From Abu Dhabi with love
SBN’s big money maker hints on new capacities for growth
Namibian corporate sector not utilising specialised trade finance products
Namibia has a large unbanked population and getting them banked is the challenge
Financing and advising businesses that would not otherwise have been able to exist is a key ingredient in pushing Namibia up the growth curve
There have been some concerns that Namibia’s upgrade from a lower-middle income to upper-middle income country by the World Bank could see donor flows reduced
We are working on a broad based BEE deal right now which will see 10 percent of SBN shareholding localised. We are also possibly looking at a local listing.
STANDARD Bank is a leading African banking group focused on emerging markets globally. With assets of over N$1 345 billion (US$183 billion), Standard Bank is the largest banking group in Africa (by market capitalisation) and operates in 32 countries worldwide.
The bank’s Corporate and Investment Banking (CIB) division has led the bank’s expansion from its southern African base into 17 countries across the continent, and 15 countries outside Africa.
The CIB division serves a wide range of client requirements around the world for banking, finance, trading, investment, risk management and advisory services.
Having developed in line with globalising capital markets and the growing sophistication in financing requirements in emerging markets, the division has built a deep understanding of market dynamics in rapidly developing economies.
Recently, Standard Bank Namibia (SBN) appointed Werner Weber (WW) to head its CIB division. Weber discusses his strategy as head of this division, with intentions best served by operating a client-centric and distribution-focused business model, supported by a culture that prioritises client relationships and economic returns, as well as a business structure that enables an integrated, multi-product service offering.
In this interview, he is excited by the localisation of SBN, as well as the strategic partnership of the two largest banks in Africa and China, Standard Bank and the Industrial and Commercial Bank of China (ICBC) taking a 20% stake in Standard Bank, which he tips to generate significant cooperation benefits and new capacity for growth in the years ahead.
PF: Can you briefly outline what your office is responsible for?
WW: Within Corporate and Investment Banking (CIB) we have three broad product groups: Global Markets, Investment Banking and Transactional Products & Services (which includes Investor Services). I look after these product houses, as well as the Client Coverage team that is responsible for servicing clients with these products.
PF: So how do you blend in with other departments and related subsidiaries within Standard Bank Namibia?
WW: The main split in the bank is between wholesale banking (CIB) and retail (Personal and Business) banking which is led by Baronice Hans. The main products are broadly similar, that is, loans and deposits, but in CIB the focus is on bigger corporate clients and this allows us to customise our service more. So we talk a lot and cross-sell is a big theme in the bank.
PF: How long have you been at the helm of this office and from where were you coming?
WW: I joined SBN in November 2010 and before that I was a portfolio manager for Rand Merchant Bank (RMB) Asset Management. Before that I was a derivatives trader for a joint venture between Macquarie Bank and an Arabic bank in Abu Dhabi.
PF: How experienced are you to be taking such a position within the bank?
WW: I have a B. Comm in Maths and am also a qualified actuary and Chartered Financial Analyst (CFA) charter holder. I also did my MBA with London Business School in 2009-2010.
Before Abu Dhabi I was a derivatives trader for ABSA Capital and I have also worked as an actuary in the health insurance industry.
PF: As Head of CIB, who are you answerable to within the company and at what levels do you deliberate?
WW: I report directly to Mpumzi Pupuma, our Managing Director. I also serve on the executive committee and attend the main board meetings for the bank.
PF: Would you say Namibians are well informed of the needs and benefits of banking for their own good?
WW: Well, the country is very two-tiered in that respect. The banked population is very aware and very demanding. There is, however, a large unbanked population and getting them banked is the challenge. This is, however, more a retail banking issue. On the corporate side, clients are very sophisticated. There are a couple of niche products such as derivatives, which I want to be driving but in general corporates here are very sharp.
PF: You are arriving on the scene, shortly after a crippling global financial crisis. What has been your take thus far on the banking practices and strategies?
WW: Namibia and the whole Common Monetary Area (CMA) region were relatively sheltered against the subprime crisis, mostly due to exchange controls. The banks that lost money were those that managed to expatriate funds and invest in subprime debt. At Standard Bank Namibia we spend almost all our energies on the domestic economy so any impact on us, if any, would have been secondary from a slow-down in the global economy.
