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DIALOGUE: Inside the Financial Mind
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Interview with Craig Bond, Chief Executive, Standard Bank China and ICBC Strategic Partnership
 
altStandard Bank is Africa’s largest bank with a history dating back 150 years. Also proud to be an African bank with a strong presence in 18 African countries, Standard Bank’s focus is connecting BRICS countries and facilitating cross border trade and investment banking transactions between them.
At the centre of the bank’s China operations and its strategic partnership with the world’s largest bank, ICBC, is Chief Executive, Craig Bond. Craig’s resume is an impressive read. Completed his schooling in Johannesburg in 1978, he obtained a Bachelor of Commerce, Bachelor of Law, and Higher Diploma in Tax Law degree. He later attended Harvard Business School to complete the Senior Executive Programme. His career history includes a number of important positions within the banking sector and elsewhere. Some of his previous posts include Managing Director of American Express Cards, Travel and Foreign Exchange Services; Managing Director of Tourvest, Africa’s largest tourism company; Chairman of Mastercard (Asia, Middle East, and Africa Region), and Chief Executive of Standard Bank Africa. In his current role, Craig runs Standard Bank’s operations in China.

Where is Standard Bank operating at the moment?

We are an emerging markets focused retail and investment banking group . We have universal banks in 18 African countries, significant operations in Asia, and a presence in key capital markets like London, New York, Dubai, and Hong Kong where capital and liquidity for emerging markets are sourced. We are absolutely focused on the BRICS and select emerging markets, and so you won’t see us pitching for business in the developed markets of Europe, the US., or Japan.
 

Where does Standard Bank fit into the Chinese financial sector?

Our role in China is a fairly unique one. We help private Chinese companies and State Owned Enterprises (SOE’s), to source, invest in, and fund large assets and projects in foreign markets. Our clients ask us, “are there good value assets to acquire or projects to pursue in Africa, Russia or Brazil?” Then we investigate and package opportunities, develop solutions, broker deals, and raise the capital required. Standard Bank is thus a partner, rather than a competitor to Chinese banks, as we assist their large Chinese clients to ‘go out’ and invest abroad. ICBC (Industrial and Commercial Bank of China) is our main strategic partner and our group’s biggest shareholder with a 20.1% stake.
 
 

What are your main responsibilities?

My day job is running Standard Bank’s operations in China. This includes our investment banking advisory business in Beijing, and our commodities trading business in Shanghai. I also work very closely with ICBC, but in truth my primary role is to ensure our Beijing, Shanghai, and Hong Kong teams are connected to our teams in Africa, London, Dubai, and New York to source and close unique cross-border opportunities with Chinese investors and contractors.
 

What kind of investments is Standard Bank involved in?

Standard Bank specialises in three major sectors: Mining and Minerals, Oil and Gas, and Power and Infrastructure. Most of our customers are Chinese state owned enterprises looking to invest in other BRIC nations (Brazil, Russia, India, and China). We also do many deals across Africa. In fact, we just facilitated the largest mining deal in Africa for 2011-2012. We acted as advisor in the acquisition by Jinchuan Group of Metorex, a large African copper mining company. The deal was worth ZAR 9.1 billion. Our role is to source opportunities, help Chinese clients understand local markets and risks, raise capital, develop risk mitigation strategies, and then hopefully close the deals. alt
 

China now has a much greater amount of capital. How does Standard Bank help it utilise this new financial capability?



We do many things in this regard. We serve as advisors to Chinese SOE’s, multinational corporations, African governments, and Central Banks in order to make deals happen. We take Chinese investors to Africa and BRIC countries to show them the kind of assets that are available. These include mining and energy assets and large infrastructure projects, for example. We help them to understand the processes and risks involved with operating in these markets, and help them structure and manage the risks of large financial transactions. In one such deal we worked with the Botswana Power Company, ICBC, the World Bank, and contractor CNEEC (Chinese National Electrical Engineering Company) to finance and build a new power station in Botswana. It’s not only about resources and infrastructure, we are also very involved in agricultural finance. Ghana is the world’s largest producer of coco beans. Every year the farmers of this massive crop need to be funded, and so for the past few years we, have worked with a syndicate of Chinese and International banks to fund this annual crop.
 
