Multibank Relationship Management in Middle East and Africa

6 Multibank Relationship Management in Middle East and Africa The drive for competitive pricing While maintaining multiple banking relationships leads to increased base fees, these relationships can lead to increased price visibility for corporates, allowing them to drive pricing down across different banks. What has still been relatively difficult and inconsistent across MNCs is quantifying indirect costs associated withmaintaining bank relationships or bank accounts. Generally, the estimate of indirect costs range between $3k-10k per bank account per year. Treasury’s evolving role Treasury is now playing a key role in driving returns on liquidity, by introducing interest optimisation initiatives with a purpose of identifying pockets of excess cash and assuring they are yielding a return for the company. The goal is to eliminate idle non-performing balances, especially in the MEA region where centralisation is challenging, and trapped cash is common. We have seen recently that some corporates are hiring dedicated treasury resources focused on the optimisation agenda. The need to efficiently source foreign currency In some emerging markets accessing foreign currency has proven to be problematic. Having several banking relationships may assist to obtain the desired level foreign currency for specific projects/payments. In countries like Egypt and Nigeria, corporates have been actively encouraged by their primary banks to establish relationships with other banks to satisfy their foreign currency needs. We have seen several examples where anMNC’s inability to access foreign currency or repatriate funds to their Head Quarters (HQ) resulted in company’s market exit. Market preferences In countries such as Cote d’Ivoire and Senegal some corporates may naturally prefer working with French banks as they may have a natural affinity to each other. In other markets like Algeria, MNCs prefer to allow their clients to pay invoices by locally, still common payment methods, like cheque or cash. Regulatory compliance Different banks may have varying levels of flexibility as it relates to documentation required to execute transactions. This creates a scenario where the ease of doing business, especially in restrictive markets may vary depending on a banking collaborator. For example, some local banks in Pakistan can have less stringent processes which creates more convenience for the MNCs. This convenience is often solving immediate/ one-off or a temporary need. Legacy The idea of having several local banking relationships was historically seen as a strength and the idea of rationalisation is generally a new school of thought. When anMNC conclude merger and acquisitions transactions, the banks of the acquired entities may be kept and even when these accounts are not used, they may not be closed. Francophone countries Map of francophone Africa