Interview with Jamie Simmonds, Chief Executive Officer and Managing Director at The Access Bank UK

The Access Bank’s DIFC branch delivered a profit and covered all of its direct running cost in 2017. What was the rationale behind setting up the Dubai branch and what are your expectations from it in 2019?

The decision to open an office in Dubai in 2015 was part of the international expansion strategy of the Bank to maximise the growing trade relations between the UAE and Africa, especially Nigeria, Africa’s largest economy, with the highest growth rate. Since the start of the millennium, Dubai has been an important global business hub and businesses have shown a natural affinity towards exploring growth avenues in Africa. The main reason behind us choosing the UAE to be our hub was down to its strong regulatory base. During the past three years we have established a strong presence in the country. Working in conjunction with our parent, we have been able to provide solutions for a lot of customers that were new to wanting to become involved in the African marketplace and in particular in Nigeria.

After covering our direct costs in 2017 and delivering strong growth in 2018, we now have the momentum to enable us to do what was always the intention in the first five years, which is to deliver really good relationship based services and innovative solutions for customers with trade flows between MENA and into Sub-Saharan Africa. We work on five year plan rotations and now have two years left in the current five year plan for Dubai. The focus on that is very much about trade finance. It is about making sure that we are a trusted partner.

We want our Branch in the UAE to follow the model that we have created in the UK, to support our customers that come to us with a trade finance requirement. We are utilising the UK resources to provide the liquidity to support with the development of businesses here in the UAE. What we anticipate is that we will see increasing deposit growth here as customers become familiar with us as their trade  finance transactions conclude and relationships develop, and this will in turn lead to a flow of liquidity. So I can confidently say that we will see a growing number of deposits from the region.

Moving forward, we will look at how we can innovate and expand the range of services that we offer to our customers here in the UAE, we have a private banking business based on a funds model that is managed in-house, and through our commercial banking business we provide support for property purchases in the UK either for buy to let or residential owner occupation purposes..

Our results demonstrate the ability to deliver sustainable performance built on the twin foundations of relationship management and a moderate risk appetite. The sustainable growth in the Bank’s financial and non- financial resources has also ensured we continue to be able to both meet and anticipate the needs of our customers

What have you learned from the Dubai branch? Did it perform better than expected? What were the sweet spots for the branch in 2018, and what challenges did you face?

As previously mentioned, when we first opened, what we wanted to do was to gradually build our presence by initially opening a representative office. The team did a really good job raising awareness of The Access Bank UK in the region which was our first key achievement.

Our second achievement was that we were able to build a strong customer base over the past two years whilst also obtaining  our branch license and providing our customers with finance solutions that support and grow their trade from Asia to Africa particularly Sub Saharan Africa through the Middle East.

Thirdly, we have managed to pioneer the trade finance from the region to West Africa, especially Nigeria. The bank has been able to leverage the brand recognition that we enjoy in its chosen markets to broaden our base of trade finance and commercial banking customers. The revival in the Nigerian economy driven by oil price recovery, strong potential for agricultural exports to the Middle East, infrastructure driven investment growth and consumption demand are expected to drive two-way trade volumes between the Middle East and Nigeria, lifting the scope for trade finance.

In 2017, The Access Bank UK grew its income year-on-year to 36 Million Sterling which is up about 44 per cent within those small elements. But the sweet spot for our branch was the GBP 671 thousand (AED 3.4 million) that we earned in Dubai in 2018, which covered our direct cost. This strong growth continued in 2018 with excellent result for both the UK and Dubai Branch this will be shown at the end of Q1 in our annual audited accounts.  We are very confident that these numbers will be comprehensively exceeded in 2019, as we have also now developed the momentum to enable us to do what was always the intention in the first 5 years; which is to deliver really good relationship based services and innovative solutions, enabling our customers to play a positive role in the trade flows between MENA region and into sub-Saharan Africa in particular Nigeria, in a way that gives them a good commercial return.

How do you find the UAE/Gulf/ME market and how does it compare to other international operations that you have?

With countries in the Middle East focused on diversifying their economies, the UAE is leading the way, serving as a global hub for trade worth $570 billion with Asia, Europe, Africa and the rest of the world, according to World Bank data.

