Multibank Relationship Management in Middle East and Africa

8 Multibank Relationship Management in Middle East and Africa Infrastructure Many reasons why corporates elect to have several banking relationships are similar across the globe - infrastructure is a leading contributor. Some banking and technical infrastructure of MNC’s subsidiaries is inherited from the past and switching costs to new technology is too high. We also see examples where deployment of global treasury technology adopted by anMNCelsewhere is not prioritised inaparticularmarket, because of the small size of a company’s operations. Industry platforms such as SWIFT are designed to protect corporates and therefore eliminate overdependence on banks. The same is not true in some MEA markets where evolution of banking and financial systems lags – we have seen this to be a challenge for example in Ethiopia and some other markets particularly across Sub-Saharan Africa and Central Asia. Reflecting on this, Nestlé’s Regional Treasurer for MEA, Nora Sena, notes, Bank’s technical ability to connect and communicate via SWIFT is often a key prerequisite for MNCs for establishing bank relationship. Governments of countries such as South Africa, Türkiye or Tanzania have separate systems designed to receive tax payments that require development from banks, meaning that only certain banks (i.e. state owned in Türkiye) may be able to facilitate these types of payments. “Treasury technology rollout – for example SWIFT - has been done in a phased approach where the largest markets were targeted first, with the goal of having at least bank per each country on- boarded. Subsequent phases were done based on transactional volumes with the banks and overall size of the market,” said Nora. Country-specific analysis In some MEA countries, the need for multi-banking is relatively lower due to stable banking systems and centralised regulatory frameworks. Examples include: • United Arab Emirates (UAE) : The UAE’s advanced banking sector and free zones allow companies to centralise banking relationships, particularly in Dubai and Abu Dhabi. Market size, favourable regulatory environment and its strategic importance makes it easier for banks to support MNCs from offshore locations as well it is easier for MNCs to select from various banking allies which is not the case in almost any other MEA market. • Israel : Country with advanced banking and payment infrastructure dominated by a very few and well capitalised local banks and with limited presence of international banks. Israeli Shekel is fully convertible, FX markets are liquid. MNCs can easily manage their entire banking needs through one or two institutions. • Morocco : Corporate treasurers can often rely on single bank for most services, though Foreign Exchange (FX) requirements may necessitate additional relationships. In contrast, countries with less developed banking systems or higher regulatory complexity requires a multi-banked approach: One would agree that in SWIFT connectivity and integration with a bank is important to ensure payment security, yet we’ve faced challenges and had to work around this preference not only in specific localized markets like Angola but also banks in markets that are expected to be more evolved such as Kuwait.