The global economy is shifting fast this year, dominated by the upheavals the US-China trade war and Brexit have caused. One of the most affected sectors is banking, due to its role as the financial intermediator in trade. Standard Chartered Plc group chief financial officer Andy Halford was recently in Kenya, and he sat down with the Business Daily to discuss the effect of these geopolitical events on how the multinational lender is doing business, the opportunities this presents for markets in Africa
What do you make of the disruptions in this market from mobile money and do you see it as a threat? What is your space in there?
I think there is both an element of opportunity and threat sitting within it. First of all, it is in recognition that the process of paying people is at the heart of society. It is a core part of the way we live now and will be for many years to come.
Like in any other sector, it always keeps businesses on their toes when there are new technologies or new players. However, these are technologies that we are also deploying ourselves, and the combination of the long-standing reputation and reliability that we have built plus the use of new technology gives us an edge, which in the long-term should provide us with a very interesting business.
In Africa, you find different regulatory regimes in different countries. What is your view on regulation and market risk in the region?
Across such a big portfolio, we face very different political issues, competition issues and very different regulatory issues.
The advantage of having such a wide portfolio is that there may be macro stresses in some parts of the portfolio, but equally, there may be opportunities at the same point in time in others. Being in a regulated sector, it does make it complicated because you have regulation both at country level and regulation for the group as a whole.
We are very familiar with that and have a good relationship with regulators. We have regular interactions with them, and it is in the heart of doing our business.
Barclays Plc has recently scaled down their presence in Africa. What would you say the future holds for a multinational bank like yours in this region?
Every bank has got its particular circumstances, and Barclays for its reasons has decided to go that route.
We strongly believe in the presence in the higher growth parts of the world and are very proud of the fact that our presence for many years here in Africa and Asia is giving us a wide breadth of offering and service.
In a world where customers have choices, this is important — we are here because of the opportunity in Africa and the fact that this strengthens our offering to other parts of the world.
How is the US-China trade war affecting you in the markets where you operate?
This is a space that has got a lot of attention. We are a trade bank, operating across the market including a big business in China. We provide a lot of dollars into the system.
The overall impact on our group as a whole in the sense of how much of our income we derive from trade between the US and China is relatively small at about three percent of our total income.
It is still early days to see how supply chains will amend themselves in light of what is happening.
We are not a domestic player in the Chinese market but are more an enabler for corporate consumers moving money in and out of the country and managing forex risk.
Over time it will be interesting to see whether any of the businesses there will decide to resequence their supply chains so that some of their activity is in other Asian countries rather than in China.
Overall this trade war has opportunities and uncertainty in it. It is something we cannot influence but we can monitor.
Is this trade war between the two largest economies ta gain for other regions like Africa — an opening for trade opportunities perhaps?
It could well be. Many businesses are still at an exploratory stage, but the logic of having production in other parts of the world particularly where required skill sets are available and cost of production is sensible. Then absolutely, the opportunity is open and that could be African markets or other Asian markets.
On balance, supply will have to shift a little bit and this will open doors in other parts of the world like Africa.
How will Brexit affect the way you do your business here?
Fortunately, Brexit is not a huge issue for the bank. Our focus is primarily in Asia and Africa, less so within Europe. Moreover, the extent to which it is in Europe, a lot of it is between London, Asia and Africa, and less between London and mainland Europe.
We have prepared for however Brexit may end up. We have had a presence in Frankfurt, Germany, for many years, and in the past year have had that unit registered as a legal entity in Germany, where it was previously a subsidiary of the UK business.
It now has its banking licences to operate under European banking rules.
We have doubled the number of staff there in the past nine months. However, Brexit unfolds we are well prepared as anyone can be.
Do you then see a new trade deal between the UK and Africa materialising after Brexit?
If Brexit does occur, the UK is going to have to strike its trade deals with as many countries as it possibly can do.
I’am sure that African markets will be right at the centre of that.
Relations between the UK and Africa have generally been good over the years, and that will be very high on the list for the government when things play out.