With the region further opening up its domestic market access to foreign businesses over the past few years, Dubai is leading efforts in this development due to its infrastructure, which was ranked sixth globally, with high scores for its air, port and road infrastructure. Since 2014, Dubai International Airport has become one of the world’s busiest airports in terms of international passengers, with expanding connections, and the Jebel Ali Port as the region’s largest. The UAE has truly witnessed improvements in facilitating trade, recently easing its visa system for foreign investors in the country.

In terms of on-ground presence, the DIFC branch is our first international operation in the MENA region and we have a representative office based in Lagos. We are currently looking to expand into other areas of the world. In addition to that, Access Bank PLC has representative offices in Lebanon, India and China. Beyond the physical presence, our letters of credit are accepted internationally across different banks and we have established correspondent banking relationships with many major banks in different countries to provide our customers with a broader range of solutions.

Moreover, we were awarded Confirming Bank status by the International Finance Corporation as part of its Global Trade Finance Programme. Also, we were the first Nigerian Bank in the UK to be appointed as a correspondent bank by the Central Bank of Nigeria to undertake infrastructure work on behalf of the Nigerian government.

How do you see trade between Asia, Middle East and Africa and where does The Access Bank fit in?

With globalization growing supply chains and opening up new markets, trade between the Middle East and Asia is expected to grow. Both regions have been known to be the most vibrant for trade in the past decade, with world exports and trade between them growing substantially year-on-year.

In more recent years, the Middle East’s role as a strategic hub has increased in importance from China’s perspective when it comes to trade. This was highlighted post Chinese President Xi Jinping’s announcement to host a Belt and Road Summit (BRI) for international cooperation at last year’s World Economic Forum Annual Meeting in Davos. According to WAM, the UAE State Agency, bilateral trade was valued at nearly $53 billion in 2017, making the UAE, China’s second-largest Middle East trading partner after Saudi Arabia. Dubai’s Jebel Ali port provides a regional headquarters to more than 230 Chinese companies operating throughout the Middle East. The Chinese expatriate community in the UAE has grown to more than 200,000 from about 30,000 in 2006, with more than 4,000 Chinese businesses operating in the Emirates. This economic relationship, along with the UAE’s unparalleled regional infrastructure, makes it an attractive BRI hub for China. This truly reveals that a new global trade order, led by China and the Middle East, is developing, with investments from China through the UAE to the rest of the world rapidly increasing.

With the digital revolution heavily impacting global trade, new technologies are set to have a positive impact as they give way to new forms of connectivity between economies, especially among emerging markets, regional blocs and trade hubs across Asia and the Middle East.

Although the Middle East was faced with much political instability in recent years, the UAE and Saudi Arabia also control almost 53 percent of the total foreign trade of Arab countries in terms of goods and services. Notably, the combined real GDP of both countries has almost exceeded 46 percent of the real GDP of Arab countries between 2017 and 2018, compared to a 41 percent average for the previous period between 2000 and 2016.

Trade between the Middle East and Africa is also set to grow, with both regions known to have great economic potential in the future and trade representing a valuable source of income. The United Nations show that the total merchandise trade between Africa and the UAE increased from US$ 5.6 billion in 2005 to US$ 17.5 billion in 2014 (the latest year available).

Total trade during 2010-2014 between GCC and Africa grew by 195%. As a result, the GCC’s share of Africa’s total global trade has nearly doubled from 2.25% in 2010 to 5.31% in 2014.

According to Renaissance Capital Investment Bank, Nigeria has been identified as one of the top five countries for growth acceleration for 2018. Nigeria’s Gross Domestic Product (GDP) was worth US$ 375.77 billion in 2017 ranking in the top 35 in the world and it’s one of the fastest growing economies with US$ 30 Billion in national reserves, and by 2050, its population is expected to be bigger than that of the United States. This itself shows the untapped potential in Nigeria, which is now being explored by the entire world.

