ESGs - specifically climate "critically important" to Absa Seychelles, says group CEO

Absa Group CEO Arrie Rautenbach. (Absa Bank Seychelles) 

A high-level delegation from Absa Group visited Seychelles and met with Seychelles' President Wavel Ramkalawan last week, as well as executives of Absa Bank Seychelles, which was previously part of the Barclays Bank group, one of the oldest banks to operate in the island nation.

SNA met with Absa Group CEO Arrie Rautenbach and the managing director of Absa Bank Seychelles, Nazim Mahmood, to talk about the transition of the brand from Barclays, the progress the bank has made as a group in Africa, and locally, as well as its plans for Seychelles for the future.

SNA: Can you give us an explanation of the change from Barclays to Absa? 

AR: It is important to understand that Barclays made the decision to exit the African markets completely in 2016. The Absa group at that time was a division of Barclays and they held about 60- 63 percent of the shareholdings in our bank at the time.

Our bank was listed as and is still listed on the Johannesburg Stock Exchange. As part of that process, we have agreed both the settlement amount and a settlement time period to completely separate from Barclays. That was a three-year period so it is safe to say that the separation process was done successfully – within the time period and within the budget. This means that today Barclays has got zero shareholding in our organisation and zero involvement in our organisation.

Part of that separation agreement was to re-brand away from Barclays. In South Africa, we were always Absa but in our markets outside South Africa – on the continents and on the islands – we were obviously trading under Barclays. Between 2019 and 2022, we re-branded all our businesses on the continent to Absa, so we now have a single brand, the Absa brand – with zero Barclays involvement.

Absa Bank Seychelles celebrated its first trading day in February 2020 after 60 years of operating as Barclays Bank Seychelles. (Seychelles Nation) Photo License: CC-BY

SNA: Since COVID hit, the economies have been hit as well. How is Absa coping with that change and has it improved in the last two years?

AR: I think what's important is that, firstly, Absa is a pan-African bank. We've got presence in 12 markets directly and then we've got representative offices in some other markets across the continent – including an office in New York and an office in London.

So, when we talk about how we've changed and how we've coped with COVID, I think that every market has been disrupted in a different way by COVID. I think as a group we've managed the COVID setback very well and in fact we took a very strong position to ensure that we stay very close to our clients throughout the COVID period.

So, we embarked on an African programme of ensuring that we look after our customers and provide them with support as our customers went through COVID distress. I think in hindsight this was exactly the right decision to make and this is the core part of our value proposition as a bank. We're very close to our customers, build long term relationships with our customers.

So, it is safe to say we've come through the COVID period with very strong capital positions, very strong liquidity positions and a stronger presence in all our markets, because of the position we have taken. We have decided to stay very close to our customers and that of course has brought us significant goodwill, but I think it's what the brand stands for.

In the last year since I have taken over as CEO, we have recommitted to our strategy of being a pan-African bank. What that means is a very important change in our organisation. Previously, we were viewed as a South African business but had branches in different markets like Seychelles for example. But we were deliberate in saying we want to change that to be known as a pan-African business, which means every market for us is equally important, including the Seychelles.

The fact that it's a smaller market doesn't matter for us because we've got a long track record in this market and we wanted to be relevant in every market that we operate. Our position post-COVID is very strong and that position is strengthened in all our markets because of the fact that we re-branded to Absa pre-COVID, but we want to make sure that our presence is sustainable in every market that we operate in.

SNA: You mentioned that you want to be close to the market, does that mean that you have already identified areas where you believe you will be investing?

AR: When we say we are a pan-African business, first and foremost is that if you look at our group make-up. South Africa is our dominant market traditionally. What we are saying is over time we want that contribution from outside South Africa to get bigger. It means that we want to invest in our African markets that we are in today to ensure that these presences hold the number one or number two position in every market that we operate in. There's plenty of opportunities for every business, including the Seychelles, to grow and we've got capital available for them to grow so that we re-balance the group in terms of the contributions we get from outside South Africa versus the contribution we get in South Africa. So, our first priority is to invest in the market that we are in and I think that is the focus for now.

