Multibank Relationship Management in Middle East and Africa

9 Multibank Relationship Management in Middle East and Africa • Zambia : Highly fragmented banking sector where is difficult to find a single bank with comprehensive suite of services offering. Zambian Kwacha is volatile, FX market regulated and many MNCs struggle to source USD liquidity which creates the need for multibanking relationships. • Cote d’Ivoire : The West African CFA franc zone’s unique monetary system and reliance on regional banks necessitates multi-banked relationships to manage liquidity and FX risks. • South Africa : While the banking sector is advanced, the country’s complex regulatory environment require MNCs to work with multiple banks for optimal treasury management. • Nigeria : Frequent regulator changes and currency controls make multi-banking essential for managing liquidity and compliance risks. Allocating business to specific banks is a pivotal part of managing bank relationships. Banks have a relatively advanced understanding of the percentage of a client’s business they have (i.e., Share of Wallet [SoW]). They will often ask for more business if they feel they are not being given an appropriate share. Banks alsomust comply with internal balance sheet management policies when extending credit and providing transaction banking services to corporate clients. The general best practices of MNCs are to centralise treasury operations with global and regional banks into hubs (e.g. Dubai) wherever possible and only in countries with strict capital controls or local currency requirements, decentralise banking relationships. Multi-banking governance When it comes to cashmanagement structures, best practice is to implement local or regional cash pooling (physical or notional) in key hubs like UAE (and sometimes to connect MEA regional pooling structure into global). Other MNCs create payment factories or on-behalf of structures (OBO) – which are still relatively rare to see across MEA - tomanage liquidity across subsidiaries and leverage virtual accounts to improve cash visibility and reconciliation without a need for multiple bank accounts. Centralising core trade services is generally easier for MNCs than cashmanagement thanks to lower Where a global banking partner is not able to support, we would prefer a regional bank with a regional relationship structure to leverage a broader scope to resolve our issues and escalations. The selection of a local, country specific bank would be under very exceptional circumstances and more importantly driven by a particular market nuance. Nora Sena Regional Treasurer of Nestlé for Middle East and Africa