Standard Chartered Bank's exit from retail business and the future
Standard Chartered Bank Tanzania’s chief executive officer and managing director Herman Kasekende responds to questions by The Citizen’s managing editor Mpoki Thomson in Dar es Salaam recently. PHOTOS I SUNDAY GEORGE
Four months after his appointment as Standard Chartered Bank Tanzania’s chief executive officer and managing director Herman Kasekende had a one on one with The Citizen’s managing editor Mpoki Thomson to discuss the lender’s priorities in Tanzania’s financial market, operational landscape, the role it plays in financing key strategic projects, as well as new developments in the sector. Excerpts;
As the new CEO of Standard Chartered Bank Tanzania, what are your top priorities, and how will they impact Tanzania’s financial sector?
As a global bank, strategic priority number one is to leverage our network in Tanzania. With our strengths being in Africa, Middle East and Asia, while also being listed in the UK and Hong Kong, what we do very well is to deliver that network to our clients, mainly the corporate banking clients.
The next strategic priority is about digitizing our operations. We want to make sure that we invest a lot more in digital and get all of our operations and transactions to online channels. Right now, close to about 95 percent to 96 percent of our transactions are actually done digitally.
StanChart to exit consumer, private and business banking in Tanzania
Another strategic area is about sustainability and climate change. As an institution we’ve taken steps to accelerate our operations to net zero.
I’m happy to note that our key regulator – Bank of Tanzania (BoT), is actually committed and aligned with the ambitions for sustainability.
We’re also working with the Ministry of Finance to come up with a sustainable finance framework which will enable the country to take advantage of some better priced financing which is available in the debt and capital markets.
Standard Chartered Bank Tanzania is set to exit consumer, private and business banking in Tanzania. What does this mean for your clients and your operations in the country?
We are committed and we believe in the prospects for Tanzania in terms of growth. When you look at East Africa, one of the best performing markets is actually Tanzania in fundamental areas: GDP growth, inflation, stability of exchange rates and interest rates.
However, what we did was to rebalance our portfolio by assessing our priority areas and where we can make the most impact. We will only do business where we believe there is scale and scope. I have no doubt that there are enough banks active to support the retail business in Tanzania.
How would exiting retail banking impact your revenue?
When it comes to contribution of the topline and bottom-line, the commercial, corporate and institutional banking (CCIB) contributes about 86 percent of the topline of the revenues of the bank, and the balance is contributed by the retail.
When it comes to the bottom-line, the CCIB contributes even a bigger share, close to 97 percent. It’s not that the retail business loses us money, but we decided that we can do a lot more by concentrating on what we do very well.
Now, there’s a lot of talk about this exit, but the underlying principle in terms of who we will choose to partner with or to sell the retail portfolio, our objective is to ensure that we’ve got the best outcomes for our clients.
This includes; what kind of proposition and capabilities does the bidder have for our people? Will they be taking the retail staff and what kind of packages will they be given? Those are the top considerations. But also, whoever we want to sell the portfolio to has got to be approved by the Central Bank.
So, there’s not going to be any job losses in this transition?
No. Our record in the market is that we always deliver more than what the law requires us to in terms of the treatment of our people. Even when we have to exit staff, we treat them with dignity. We train our people in order to make them ready to take up opportunities that may be available in the market in the future.
How long will this transition take until it is wrapped up?
I cannot give dates at this point in time. The progress is very good on our side, internally. But remember, we have a key stakeholder that we work with, and that is the BoT. They’ve communicated with us in terms of imperatives, and there are certain boxes that we have to tick.
Are there any banks that have shown interest in taking up your retail business?
There are bidders. There are people who have shown interest. But I think it’s still early in the day, so we should give it time, and at the appropriate stage we will go to the market.
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