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Moroccan bank plans to expand

Wednesday, Nov 21, 2007

Morocco's Banque Marocaine du Commerce Exterieur will unveil plans in London on Wednesday to extend its reach across sub-Saharan Africa through its newly created subsidiary investment bank, MediCapital.

The logical expansion route for the Moroccan banking industry is south, said Othman Benjelloun, BMCE chairman, who has helped revive the industry following BMCE 's 1995 privatisation.

He told the FT the bank would meet intensifying regional competition from South African and Nigerian banks, as well as competition from global investment banks seeking to capitalise on Africa's improved economic performance and average growth rate of 6 per cent.

Outside South Africa, most investment banking activity has been concentrated on countries with more developed capital markets such as Nigeria, Kenya, Ghana and Zambia.

MediCapital would initially focus on French-speaking Africa. But the group plans to open four branches a year over the next decade to give it reach across the continent, where Mr Benjelloun believes the combination of booming commodity prices and demand for infrastructure as well as banking and insurance services could provide years of growth.

The investment bank was registered in London under the Financial Services Authority earlier this year and is opening offices in Madrid, Paris, Dubai and Hong Kong, from where it hopes to tap into new international appetite for African risk.

Earlier this year, BMCE bought a 35 per cent stake in the Mali-based Bank of Africa, with an option to expand this to a controlling stake in 2009. This gave it access to 11 countries in west, central and east Africa, in addition to the four where it is already present.

MediCapital branches will be linked to their parent bank as well as created separately in other markets including, for example, the Democratic Republic of Congo, where there is no investment bank to date.

"Even in small countries like Benin and Burkina Faso there is a need for an investment bank, not only to give advice but also to make things happen," Eric Aouani, MediCapital's chief executive, said. The need for staff on the ground was driven, he added, by the advantage this gave in sourcing deals as well as by the paucity of information on African companies.

BMCE played the lead role recently in structuring financing for an international airport outside Senegal's capital Dakar, overcoming donor concerns about the country contracting new debt by introducing a levy on airfares to guarantee repayment of a 220m ($325m, GBP157m) loan.

MediCapital was working on a similar deal to finance a new airport in Gabon, as well as a number of power projects scattered around west Africa. The bank seeks to capitalise on what it sees as a gap in the market for projects with a value of between $50m and $200m.

"Below $50m you get local banks working. Above there are the big international players. But there's a hole in the middle," Mr Aouani said.

William Wallis in London

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