Multibank Relationship Management in Middle East and Africa

5 Multibank Relationship Management in Middle East and Africa Multi-banking drivers for MEA MNCs Treasury professionals should consider the following when determining their organisation’s banking needs. The organisation’s current credit commitments and future credit needs Corporates with larger credit requirements may be unable to find one bank that can serve all their credit needs while this pool of credit providing banks will require to get adequate share of transactional flow wallet. Additionally, companies may want to spread out their counterparty risk. The organisation’s geographic footprint Multiple banking relationships may be necessary to ensure product and service coverage in all countries where a corporate has a presence. Very few banks have a comprehensive presence in all major markets inMEA. Concentration risk While it may contribute to operational complexity, establishing/maintaining secondary banking relationships allows treasury to transfer accounts and services if major issues develop with the primary bank. In some instances, treasuries may adopt a multi-banking policy as part of its risk management strategy whichmay differ for countries with less stable banking systems. Capabilities If a corporate’s approach to selecting banks consistently targets “best in class”, it’s likely to choose the best bank for each service rather than a single bank for multiple services. Treasury oftenmust balance access to the best service with the need to have a manageable solution. For example, a local bank which has a significant advantage over other banks in terms of cash collections, because of a vast branch network in the country or region, may not be the preferred bank for cross border payments. Some corporates adapt different/independent bank relationship strategies for each treasury function (i.e. providers for cashmanagement, FX, trade, insurance or pension programmes).