Business Times Africa Magazine 2017 /vol 9/ No2 BT2Edition2017_web | Page 55
MAURITIAN BANKS THINK BEYOND HOME COMFORTS
drive MauBank’s success. The lender
has ambitious plans to capitalise on
its strong SME and retail offerings to
further its growth.
“The merger of MPCB and NCB has
given MauBank a market share of 8%.
Our aim is to reach 15% and become the
third significant bank in Mauritius,” says
Mr Nagarajan. “We will do this slowly
because our job now is not to grow the
balance sheet but to put the bank back
on track. We have actually shrunk the
balance sheet slightly because we had
too many high-cost deposits. Reducing
these deposits has helped to push us
into profitability.”
International expansion
Beyond the domestic market, a number
of Mauritian banks are focusing more
of their efforts on international growth.
Indeed, many lenders have for some
time looked towards mainland Africa
and Asia as an engine of future growth,
and capturing opportunities along
the Africa-Asia corridor is a central
theme for most Mauritian banks. Many
already boast a footprint across multiple
markets in Asia and Africa, but there is
a strong trend to capitalise on these
positions by leveraging relationships
and market knowledge to drive new
growth.
AfrAsia Bank is no exception. “As a
bank, our bandwidth is restricted due to
our size. So we have defined the markets
where we have sound local knowledge
and significant relationships. In
this respect, South Africa and India
are two markets in which we have
excellent local connectivity as well as
strong understanding of the business
landscape,” says Mr Bhasin.
“Gradually, we want to diversify our
country coverage on the asset side. We
have started looking at smaller markets
because we think we can understand
these places better than some of our
larger competitors. In this respect, we
are carefully looking at opportunities in
Sri Lanka, Bangladesh and Indonesia,”
he adds.
Other lenders are also making
ambitious moves. SBM has been
aggressively pursuing geographic
expansion in recent years, which has
seen it enlarge its presence across south
Asia, sub-Saharan Africa and the Indian
Ocean.
“Our long-term growth strategy is
built around regional expansion in order
to cover the Asia-Africa corridor. Today,
we have a presence in India, Madagascar
and Myanmar, and soon in Kenya and
Seychelles,” says Mr Li Kwong Wing.
“We also want to open a representative
office in Hong Kong, Dubai and South
Africa. We are developing our footprint
across this corridor to facilitate the flow
of business, trade and capital between
“GRADUALLY,
WE WANT TO
DIVERSIFY
OUR COUNTRY
COVERAGE ON
THE ASSET SIDE.
the two regions.”
India focus
This kind of international connectivity
has long been a key ingredient to
Mauritius’s economic success. In terms
of financial services, the country's
long history with India, characterised
by its decades-old double taxation
avoidance agreement (DTAA), has
positioned the country as a successful
international financial centre. But
changing political currents in India
have led to a renegotiation of this treaty,
which reinstates capital gains taxes on
Mauritian residents upon the transfer
of Indian securities. The move was
expected to hit the country's economy,
as well as its offshore business, hard. But
to date, the impact has been negligible.
“The revised DTAA with India will
not have any meaningful impact on
Mauritius," says Mr Bhasin. "Indeed,
we expect business flows to increase in
the coming years. This is because the
DTAA was attractive primarily for equity
investments with India.
“Moving forward, to support much-
needed infrastructure developments,
the debt markets are likely to play a
much bigger role. And Mauritius can
play a significant part here because
it has a deep connectivity with, and
understanding of, India. In addition,
Mauritius benefits from abundant
foreign currency liquidity,” he adds.
African connections
But the treaty change is giving
Mauritius’s banks and wider financial
services community fresh impetus
to build closer ties with Africa. Most
lenders are now looking to enhance
their business lines with the continent
by harnessing their accumulated
specialised knowledge to position
the country as a hub for treasury
management and trade services, among
other activities.
“Fundamentally, MCB is truly African
at heart and we are on the continent to
stay. In fact, the African continent is an
integral part of our medium- and long-
term vision,” says MCB’s Mr Gufflet.
But as Mauritian banks reap the
rewards of regional expansion, they
must also face up to a greater level
of risk. In recent times, sub-Saharan
Africa has been a source of political
and economic volatility as commodity
prices crashed and national currencies
tanked.
Political risks are also mounting in
key markets, as shown by the South
African government’s sacking of
respected minister of finance Pravin
Gordhan, replacing him with Malusi
Gigaba, who has announced plans
to radically transform the country’s
economy. The move led Standard &
Poor’s to downgrade its sovereign rating
to junk status.
Mr Bhasin says: “The regional
credit cycle is not showing any signs of
improvement. South Africa, in addition
to a number of other African markets,
is showing signs of a slowdown. We
are hoping that South Africa’s recent
downgrade doesn’t negatively impact
the performance of the country’s
corporates and banks.” TheBanker
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