19 May 2004
Changes in the consumer credit business began with the acquisition of Eqdom by the Groupe Societe Generale. A reform of the sector was bound to accelerate as the financial authorities and the central bank, Bank Al-Maghrib, issued new regulation emphasizing on more prudent practices.
The rules include handling the problem of refinancing consumer credit firms, which happen to favor credit firms that have established relationships with national banks and other sources of finance. Hence, the ongoing consolidation is more like a realignment of loan providers so as they become an integral part of the banking system, which would guarantee financing availability.
This alignment is critical indeed because consumer loan firms with links to banks perform better and are in safer position. In Morocco already a number of consumer loan firms have direct links to banks through various ownership structures. This is the case of Assalaf Chaabi linked to BP Bank, Eqdom with SGMB Bank, and the newly announced Wafasalaf-Credor with Attijari-Wafabank, Cetelem-BMCI Salaf with the banking group BMCI, and Salafin with Othman Benjelloun’s BMCE Bank. In comparison, other credit financing institutions appear much weaker and are more sensitive to changes in market and legislative conditions.
Companies like Acred, Diac Salaf, Diac Equipement and Somafic, although they have relations with insurance firm AXA Maroc, and Sofacred and Sofac Crédit with their relation with CDG, remain too small and too vulnerable given their lack of established relations with the nation’s largest banks. This is likely to change as these smaller entities are preparing to undergo mergers or acquisitions.
There is also a third group of ten consumer credit firms that are totally independent. Such private companies include Taslif, Fnac, Finacred, SalafMous, Sonac, Sorec Crédit, Dar Salaf and Salaf, and are either small entities with regional markets or niche specialists focusing on markets like auto loans. Because these ten companies are too small or too specialized, they do not have any major competitive advantage and thus, are likely to be absorbed to further strengthen the position of the majors.
With the Wafasalaf-Credor announcement, the consumer credit sector will have two dominant players, Eqdom with an estimated 28% market share and Wafasalaf-Crédor with up to 31%. These two will compete with mid-size entities represented by Assalaf Chaabi, Cetelem-BMCI Salaf and Sofac Credit and a multitude of small niche or regional players.
Despite the recent mergers and acquisitions, there is still room for more concentration in the Moroccan consumer credit business. Negotiations are underway and sources say the Caisse de Dépôt et de Gestion is currently planning another acquisition of a large entity to add to its already active Sofa-Crédit and Safacred subsidiaries.
The same company is reportedly talking to Taslif and Rabat-based FNAC to eventually purchase them. Other movements in the business are likely to shape the industry in the medium term. Once the restructuring of its Acred unit is completed, which will then be merged with Somafic, Axa Maroc is likely to focus its attention on a mega merger of these two units with two others under its control, Diac Salaf, Diac Equipement
These changes are occurring as Morocco continues to open its market to foreign companies. In the consumer credit business, the situation is further complicated by the presence of foreign competitors, namely Cétélem, Sofinco and Franfinance, requiring local companies to adjust.
Changes in the consumer credit business began with the acquisition of Eqdom by the Groupe Societe Generale. A reform of the sector was bound to accelerate as the financial authorities and the central bank, Bank Al-Maghrib, issued new regulation emphasizing on more prudent practices.
The rules include handling the problem of refinancing consumer credit firms, which happen to favor credit firms that have established relationships with national banks and other sources of finance. Hence, the ongoing consolidation is more like a realignment of loan providers so as they become an integral part of the banking system, which would guarantee financing availability.
This alignment is critical indeed because consumer loan firms with links to banks perform better and are in safer position. In Morocco already a number of consumer loan firms have direct links to banks through various ownership structures. This is the case of Assalaf Chaabi linked to BP Bank, Eqdom with SGMB Bank, and the newly announced Wafasalaf-Credor with Attijari-Wafabank, Cetelem-BMCI Salaf with the banking group BMCI, and Salafin with Othman Benjelloun’s BMCE Bank. In comparison, other credit financing institutions appear much weaker and are more sensitive to changes in market and legislative conditions.
Companies like Acred, Diac Salaf, Diac Equipement and Somafic, although they have relations with insurance firm AXA Maroc, and Sofacred and Sofac Crédit with their relation with CDG, remain too small and too vulnerable given their lack of established relations with the nation’s largest banks. This is likely to change as these smaller entities are preparing to undergo mergers or acquisitions.
There is also a third group of ten consumer credit firms that are totally independent. Such private companies include Taslif, Fnac, Finacred, SalafMous, Sonac, Sorec Crédit, Dar Salaf and Salaf, and are either small entities with regional markets or niche specialists focusing on markets like auto loans. Because these ten companies are too small or too specialized, they do not have any major competitive advantage and thus, are likely to be absorbed to further strengthen the position of the majors.
With the Wafasalaf-Credor announcement, the consumer credit sector will have two dominant players, Eqdom with an estimated 28% market share and Wafasalaf-Crédor with up to 31%. These two will compete with mid-size entities represented by Assalaf Chaabi, Cetelem-BMCI Salaf and Sofac Credit and a multitude of small niche or regional players.
Despite the recent mergers and acquisitions, there is still room for more concentration in the Moroccan consumer credit business. Negotiations are underway and sources say the Caisse de Dépôt et de Gestion is currently planning another acquisition of a large entity to add to its already active Sofa-Crédit and Safacred subsidiaries.
The same company is reportedly talking to Taslif and Rabat-based FNAC to eventually purchase them. Other movements in the business are likely to shape the industry in the medium term. Once the restructuring of its Acred unit is completed, which will then be merged with Somafic, Axa Maroc is likely to focus its attention on a mega merger of these two units with two others under its control, Diac Salaf, Diac Equipement
These changes are occurring as Morocco continues to open its market to foreign companies. In the consumer credit business, the situation is further complicated by the presence of foreign competitors, namely Cétélem, Sofinco and Franfinance, requiring local companies to adjust.
© The North Africa Journal 2004
