Career corporate banker-turned-corporate treasurer, Mohamed Al-Afif, shares his insights.
In my current role as Group Treasurer al Al-Gihaz Holding, I manage the overall relationships with key banking partners and take a lead role in debt facility negotiations with lending institutions. Having spent almost six years as a corporate banker, this has a number of advantages. We speak the same language, which can shortcut lengthy negotiations or potential limitations. It has also made me more conscious of managing my demands, as I am wary of what qualifies as an over demand or an under demand, and I can manage accordingly. Lastly, as is the case in most industries, network is very important. When I came to corporate treasury my banking networks quickly became a key component of my success. Knowing exactly who to call enables the short-cutting of any bureaucracy and the hassle of being passed around departments.
For me, there are two fundamentals and then there are the differentiating factors, which are vital for banks in this competitive marketplace.
The first fundamental component in choosing a banking partner is to consider the viability of a long-term partnership. This incorporates a number of components - how strong is the bank’s balance sheet? Are they diversified across different territories to enable sufficient support of multinational operations? How technology savvy are they in terms of online services and technology applications? Selecting a bank takes time; it is not a process you want to repeat regularly due to poor selection at the start.
Secondly, consider the strength of the relationship with senior bank management. A solid relationship accelerates any escalation and approval processes. This is especially the case when it comes to complicated areas of project finance and syndicate loans, where any approvals in terms of acceptance and rollovers will be made at the senior level.
In this competitive environment, banks need to be able to differentiate themselves from one another. A challenge that I find many Middle Eastern corporates face, is being offered mechanisms that are fit for other geographical territories, which is not the right approach. What we’re frequently seeing is banks applying a one-size-fits all banking solution. Each market has unique characteristics, so a bank needs to really listen to their corporate clients, to understand their specific needs. Having said this, banks need to conduct their own market research before launching a product in a specific geography. Doing a soft launch with a handful of preferred clients is the favourable approach, allowing banks to incorporate any feedback received prior to an official launch.
In addition to standard services and solutions, advisory is another area where banks can add real value. Banks are often one of the most exposed functions to the economy, which enables them to see where the risks and opportunities lie. Delivering such information is key to the corporate treasurers’ decision-making toolkit. The more of an advisory role the bank can play, the more the relationship becomes a partnership, and that is beneficial to everybody.
You can hear more of Mohamed Al-Afif, Group Treasurer, Al-Gihaz Holding at the ACT Middle East Annual Conference
