Visiting SCB Group Head confident of SL’s ability to plug into other regions

Friday, 4 April 2014 00:00 -     - {{hitsCtrl.values.hits}}

  • Identifies Lanka to be numerically and visibly encouraging region
  • Gives thumbs-up for nation’s progress
  • Rates Colombo as the ‘city of next decade’ and says it can be a Singapore
  • Confident SL will play major role in creating logistics hub for textiles manufacturing in South region
  • Confident of SL playing key role in transportation in ‘South to South’ integration trend
  • Says 2014 will be a challenging but decent growth year for SCB
For visiting Standard Chartered Bank (SCB) Group Head Origination and Client Coverage Wholesale Banking Sean R. Wallace, Sri Lanka is well-known territory. Being a regular business and leisure traveller to the country for over 10 years, Wallace, on observing the continuous development in the country, gave the nation a thumbs-up for its progress. Recognising Colombo as the “city of the next decade,” he shared that SCB is keen on assisting the Government in making it a “great” financial, business, transportation and logistics hub for South Asia. In an interview with the Daily FT in Colombo this week, Wallace shared Sri Lanka’s scope in integrating itself with other regions, along with future plans of SCB in a global and local context, challenges and outlook of the bank for 2014. Following are the excerpts of the interview:   By Shabiya Ali Ahlam Q: What brings you to Colombo again in less than a year? A:Yes, I was here late last year. Sri Lanka is a very important country for Standard Chartered so I am pleased to be back again. I am here to meet some of our most important clients and the Central Bank Governor and attend a few internal meetings. Q: Being a regular visitor to Sri Lanka, what is your view on the progress of the county? What more can the nation do better? A:Sri Lanka is both numerically and visibly very encouraging. Colombo, which I have been visiting for over 10 years, is really magnificent. There is a wonderful mix of new and exciting infrastructure along with improvements in some of the old infrastructure, all of which will help the economic development of the city. Looking at what more the nation can do better, it is a question of evolution and growth. If you compare the GDP per capita of Sri Lanka with other countries in the region, it can be said that for the nation it is growing well. Standard Chartered has a major hub in Singapore, and it is a marvellous city where everything works incredibly well. It has great education, healthcare, logistics, and other special elements. Standard Chartered needs similar hubs in its footprint, and if Colombo continues to develop along the same trajectory, then it certainly has the potential to be a hub for the bank. As I have travelled around Colombo, there is clearly significant investment in new infrastructure developments; it has a good base of healthcare, English education and a wonderful mix of culture. For these reasons, Standard Chartered views this as one of the cities for the next decade and as I mentioned, it has the potential to be an important hub for us. Through our international expertise, I believe that Standard Chartered can help the national agenda to position Colombo as a great financial, business, transportation and logistics hub for South Asia. Q: From an economic environment perspective, where is the room for improvement? A:I think it is one of those tender balances of trying to grow but not too quickly. Not making it too credit-based and making sure that there are no bubbles in the economy. We are quite comfortable with how Sri Lanka is growing. We think it is kind of a Goldilocks growth economy and that it is just right. Q: What are the challenges you see for the banking sector in Sri Lanka?  Are there any specific ones for foreign banks? A: Standard Chartered is very committed to Sri Lanka and wants its business to grow quickly. To grow, the bank will have to scale up its onshore capabilities whilst also relying on our offshore expertise. This means, for example, that to support the JKH Project Waterfront development, we have included in the project team project financiers from our overseas units who understand how to structure and execute large complicated projects. The combination of these skilled bankers with our local team is very powerful and great for our Sri Lankan franchise. We also have very talented Sri Lankans in the network that have had  experience in dealing with sophisticated products and projects in our global network and it is very likely that we will move some of them here over time. Q: SCB revealed earlier this year plans on expanding operations in Sri Lanka. How is that coming about? A:We have 10 branches in Sri Lanka where the furthest north is in Negombo and the furthest south is in Moratuwa, and our head office situated in Colombo. On the consumer side it is a constant evaluation on how we look at different cities such as Galle and other development cities so we can service our customer base. While the customers in Colombo have a larger gravity of the entire country, we are looking at building our brand in other parts of the nation.   "The group is excited about what is happening in Sri Lanka. We see it in the deal activity, and the FDI interest which in turn is reflected in the development of the local business. We are therefore actively investing in this franchise to ensure we are part of the Sri Lanka growth story – Standard Chartered Bank Group Head Origination and Client Coverage Wholesale Banking Sean R. Wallace" Q: Is there a specific number of branches the bank hopes to open outside of Colombo by the end of 2014? A:As I mentioned, the bank is committed to Sri Lanka and therefore we are continually looking at the best way to serve our clients. If this means opening additional branches, then this will be considered but at this stage a specific number has not been discussed. Q: What is the progress on supporting SriLankan Airlines? A:As you may have seen we were delighted to announce Standard Chartered Bank’s role as the Sole Structuring Bank for an Islamic Structured Term Financing of US$ 150 million. This is yet another example of the bank bringing its international expertise to support one of our local clients. This kind of support will naturally continue and is similar to what we have done with other national flag carriers across our footprint. We bring a unique set of skills to an airline. We have a leasing company, Pembroke, where we literally buy aircraft and lease it back to the airlines – it is an efficient way for an airline to expand its fleet. We also do advisory work on how to create strategic relationships with other airlines and to grow with the network. I just flew on SriLankan Airlines – the airline is really improving. Q: How about SCB’s support to improving Sri Lanka’s sovereign rating? A:Standard Chartered is proud to be a rating agency advisor for a number of Sovereigns including Sri Lanka. The bank has a dedicated team that proactively works with different Governments across our footprint to improve their Sovereign Rating. We were instrumental in getting the Philippines their investment rating about a year and a half ago. Our goal here will be the same. We will be figuring out ways in which we can assist the Government to work on policies, growth agendas, and other areas. Q: Are there any plans on further expanding in the South Asia region? If so, what new markets is SCB looking at? A: We have a unique position in this part of the world. We have got one of the largest and probably one of the most important banks in India from a foreign perspective. We have a fantastic franchise in Bangladesh, and are the largest foreign bank in Nepal and Pakistan. And we are just opening up in Myanmar. Interesting for us is the whole Bay of Bengal region. There are over 325 million people in Bangladesh, the state of West Bengal, Myanmar and Sri Lanka and we see significant opportunities in this region, as it has a large market, good growth, and low cost manufacturing. I must add that Sri Lanka will play a significant role here. In the area of textiles Sri Lanka is at the high end, and they can work with places like Bangladesh, Kolkata, and Myanmar in creating a hub for the manufacturing of textiles. Q: Africa is recognised as a potential region to get into. Is it so for the banking sector? A: Absolutely. Africa is a market where Standard Chartered has had a presence for more than 100 years. We have a unique franchise in the region and are committed to the Continent. In fact we are opening up in new markets such as Angola and Mozambique and plan on moving into more markets in the next couple of years.  It is one of our fastest growing regions and what is really interesting is that when you look at the population growth, Nigeria is projected to be the third most populous country by 2050. West Africa is going to be an energy hub, while East Africa will be an agriculture hub. Sri Lanka will benefit from Africa’s growth due to South to South integration. Q: Will there be a point where the focus on South Asia will be diverted to Africa due to increasing opportunities in that region? A:It is about people at the end of the day. The connectivity over the last 100 years with Africa was countries such as the United States, United Kingdom, and France. Now it is a South-to-South integration. We are seeing all sorts of economic ties growing between the South Asians and Africans. It is very encouraging. Q: What are the plans for SCB in 2014? How much more do you hope to achieve in comparison to last year? A: The group is excited about what is happening in Sri Lanka. We see it in the deal activity, and the FDI interest which in turn is reflected in the development of the local business. We are therefore actively investing in this franchise to ensure we are part of the Sri Lanka growth story. In terms of where we are globally, we have a mixture of challenges and opportunities. So it feels like when you look at the Indian stock market, there is real enthusiasm for what is going on in that county and we have a good franchise there. Africa continues to grow very nicely, and we are well situated to take advantage of that. We think some of the challenges in China will make our business change but we will continue to see growth of 7% in that part of the world and that is enviable when looking at other places. Overall we see a challenging but decent growth year for 2014.