PF: What lessons are you bringing from Abu Dhabi?
WW: The United Arab Emirates is similar to Namibia in the respect that they are also a small population and are blessed with a lot of natural resource base. So when they struck oil the pace really picked up in their economy and the size of the deals and the speed at which things happened was really impressive. Namibia also has that buzz right now (mining) and it feels like we are destined for great things. I’ve been fortunate to have seen what works and what doesn’t in such an environment. One thing I think we are already doing different to the Emirates is that we have locals making the strategic decisions, where they often had expats. So this immediately changes the horizon to a long term view, where there they had people chasing short term gains.
PF: So how strategic will you create sustainable long term growth?
WW: Very much so. If you look at other countries in the Standard Bank franchise the wholesale banking is the big money maker. In Namibia, however, retail banking makes up around three quarters of the bank’s bottom line. So we at CIB have a lot of room for growth. In terms of long term growth for the country, we have a big role to fill as well. Firstly, Namibia, like any other emerging economy, requires enormous investment in infrastructure.
These are big ticket deals that cannot be financed by our local banks alone. At Standard Bank; we have access to a large pool of global investors, including our Chinese shareholder that can help us in financing these projects. Secondly, unemployment is close to our top priority as a country. Financing and advising businesses that would not, otherwise, have existed is a key ingredient in pushing Namibia up the growth curve.
PF: Where does your division hold a substantial share in the Namibian market?
WW: This is quite a contentious one at the moment and there seems to be a bit of debate amongst the banks regarding the rankings. On investor services we are by far the biggest in the market.
Our Global Markets team is also highly regarded and I would think that we do quite well here too. But on average the Namibian market is quite well contested and there are no clear leaders or laggards. This is good for the consumer and it keeps us sharp too.
PF: Explain, in detail, how trade financing and financial market risk management can help businesses survive uncertain economic environment?
WW: On the risk management side we are talking about hedging products which can help corporates to mitigate their exposure to the financial markets, be it currency fluctuations, interest rates or commodity prices. I believe we are at the beginning of a significant interest rate hiking cycle and that entering into an interest rates hedge right now could end up being a very smart decision.
On the trade finance side, our research shows that trade within Africa, and between Africa and the BRIC nations (Brazil, Russia, India and China), has increased exponentially over the last decade. What we are seeing often is that corporates are not utilising specialised trade finance products. These products could, however, lighten the cash flow burden on them and also significantly reduce the risk of non-performance under import and export agreements.
PF: One would assume that the International Development Groups (IDG) falls under your jurisdiction. How do you manage the bank’s relationship with Government and international donor organisations?
WW: We have just hired a senior relationship manager to focus solely on these relationships and she has a team assisting her in this. So these relationships are very important to us. We would love to be doing more business with Government, as do all the other banks and we hope that our localisation process will allow us to do more of this business. Donor business is also very important to us, and even more so to the country. There have been some concerns that Namibia’s upgrade from a lower-middle income to upper-middle income country by the World Bank could see donor funding reduced. This remains to be seen.
PF: What financial instruments are there to enable SBN CIB’s clients to invest and manage risk in today’s global financial market?
WW: The list is too long to go through. In short, we can structure any solution that can incorporate any given risk appetite and focusing on any of a number of geographies and on any of a number of asset classes, be it equity, bonds, commodities, credit, FX, interest rates. Also in terms of tenor we can structure investments up to and possibly exceeding 30 years, which should be interesting for the insurers and pension funds.
PF: Any syndication strategies?
WW: At this stage, there is a big demand for assets in Namibia so we try to keep as much as possible on our own balance sheet. We have done syndications before and given the size of some of the upcoming infrastructure projects we will definitely do them again. Our expertise in arranging financing for large projects is superb, be it loan financing or bond issuance. We were ranked the Best Investment Bank in Africa by a number of institutions.
PF: But banks have been criticised for not financing international and domestic market expansion, receivables and other trade-related financing needs?
