demonstrated by global mining and energy giants also continues to be a material growth driver. The relatively mature funding markets, which are offering fairly high returns, have supported and will continue to support this growth. In terms of this trend, Mozambique has been a star performer, registering figures consistently ahead of its peers. Government funds are supplied by inward investment, donor funding, and export proceeds, which up to now has been sufficient. Local funding has been secured through a relatively small bond market. Against the backdrop of the crisis, Mozambican sovereign bonds have presented a secure investment with a decent return for both domestic and international investors. However, the local bond market has a few unique characteristics—currency bonds are in short supply and the secondary market is practically non-existent, and bonds have been issued with maturities of around five years, which may be too long for some foreign investors. The upside is that the bonds always offer a real rate of return regardless of inflation. The Ministry of Finance is considering the possibility of placing more emphasis on the structural management of government finances, fixed-rate issues, and primary dealerships. From our perspective, although yields are relatively low compared to historic levels, Mozambican sovereign bonds offer a strong investment alternative.

What is your outlook for the Mozambican economy and what does this signal for the future of Barclays Mozambique?

Mozambique is on the cusp of becoming the fastest-growing economy in Africa due to sizeable investment opportunities in natural resources such as gas, coal, agriculture, and fisheries. Barclays remains committed to Mozambique's success, and the bank recently underwent a recapitalization process in order to play a larger role in the country's growth story.

© The Business Year - March 2013