BY VICTOR ADAR
Twenty years ago, big banks had a scorn for the lower market and one had to have a certain a mount of money to own a bank account. Banking was difficult especially going by the fact that it was necessary to have a stable source of income with some banks setting Sh20, 000 as a requirement while certain accounts were operated at minimum balances of Sh5, 000. The least that those who were furious could do was to keep their cash under the mattress.
People a breast with the banking sector thought that this lot that was targeting the top egg got the raw end of the deal especially when tier one banks like Equity and KCB probably saw a better market at the bottom of the pyramid and started serving the “unbanked.” As people removed cash from under their mattresses, sort of, and moved to banks they believed, aligned with their vision, big banks grew to a level where they had to stop and think big.
This resulted into bank minimum balances being slashed by various players, as accounts with low or no minimum balances were introduced partly as a strategy to attract and retain customers. To survive this change was no fun. Things were thick.
Jeremy Awori who is the managing director of Barclays Bank of Kenya came at this time when the road a head was opaque; the bank’s balance sheet was declining and the liabilities not growing. “Competitors were growing revenues and we were not growing those revenues,” he says.
“If you look at the half year results we are consistently in the double digits level assets growing in the excess of 15%. Our revenues have also grown northwards of 10%. So from being in a negative position we are now in double digits, and that has been the big differentiator between us and our competitors.”
Barclays is back, and if you thought that the financial institution is spreading itself too thin because of its expanding portfolio, think again. The bank is actually stealing the show big time, launching various wings from bancassurance to stock broking subsidiary and higher returns derivative. Actually, the rise of the Barclays is going down as the most successful one in the history of big banks verses tier one banks in Kenya during Awori’s tenure.
Mr Awori is proud of the transformation at Barclays and bringing the bank back to profitability. The businesses are entirely different, he says, adding that their insurance business, for example, is growing and is already paying for itself. And they not only offer financial solutions to retail, enterprise and corporate customers but also its regional and global footprint enables it to offer cutting edge financial solutions to its clients.
“It is an exciting business. Using technology and partnerships we’ve brought in a lean, effective team to grow this business. And we are encouraged that we have the resources. We are a strong, stable bank and we are committed to invest in businesses here. We don’t really see that as a risk in terms of spreading our selves too thin and if anything, we are able to invest in more areas as this business grow.”
It is as a result of progressive growth that Barclays Financial Services Limited (BFSL) which offers cash equity trading services, fixed income and bond trading and derivatives, was birthed. The new brokerage is also planning to launch Exchange Traded Funds (ETFs), working closely with the Capital Markets Authority and the Nairobi Securities Exchange under the new NSE rules. The Kenyan brokerage arm is set to bring a range of new investment products and services to the country’s vibrant financial market, and will also focus on institutional clients before later expanding the portfolio.
An investment bank licensed by the Capital Markets Authority and admitted as a trading participant of the NSE in 2015, BFSL is authorized to undertake brokerage activities in the NSE, something which is expected to inform the securities exchange drive to innovate African bourse. BFSL is actually poised to offer a key research portal, Barclays Live, providing a world class global research, indices, data and analytical tools, and clients sector-based research across agriculture, business services, commodities, financial institutions, global development organisations, healthcare manufacturing, transport and logistics.
“The initiatives that we have been investing in have been the ones which have been growing. So if we didn’t take those decisions we could still be falling, and what is exciting is that we are winning customers because of the portfolio product. People are now saying they need to come and bank with us, and I’m excited, we see many new customers coming in. I’m happy.”
Currently, Kenya is the third largest stock-market hub in Sub-Saharan Africa after the South African JSE and Nigeria’s SEC, but its move to ETFs is poised to make it an even more competitive investment hub. As a wholly bank-owned subsidiary, BFSL will stand on uniquely solid ground as a brokerage, with assured healthy corporate governance, as well as active foreign desks in nine other African markets; Botswana, Ghana, Mauritius, Mozambique, Seychelles, South Africa, Tanzania, Uganda and Zambia.
On the other hand, the financial giant have invested in Kenya’s bright minds who are also the future leaders, employers and entrepreneurs of this economic hub of Africa by supporting them, thanks to initiatives like the Mathare Youth Sports Association (MYSA) employability and work readiness Program. The bank also has a robust citizenship agenda that is anchored on youth empowerment and has spent a lot on programmes, which have helped transform the lives of thousands of youths across the country. But amid the good things are ups and downs.
“For me what is important is that we move forward. In any business, there are challenges and in challenges come opportunities. Interest rates law presents practical challenge but you can successfully grow by investing in other areas which are not interest rate related,” he says.