Recently, the Investment Corporation of Dubai has placed US$ 300 million in Dangote Cement of Nigeria, one of Africa’s fastest expanding companies, while Etihad bought a 40 per cent stake in Air Seychelles. Saudi Telecom Company (STC), holds 75 per cent stake in Cell C, one of South Africa’s telecom operators, while Rani Investment, which is based in the UAE, is one of the key investors in Mozambique’s tourism industry.

At The Access Bank UK-DIFC branch in the UAE, we believe in contributing to that economic growth and global trade, by offering a wide range of services to support business activities across various sectors in the region. As a licensed branch, the strategic and centrally located Access Bank UK DIFC Branch serves as a route for investors in the region to trade effortlessly from Asia to Africa. Armed with a strong purpose to offer complete support to our customers by moving closer to them, our DIFC Branch is committed to building a long-lasting relationship in the region.

Access Bank Plc is set to acquire Diamond Bank this year, creating Nigeria and Africa’s largest retail bank. What’s the rationale for the deal, and what’s the post-merger plan in a nutshell (I know that might be quite a big nutshell!).

The potential merger of Diamond bank PLC and Access Bank PLC will create Africa and Nigeria’s largest retail bank by customers. It will provide an exciting prospect for all stakeholders in both entities and will create a financial institution with the scale, strength and expertise to capitalise on the significant opportunities in Nigeria and Sub-Saharan Africa more broadly.

Access and Diamond Banks both have complementary operations and similar values, and a merger with Diamond, with its leadership in digital and mobile-led retail banking, could accelerate our strategy as a significant corporate and retail bank in Nigeria and a Pan-African financial services champion. The merger, once done, will obviously strengthen the trade relation of the Access Bank UK vis-a-vis international trades.

The completion of the transaction is still subject to formal regulatory and shareholder approvals.

How is trade between UAE and Nigeria and will the merger help facilitate more trade?

Over the last few years, the economic relationship between UAE and Africa has been strengthened significantly with local businesses taking advantage of the opportunities offered by Nigeria and Sub-Saharan Africa. The geographical proximity to this region has also paved the way for Nigeria and UAE to work together to build stronger ties with both economies.

In terms of an ideal investment destination, Nigeria offers many opportunities particularly in priority sectors such as agriculture, trade and ICT, which will fundamentally boost manufacturing in the coming decades, and the UAE is an excellent base to grow such a business relationship.

We at The Access Bank UK have observed several companies that trade regularly with Africa establishing their buying houses in the UAE to benefit from the tax environment and the advanced infrastructure that the country has to offer. Moreover, these companies can also take advantage of the UAE’s strategic location in the world, which serves as a route for investors in the region to trade effortlessly from Asia to Africa.

The biggest challenge faced by bankers and investors alike are the logistics of distribution and services, and the basic requirements that accompany it. Undoubtedly, there is a clear opportunity to develop this sector as it has not been fully explored in West Africa, which will change the face of the region once developed. This will include an authentic manufacturing base, and will offer a lot more opportunities for GCC investors. The World Bank has already shown great interest in this, which will produce potentially lucrative investment opportunities for all parties from within and outside the continent.

As logistics and financing have been identified as key challenges, The Access Bank UK helps finance the trade transactions of its customers to transfer their goods to and from Nigeria as smoothly as possible. Many traders are cautious purchasing goods, and completing payments etc. In some cases, traders are wary of exporting goods and not receiving the payment. The Access Bank UK verifies the legitimacy of all parties and the completion of documents for all legal purposes, while financing shipments of goods before arrival to facilitate and ease the cash flow of its customers.

With a licensed, fully-functional branch in the UAE, the centrally located Dubai office will serve as a route for investors in the region to trade effortlessly from Asia to Africa while also offering complete support to its customers by moving closer to them.

What’s next in the Middle East for Access Bank? Are there plans for more offices in the region or any other expansion?

Our office in DIFC- Dubai is our hub in the MENA. From here, we handle our customer-base in the whole region and cater to all of their needs. The reason why we chose Dubai was because of the strong regulatory base that we are particularly pleased about; the ease of its infrastructure, and the business friendly environment. The Dubai operation is growing its brand presence and business and customer base in a controlled and sustainable way and at present we have no plans to expand further within MENA.