WW: I am not aware of this. There are obviously exchange controls we need to abide by. Within these guidelines it is in fact our vision to be the bank that enables cross-border trade and financing these activities. Our presence across Africa and the BRIC countries positions us perfectly to enable this kind of business by being there for clients on both sides of the border.
PF: What are SBN’s strengths in CIB market?
WW: Local presence and relationships, backed up with the global knowledge and skills. The communication between the different countries is amazing; you should see our phone bill. There are a lot of international banks flying in and doing deals here and some of these deals end up going wrong for the client. We have been here for a while and want to be for a long time to come. So doing good business is key to us.
PF: What are the other specifics of the Namibian banking market today?
WW: Localisation is a key drive right now and you would have seen in the press that we are making good ground in this regards. We are working on a Broad Based BEE deal right now which will see 10 percent of SBN shareholding localised. We are also possibly looking at a local listing sometime in the not too distant future.
PF: Where and how does your division fit in the localisation process of SBN?
WW: Localisation is a broad concept that involves many parts. In terms of the localisation of ownership, we contribute a significant portion of SBN’s bottom line so we will be contributing a significant portion of the dividend and growth in the share price once we list. In terms of localisation of employees, we are now fully Namibian. My predecessor was the last expat in CIB. In terms of Corporate Social Investment (CSI) we are involved in a number of local projects and sponsorships. We are all fully on board in terms of the drive to localise. We are a big bank and a key part of this economy and fully understand that our decisions impact on the country and its people. We embrace this responsibility.
PF: What are the growing pains in the investment banking industry?
WW: There seems to be a perception that large investment banking deals have to be done with international banks. Also our investment banking franchise in Namibia is fairly new. So there is a lot of communication that needs to happen to show clients that we can put world-class deals together in Windhoek.
PF: And how do you interpret the major gap between Africa, US and Europe in terms of investment banks, despite Africa’s rapid growth in this area?
WW: We just need to keep more of this business local. You won’t see a US infrastructure deal being done by a Chinese bank. If we can keep these deals local it will benefit the economy as banks will pay tax locally on the profit from these deals and will be able to employ and up-skill locals in this industry. In comparison to the US and European banks, bear in mind the size of their economies. If SBN was doing business in a $14 trillion economy we would probably have been a bit bigger too.
PF: Having worked in different continents, what would you give as a guide to working with investment banks in Africa?
WW: Stick to the names you know and can trust. Investment banking deals are generally long term deals and are very sophisticated. Also, make sure the bank has a local presence. There are a lot of nuances to doing business in Africa the internationals do not necessarily understand. Standard Bank started doing business in Africa in 1862.
PF: And your message to those in Namibia’s corporate world who are looking at major investments?
WW: There are great opportunities. There are a number of large infrastructure projects that need to happen and in the recent budget speech the Finance Minister (Saara Kuugongelwa-Amadhila) showed her commitment to these as well through the generous increase in Government’s infrastructure spending. These projects in turn will create opportunities in mining and other core sectors. And on the back of these there will be numerous opportunities for SMEs and individuals to set up support businesses, all of these creating employment and uplifting Namibians.
PF: Talking of opportunities in corporate finance, how available are jobs in this market and where do you get the best of your skilled and competent staff?
WW: There are not too many jobs going around. We run a pretty lean ship. The whole of CIB is less than 60 people. But finding the right skills is a major problem for us. Skilled Namibians are very scarce and demand a premium as a result. However, we are proud to say that as from 1 November 2010 our CIB team is 100% Namibian. In CIB, people are our number one asset though, so we will always find a seat for the right individual.
PF: What would be your parting words for youths aspiring to be in your position and how best do you think they can achieve your levels?
WW: The world is globalising very quickly and as a result, international experience is very important. I am very happy that I worked in a few different countries and really value the experience I got there. In the last 10 years you wanted to go to New York or London. Over the next 10 years you probably want to spend time in China or Africa. So travel while you can, experience the world.
Also, never stop studying. Another result of globalisation is going to be that we will not only be competing with other Namibians, but with the Indians and the Chinese and the Russians too. And they are very smart.
