What investment bankers really do
The guarantees will help to protect Absa against risks related to mandatory capital reserves, free up financial capacity, enable Absa’s subsidiaries to provide additional lending and generate more revenue. PHOTO BY KELVIN ATUHAIRE
What you need to know:
Investment banking is a special segment of banking that helps individuals or organisations raise capital while providing them with financial consultancy services. In this question and answer session, Prosper magazine’s Martin Luther Oketch asks Mr Anand Naidoo, Absa’s managing executive clients’ coverage in Cape Town South Africa, about the significance of investment and corporate banking in African countries.
Help Ugandans understand what corporate and investment banking is?
The whole idea about investment banking doesn’t mean that I’m taking your money and investing it! It is about investing in assets and infrastructures that create economic growth. The more you invest in assets and infrastructures, the more jobs you create, the more the economy gets stimulated and the higher the economic growth and that is true. If you look at what is happening in Africa most of the projects in Africa, 70 per cent of it is geared to debt and 30 per cent is geared to equity.
What is so unique about Absa’s corporate and investment banking in Africa within the markets it operates in the region?
As Absa, we do corporate lending/corporate financing of export credit (trade financing). Trade is happening between China and Africa, India and Africa both inwards and outwards. The fact is that we have got trade with China and India. So as a bank, we have got to finance these trade flows coming in Africa and going out of Africa using out investment and corporate banking window of the Absa Group.
Does Absa have corporate and investment banking in all the 12 countries it operates in?
We have 2,000 employees in the African continent; we have a presence in 12 countries in Africa. In ten of those economies including Uganda, we are systematic to those economies where we do retail banking and business banking.
But in the area that we represent is an investment and corporate banking we play a significant role in our banking perspectives to help those economies grow. So within Absa, we have various sector team with a big focus in the areas of mining, oil and gas, power, utilities, infrastructure, agriculture, telecommunications, retail or consumer sector, pharmaceutical, health and many others.
The whole idea about investment and the corporate bank is to offer specialized banking solutions and not just to enrol high-level banking solutions. Given that the investment size that people make in the various countries is quite significant and it requires that we offer specialized banking solutions to them.
What sort of services does Absa offer under its corporate and investment banking?
We are doing the management of risks that is a currency, which is key to us; currency risks is in every country because each country in Africa has its own currency and trading with other countries in US dollars and it has to hedge its currency against those other currencies. As Absa, we do a lot of cross-currency hedging here in Johannesburg and also in treasury department in-country office branches. We even do interest rate hedging as well. We also give clients business advice.
Would you comfortably say Absa is on the rise following the name change from Barclays?
Yes, we have an office in London UK, we are opening an office in New York to connect our international clients with African clients. We also plan open offices in global trade corridors of Dubai, India, Singapore, Japan and China because there is a lot of trade happening in these countries.
So we are taking Africa out in the world and bringing the world into Africa to promote trade and development in the African continent. We also have the emergency regional
Corporate clients, which is good for us as a bank and we are introducing them to our international clients who are international corporates and multinationals.
Absa is a listed company’ what is its current market capitalisation?
Absa is listed on Johannesburg Stock Exchange as Absa Group Limited and there is trade going on the counter every day. I think its current market capitalisation is 123 billion Rand, which is equivalent to $8.2 billion.