SNA: Are there specific areas in Seychelles you think would be interesting for your bank?

AR: In Seychelles, there are a couple of areas. But I can tell you at a group level the thematics that are important and flow through very strongly to the Seychelles business. Firstly, for us the ESGs [environmental, social and governance factors] and specifically climate is critically important. It is one of the signature areas we want to focus on from the ESG perspective and in fact, in South Africa, we are the leading financier of renewable energy. That's a strong link back to Seychelles.

In fact, across all our markets, when you look at ESGs, it's very important that we look at the climate mitigation but we do it in such a way that it's supportive of the communities that we operate in. So, if it is going to work for Seychelles, you must know when you manage that transition.

Another part of our group strategy apart from ensuring that we get a bigger contribution from Africa is digitisation and how we digitise our services and our products to our clients. In fact, what we've seen is that in our Seychelles business they are actually leading in a number of these elements from the African and continental perspective and from here it moves into other markets.

I think the other area that is particularly important is financial inclusion and how do we ensure that we get more people to participate in banking and in the economy, and digitisation allows us to do that. The final element that I want to finish from my side is just how we look at developing talent and ensuring that talent is moving across our business because we are in so many markets.

We want to focus strongly on ensuring that we create mobility across these markets so that talent from Seychelles can grow in other markets and come back into the Seychelles market and vice versa. When I met the team, I met a number of colleagues who are here from other markets learning from Seychelles. In some of our markets like Zambia, for example, our chief credit officer is a Seychellois. So, what's important for us is to develop the talent and do it across the continent and I think Seychelles has a fantastic opportunity to do that.

Because we have been in Seychelles for such a long time, we are committed to this market as a group. We certainly, through our local team here, with their board support, believe we can participate in some of the government's initiatives that they are planning to grow the economy and be part of that, be part of that growth.

Managing director of Absa Bank Seychelles, Nazim Mahmood. (Absa Bank Seychelles) Photo License: CC-BY

SNA: What sectors do you want to focus on in Seychelles?

NM: We're involved in multiple sectors and at this stage we are evaluating a number of projects. We're also evaluating these projects through the Ministry of Finance. What we want to do is to go down to the grassroots level and become involved in projects which are there for the development of Seychelles for the long run.

On the digitisation side, we have made a significant effort and we've recently launched "buy now pay later" on the [credit] card side. The digitisation agenda for us is top of my mind and it's important for us to be at the cutting edge of that. I think it's important that we keep the government's agenda, which is of digitisation... to move away from cash payments and, therefore, aligning ourselves to that objective and our capability level.

SNA: You mentioned that you are fully capitalised, one of the things with banks in the country is the high interest loans. Is that an area Absa is thinking of visiting in the future? 

NM:  The interest rates are a reflection of what the economic landscape is. When we talk about the lending landscape here, our loans in the commercial space are anywhere between 10 and 12 percent and the retail space are anywhere between 14 and 15 percent and that is a reflection of the landscape here. From our perspective whenever we get to launch a product we always go through pricing and consideration but we also go through from the Central Bank perspective, being our regulator in the country, and all of this actually happens from a competitive market space perspective.

So, we never look at interest rates in isolation, otherwise you always think that you are paying a lot more but if you look at the cost of capital, you look at delinquencies in the market and the minimum return that you are looking at which is commensurate to this market, that's how we actually arrive at it.  We feel that it's important to look at it from that perspective and then it makes sense across the board. 

Absa has sponsored the young players of the Rovers Football Club. (Seychelles Nation) Photo License: CC-BY

SNA. Your predecessor, Barclays, used to play a huge role in the community, they would sponsor sporting events and other things. Is that an avenue Absa is willing to go down?

NM: Actually, we have revamped a significant part of our strategy around sponsorship, marketing. We're seeing additional events coming through on the youth side and we are actually sponsoring the Regatta event.

If you recall, in previous years we have sponsored the young players of the Rovers Football Club, and this year we have sponsored other small ones along the way because we feel that if we go with just one it might not be enough and this is a small community. We are the principal sponsors of the Absa Mug then we have the golf McQueen Cup.