Lastly, just be a good person. We often underestimate how far you can get by just being an honest, friendly and humble person. PF
Who is Werner Weber?
Date of Birth: 2 October 1977
Languages: Fluent English and Afrikaans
2010 Master of Business Administration (MBA) London Business School, UK
• GMAT: 720
• Exchange Student: Technology and Business Strategy Instituta de Empressa, Spain
2008 Chartered Financial Analyst (CFA) Charter Holder CFA Institute, USA
2005 Fellow of the Faculty of Actuaries (FFA) Faculty of Actuaries, UK
• Fellowship in Investment and Finance
1998 Bachelor of Commerce (Mathematics) University of Stellenbosch, SA
• 4 Distinctions
Nov 2010 – Current
Standard Bank Namibia
Head: Corporate & Investment Banking
• Managing three product houses (Global Markets, Investment Banking and Transactional Products & Services) as well as the Client Coverage team, consisting of eight direct reports and 46 indirect reports
• Full budget responsibility for circa N$125 million Profit After Tax
• Chairman of the Asset and Liability Committee
• Member of the Executive Committee and Credit Risk Committee
Jan 2010 – Sep 2010
RMB Asset Management
Portfolio Manager (LDI) RSA
• Managed both fixed income and inflation linked portfolios of our Liability Driven Investment funds
• Built risk management models for these portfolios from scratch using a combination of Excel, Visual Basic and Matlab
• Used these models to immunise portfolios against changes in both real and nominal interest rates
• Mandated with creating additional alpha for surplus funds, using credit risk, basis risk, directional curve views as well a limited exposure to options
Mar 2006 – Sep 2009
Macquarie/ADCB Treasury Joint Venture Vice President - Derivative Structuring (Abu Dhabi, UAE)
• Negotiated various large derivative deals with local and international clients exceeding US$350 million in national each
• Won a number of deals for ADCB through the structuring of innovative derivative solutions, without which projects would have been unable to go ahead
• Structured and executed deals with client and hedged derivative structures in the interbank market
• Analysed financial models of projects and corporates in order to structure tailor-made derivative solutions
• Priced derivative structures in interest rates, commodities and FX using in-house developed pricing models
• Started up energy trading business at ADCB, procuring of clients, structuring of bespoke energy derivative structures and together with traders developed pricing models and system capabilities for these trades
• Streamlined structured derivative idea generation and communication to client base
• Led research into new markets such as carbon and freight derivatives
May 2004 – Mar 2006
ABSA Capital (Barclays Capital affiliate)
Interest Rate Dealer (RSA)
• Responsible for modelling, pricing and trading all non-vanilla ZAR interest rate products
• Developed live pricing models with Reuters link for trading non-vanilla structures
• Co-managed the bank’s ZAR interest rate risk through the ZAR interbank swap market
• Developed a Prime Rate swap curve and made a market in Prime-swaps
• Communicated structuring ideas and solutions to asset managers
Jun 2003 – May 2004 NMG Actuaries and Consultants Actuarial Manager & Senior Consultant (RSA)
• Initiated the creation of a fund for medical schemes
• Managed the actuarial team, including all appraisal, recruitment and remuneration policies
• Advised on legislation and its impact on medical schemes and sponsoring companies
• Supervised benefit design and product development
• Performed loss of income claim calculations using my own pricing models
Feb 2001 – Jun 2003 Alexander Forbes Health Care Consultants Actuarial Consultant
• Developed valuation models and managed FAS106 and AC116 actuarial valuations
• Conducted contribution pricing using Excel-based pricing models
• Performed financial projections, budgeting and IBNR reserving
• Analysed claims cost and presented to boards of trustees
Jan 2000 – Dec 2000
Century Life Programmer London, UK
• Streamlined maturity, death, surrender and paid-up value calculations and projections
• Developed systems for life insurer’s unit-linked and other products
• Provided technical assistance in mergers & acquisitions
Jun 98 – Jul 98 Sanlam Life Insurance Student Internship
• Developed system capability flagging AIDS deaths
• Modelled AIDS death mortality. PF