Standard Bank Angola, a subsidiary of Standard Bank, Africa’s largest lender, started operations in 2009, opening its first branch in 2010. The bank has six branches, five in the capital, Luanda, and one in Lubango in the south. The bank comprises a corporate investment bank for larger clients and a retail section. It is planning to roll out more branches and become one of the top five banks in Angola. Stephen Williams talked to the bank’s MD, Pedro Pinto Coelho, about this vision.
African Business: What sorts of clients are you targeting?
Pedro Pinto Coelho: We have a strategy that we call the virtuous circle. We start with the top of the economic pyramid, that is the large corporates, since we are the only true international bank in Angola. We operate in all of Angola’s neighbouring countries and, in fact, in 17 countries throughout Africa, while other banks here are domestic Angolan Banks or subsidiaries of Portuguese banks. So we have that advantage.
The first objective is to provide our services to these large corporates, leveraging our truly pan-African and, indeed, global networks.
We then focus on the smaller and medium-size companies that are typically the suppliers to the large corporates, and then we offer retail banking services – especially to the employees of the companies we work with and high-net-worth individuals.
Q: You have very ambitious expansion plans in terms of rolling out your branch network. So will the nature of your client base change as you expand?
A: We are only expecting to cover the remaining parts of the banking market at a much later stage, if and when we are able to service the corporate segment, which is our priority.
At this stage, we are not planning to be a full-fledged universal bank because that would require many more branches than we currently own, although we anticipate opening between 20 and 25 branches by the end of this year. And in three to five years’ time, hopefully, we will have established around 60-70 branches that will allow us to build a client base across the country.
Q: How different is the banking culture in Angola to other countries in Africa?
A: The banking culture in Angola is influenced by the fact that this is a country working under a different legal system, which is influenced by the Portuguese legal system – although there is now an Angolan legal code which has made some changes.
But essentially, the biggest influence is Portugal and, to a certain extent, Brazil. Due to the fact that a number of Portuguese banks that have been here for many years, Angolan banks have tended to operate in the same way as them.
Q: How competitive is the Angolan banking system, and what are the strengths you are bringing to the market?
A: I would say that we bring a new type of culture and a new way of doing business, so I think that we can differentiate ourselves from the rest of the banks.
We are particularly focused on the quality of the service. The ébanking sector in Angola is quite young with just five banks, namely Banco Poupança e Crédito SARL; Banco Angolano de Investimentos; Banco Fomento Angola; Banco BIC SA; and Banco Espírito Santo Angola SA as the country’s biggest lenders, according to the central bank, controlling 80% of the market. That is why I say it is so important for us to break into that top five.
Banking has grown quite fast in Angola over the last decade, but many of the banks have just not had the time to adjust their operations to cope with the number of clients that they have been attracting.
We hope that, by entering at the later stage in the market, we can be more competitive, particularly in terms of the strength of our balance sheet.
Q: Are there any other advantages that Standard Bank Angola enjoys?
A: First of all, we are the largest African bank and have the full support of the Standard Bank Group. Secondly, we are an international bank; and thirdly, because we always provide the best quality service possible – and that is something that, in my experience, the customer always appreciates.
Finally, I think that the way we are very careful in how we deal with the client is pivotal. We segment the client according to its profile; whether it is an oil and gas company, the government, a retail company, a private client or whoever is in front of us, we try to tailor our service specifically to that client.
Q: As a proportion, how much of your business is oil and gas related?
A: Well, our business is still quite young. Basically, the fact is that since we are a new bank in this country, the companies that have been present in Angola have naturally had to work with banks that were already operating in Angola – that is, Angolan banks and some Portuguese banks. I believe there is the possibility that that this will change and we will attract more oil and gas clients, especially as the government wants the oil companies to start paying their taxes and services through the local financial system.
This places a lot of pressure on the existing financial system to ensure the right procedures are followed, that the banks are fully prepared and they have the right skills sets, the right people and the right systems in place to guarantee a smooth process of payment.
We believe that we are quite well positioned for this. We have been attracting a lot of these companies already. I would expect a big share of that particular market and, on the other hand, we also have people that come from the industries and that speak the same language.
We have an oil and gas desk specifically that relates with these companies and they are so focused on the oil industry that we can guarantee that we understand their challenges and we can support them. I would say, right now, that our oil and gas business is about 20% of our portfolio, but I would expect this figure to increase within the next couple of years.
Q: Beyond the oil and gas and extractive sectors, which of Angola’s economic sectors, in your opinion, offer the best potential?
A: I think it depends on the time frame. If we consider the short to medium term, I would say that the construction sector, particularly infrastructure, will be quite important. Also in the short to medium term there are a number of retailers that are being established here. Now you have the major brands starting to want to be based in Angola.
In the medium to long term, but not at such a quick pace, there are clearly some industries that are trying to become established here. For example, there is one enterprise that has already opened producing cans for the beverage industries. I think that there will be more important investment, particularly in construction materials production that will reduce the imports from abroad.
Q: Are there any other trends within the retail space? I’m thinking here of the big supermarket groups that are opening up in Angola.
A: Yes, there are Portuguese, Angolan retailers and South African retailers that have all have ambitious plans to grow, and grow fast, in Angola. Clearly, food and beverage retailing is growing very quickly. I sense that the agricultural sector has been a bit slow. But I think with the number of instruments the government is providing in terms of subsidies and trying to attract investment in that area, it will also eventually allow Angola to capture some of that investment in agriculture. But I think it is taking a bit longer due to the nature of the sector and the cycle is much longer.
Q: Would you say that the economy is diversifying quickly enough to deal with Angola’s demographics and the income disparity in the country?
A: I would say that it is clearly an objective from the government to increase the number of jobs and diversify away from the oil and gas business.
Certainly, there are limitations bearing in mind the level of qualification the Angolans have, and those that they need to have. I think the diversification is probably not proceeding as quickly as government may want or that Angolans believe is necessary, but realistically I think that a lot has been achieved in such a short period for a country.
In 10 years, they have done such a lot, they have had to train people in order to guarantee they achieve adequate and relevant economic diversity, and that will take some time given the wide skills gap.