Price: We Understand Our Customers’ Interests and Help Structure The Right Products to Support Their Businesses

Standard Chartered Bank’s Regional Head of Financial Markets for Africa and the Middle East, Mark Price, in this interview with Eromosele Abiodun speaks on the complexities of the financial market and global economic growth. He also explores how Nigeria can attract portfolio investments to grow the Nation’s economy.

You lead the Financial Markets business in one of the world’s biggest emerging markets. What was the journey like before you joined Standard Chartered Bank?

Before I joined Standard Chartered Bank, I had been to about 50 countries worldwide. I lived most of my life in the United Kingdom, worked in Sydney, New York, Singapore and Dubai. The vast experience and viewpoints that I garnered from all those years and locations have played a massive part in my role in Standard Chartered Bank.

Standard Chartered Bank reported its highest operating profit since 2015 in Africa and the Middle East region. How did the company achieve such a remarkable feat?

Our record financial performance also establishes the progress made in the execution of our strategy. That record shows the hard work, commitment, and continued cost discipline of the good people of Standard Chartered Bank. This has ensured that investments continue through the cycle.

There has been global inflation. How do you think that is playing out for the Nigerian economy?

Inflation is quite interesting because I think it impacts countries differently based on the drivers of the economy. Nigeria is an oil-based economy. The increase in oil price has been a significant driver of inflation in oil-importing countries Oil. But you would imagine that the case would be different in Nigeria because of the production here. However, we are not necessarily seeing all the benefits with the rise of the price flow through the Nigerian economy. The Central Bank is doing its best to tame the inflation effects, and we hope they can see so that there is an ease of pressure from the Nigerian economy.

We also observed massive contraction of GDP activity in almost all countries in 2020. Thankfully, we saw a bounce back in 2021. We are hopeful to see that continue throughout 2022.

I will like you to talk about portfolio investment. How can a country like Nigeria attract portfolio investments?

A few things make attracting investments difficult in terms of the mechanics of the investment. There are good places to put money to work in Nigeria. There are good yields to be earned and reasonable access to buy. My concern is what we have seen in terms of the reduced inflows. So, a prospective investor’s concerns are not about “How can I get my money in?” but “How do I get my money out, and how long will that take?” That space is more beneficial to longer-term investors. And that perhaps narrows the fields of people that want to invest for the amount of money that comes in.

Also, the CBN is more focused on making dollars available to the domestic economy, and they have done quite well in making dollars available to those who want to repatriate. However, there has to be a balance at this point because portfolio investors have to wait a bit longer, so whatever they have made in terms of returns gets eroded. Potential foreign investors will have to weigh all the possible scenarios that will look negative, so coming into Nigeria, for now, is possibly not happening. There are surely structural impediments that need to be straightened out.

What role does interest rate play in attracting portfolio investments and unlocking interest rates?

Interest rate means returns on investments. A high-interest rate means that there are higher yields and higher remuneration. When you have high-interest rates, you see currency depreciation; a mathematical formula links those two things. In a free-flow exchange rate environment, there will be arbitrage potentials, which means you can earn 10 per cent in interest rates beyond depreciation in your currency. However, in a more controlled exchange rate environment, control mechanisms are at play, which is very attractive to potential investors.

Do you think the current external conditions are favourable for Nigeria to access the Eurobond?

At the moment, all new issue bond markets are struggling. Many other capital markets worldwide are under pressure, particularly with what is happening with Russia and Ukraine. So, it is currently not easy to raise money except in certain places worldwide. I guess it is why Nigeria announced a change of plans for the Eurobond. They understand that the high-interest rates will accrue a significant debt burden for the country at this point.

How is Standard Chartered Bank committed to promoting sustainable financing?

Standard Chartered Bank is a leading sustainable finance bank in the world. We have three broad commitments. The first is reaching net zero as a bank by 2030 and helping our customers get there by 2050. The second commitment is lifting participation and financial inclusion in the emerging markets by raising financial literacy or access to financial products. We have made tremendous progress broadening participation and financial inclusion across the under-banked communities where we operate in Africa and the Middle East. We have done lots of work already around digital banking, making free banking available to a much broader population as long as they have a small phone. We have also done a lot of what we call ‘Resetting Globalization’ to help improve trade flows around the globe, and we have seen many new trade corridors open in the last ten years. There is also a lot of work internally around the carbon footprint of our building. We are aiming to be carbon neutral negative by 2030 as a bank. There are also actions regarding the investments we have been structuring with partners in the public and private sectors.

The CCIB section of your bank plays a crucial role in corporate and large organisations. Kindly share how that works.

The bank’s CCIB (Corporate, Commercial and Institutional Banking) part is meant to cover corporates. By that, we mean large global corporates and multinationals and what we term the international corporates and the big domestic players, and our institutional plans like sovereign funds, the significant money funds. Standard Chartered Bank is very corporate and institutionally focused. That helps us connect the people who typically need money with the people who have money. Whatever the side, capital raising, financing, or risk-taking, we sit there as the partner that helps balance the equation. The intent is to ensure that we have a very healthy corporate handling institutional franchise. We understand our customers’ interests and help structure the right products to support their businesses. We ultimately help them get to the next level.