This is a unique and exciting time for Chinese investors. We hope to encourage the use of China’s large foreign capital reserves to find good investment opportunities that will help other nations develop their infrastructure and their economies. In Africa, the first wave of investment was infrastructure: roads, rail, bridges, dams, and airports; the next wave looks to be renewable energy, and hopefully the third wave will be manufacturing. This is not one-way traffic. China needs Africa for its resources and new consumer markets, whilst Africa needs China for its capital, infrastructure, and engineering skills. I see continued potential for the development of a win-win relationship going forward.
 

With increasing globalisation, how important is the Bank’s image as a South African brand? Does this give the company any advantages in emerging markets?


That’s an interesting question. We don’t consider ourselves to be a South African bank; we are really a pan-African Bank. It is great that our brand is regarded as being ‘the most trusted’ and that it is gaining stature in Africa, China, and abroad. We are very proud of the reputation we have developed. Our history and legacy is a very important part of our culture.
 
There are many unique things about South Africa. As a result of years of isolation during the Apartheid era, a very innovative and self sufficient national culture developed. Apart from the world’s first heart transplant, the world’s first coal to oil technology, and many other innovations , a very sophisticated financial sector developed including our capital and equity markets and banking systems and technology. I think another very positive benefit of being a South African bank is that we are very multicultural. Due to our difficult history, we are used to encountering racial and cultural challenges, seeking strength out of diversity, overcoming racial and cultural barriers, and this helps us to integrate and operate successfully in difficult foreign markets.
 

Many people around the world have blamed investment banks for the global financial crisis. What are your views on that?


altThis is a complex topic. I personally believe that the economic cycle has much to do with our current difficulties in the world economy. Prior to the financial crisis, we had been through 15 years of boom around the world, and at some point the world economies had to cool down, deleverage, and rebalance. The sub-prime mortgage situation in the U.S, and the way investment banks and hedge funds packaged and sold those assets, undoubtedly had a role to play in the eventual meltdown. The financial products got far too complicated. However, I still believe much of what happened was simply a highly leveraged world needing to rebalance itself to regain equilibrium. It’s a difficult time to be a banker because it is so easy to blame bankers for the financial crisis, and in many instances we’re an easy scapegoat for politicians who are keen to avoid blame. 
 
In reality, good banks will always survive and play a positive and important role in facilitating improvements in economies and people’s quality of life. Correctly managed, banks have a very positive role to play in society and facilitating economic growth. People need to have faith because the current situation will eventually give greater balance to the global economy. The rebalancing is taking time but I believe that the world’s troubled economies will indeed bounce back, even though it will take longer than most people had hoped or expected.
 

Do you think there needs to be more regulating of financial sectors to prevent this kind of crisis in the future?

The short answer is yes. There needs to be more of the right kind of regulation, more transparency, and more scrutiny of the complicated financial systems and product we see today. Every week, there are stories of money being lost by rogue traders or poor risk management systems. Personally, I believe regulations should be aimed at making banks go back to basics, helping provide finance and safe investment products to individuals, companies, and governments. We ought to be working to provide the capital and liquidity required to help companies and economies grow, create jobs, and stimulate jobs and innovation. 
 

What were your bank’s aims at the 2012 China Global Outbound Investment Summit?alt

In terms of the summit, we wanted to get the message out that there are many fantastic investment opportunities in some parts of the world that people wouldn’t usually consider. We want to tell Chinese investors that there are great opportunities in many African countries. There are many African countries which have increasingly stable democratic societies, good institutions, solid economic foundations, a willing and able low cost work force, and in many instances resource rich geographies. Investing in these opportunities has the potential for excellent returns.
 

What does Africa’s economic future look like?

Africa’s population is growing fast with a very young urbanising population. Coupled with the growing affluence and sophistication of Africans, I have no doubt that Africa will become an increasingly important consumer market. I often liken Africa to China 30 years ago, where infrastructure was poor, education was lacking. and resources were not very abundant. One major difference is that Africa has huge untapped natural resources to fund the required infrastructure refresh required. Africa also has a young population which is great for labour markets and economic growth. The weather and rainfall over much of Africa is very good for agricultural production, urbanisation is rapid, and the continent already has some of the world’s fastest growing economies. It’s very hard not to be optimistic long-term, but there are likely to be some challenges and bumps in the road. Good investment opportunities are abound in Africa, but investors will need to do their homework, understand their risks, and seek good advisors before taking the plunge.
 

Photo by Meng Yu 
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