Morocco is a North African country, following a constitutional monarchy system and holding a population of 34,859,364 as of July 2009. Morocco is part of many international organisations and as a relatively stable country politically and economically, it has great ambitions towards modernising its sectors to be up to the international levels as well as developing its people's standards of living.
Having suffered from agricultural dependency for many decades, the Moroccan economy is recently responding positively to government efforts to diversify it. Indeed, it had achieved a $137.9 billion GDP in 2008 out of which 54.1% is coming from the services sector, while agricultural contribution has been regressing to reach 15.7%. In its willingness to develop its economy, Morocco does not hesitate before signing international conventions related to modernisation of sectors and free trade. Under the guidance of World Bank and IMF, it has initiated many reforms in order to reduce poverty and unemployment, and improve the different infrastructures required to attract more investments. However, although Morocco's imports/exports partners are restricted to geographical neighbours, an increase in exports has been recorded in recent years since the merchandise no longer depends on natural resources, but includes a large proportion of semi-manufactured goods as well as services, mainly tourism.
This report will attempt to explore an industry that represents a pillar of any economy - the banking sector, and will analyse how the creation of Attijari-Wafabank has impacted on it during the recent years.
THE BANKING SECTOR IN MOROCCO
Definition of banking
Banking refers to the industry of keeping money for savings and checking accounts or for exchange or for issuing loans and credit.
Banks typically have two basic roles: payment and collection of money. First of all, they are considered as payment agents since they issue banknotes, run customers' checking or current accounts, allow cheques' cashing, i.e. exchanging them for the amount of money they are worth, as well as transferring money to another person or place. Second, as a money borrower, banks collect funds through customers' current accounts, term deposits as well as debt securities release. This money serves to offer different types of loans, advances on current accounts…etc. However, banks always consider reserves of cash in order to maintain certain equilibrium of inflows and outflows and be ready for any unexpected events.
Banks clients could be individuals, professional businesses, or governments. Banks' commercial role expands their functions to involve currency exchange, brokerage, insurance, unit trusts, financial advice and so forth.
Banks micro environment in Morocco
Morocco's banking sector is practically well developed and modern. The banking system is constituted of the Central Bank (Bank al Maghreb), 18 commercial banks (partially owned by or working in partnership with European banks such as BNP Paribas), several development banks, and 36 financing companies. Seven banks control the market and the principal actor is the Banque Populaire's network, followed by Attijariwafabank, the BNPE and banks controlled mainly by foreign shareholders, including the BMCI (a subsidiary of BNP-Paribas) and the Credit du Maroc (a subsidiary of the Crédit Lyonnais-Crédit Agricole Group).
Operating since 1959, Bank al Maghrib is both a central bank and an issuing bank. Indeed, its role includes the supervision of banks and financial institutions in terms of credit distribution, and actively advises the government in relevant matters. In addition to the central bank, there are specialized bodies that finance different economic areas that are of interest to the country, and are either public or semi-public. These include:
The National Bank of Economic Development (Banque Nationale Pour le Developpement Economique - BNDE).
The Moroccan Fund for Markets (Caisse Marocaine des Marches (CMM).
The National Fund for Agricultural Credit (Caisse Nationale de Credit Agricole - CNCA).
The Central Guarantee Fund (Caisse Centrale de Garantie - CCG).
The Fund for Management and Deposit (Caisse de Depôts & de Gestion - CDG) which is predominantly active in real estate and tourism, funding public interest projects and other small initiatives.
The Property and Hotel Credit (Credit Immobilier & Hotelier - CIH).
Moreover, in terms of investment institutions, over 20 insurance companies are present in Morocco and are also under specific regulations to specify the range for the percentage of funds to be invested depending on the sector or the instruments utilized.
Morocco is primarily a cash economy; however, the use of debit and credit cards has been recently increasing. As a matter of fact, in addition to retail chains and petrol stations, more and more stores are accepting payments by debit cards. This allowed banks to develop this non-traditional method of payment along with cheques to better serve consumers and incite them to spend more.
Banks macro environment in Morocco
The Moroccan financial system has gone through several reforms since the 1990s with the aim of attracting foreign and domestic investment. With assistance from international bodies, the government is simplifying the investment process by reducing bureaucratic procedures and decentralising the whole process by forming regional investment centres.
Based on the three goals of restructuring capital markets, liberalising financial transactions, and reforming banks legal framework, several cumulative laws have been passed. Then a comprehensive financial sector law was designed to strengthen banking supervision and improve risk management practices in the banking sector.
Now, there is a unification of the legal framework governing credit institutions, entailing banks and financing companies. Moreover, three institutions have been created: the National Currency and Savings Council (CNME), the Credit Institutions Committee (CEC), and the Credit Institutions Committee (CDEC). Finally, depositors are protected by a set of measures as well as a deposit guarantee fund.
This is all done under the guidance of the IMF and the World Bank which are the two main players in the international monetary system. Their goal is to facilitate balanced growth of international trade, promote exchange stability and eliminate exchange restrictions, and to allow countries to correct payment imbalances.
BCM-WAFABANK MERGER
Before the merger
Belonging to a prominent holding (l'ONA), BCM has long been following a growth tactic involving the creation of more agencies without really working on its strategy. Its PLC was indeed in the end of the maturity phase, approaching the decline. At the same time, Wafabank, which was still in growth stage, was following an efficient strategy and projected to merge with another bank to form a greater entity. Threatened by such news, and in order to avoid strategic drift, the former decided to acquire Wafabank and benefit from the advantages of such deal in terms of negotiation power, economies of scale and R&D.
Economists and the press had in fact expected of this merger the creation of a significant power, the country's largest bank and potentially one of Africa's 5 most important banks. This will impact not only on a micro-economic level, but will for sure influence the macro-economy of Morocco and other countries.
In this context, the merger was officially announced on the 24th of November 2003 after the two owners had reached a mutually convenient agreement.
During the merger
Wafabank had the know-how in efficiency; BCM had the size and a strong IT infrastructure. That is how the foundation of the project was to reach synergy in terms of cost efficiency, integration in terms of technology and HR processes, as well as expand in terms of size to constitute a leader in the best practices. Hence, the common vision was to enable growth, encourage innovation, and improve on quality and quality of service; this implied an adoption of a strategic human resources management approach since the human factor is the most precious asset in service industries.
Moreover, HR policies had to be reviewed in order to get rid of job positions duplications, communication blockages as well as cultural conflicts.
After the merger
Once the challenge of the integration was overcome, the commercial dynamism had to be resumed in the most effective ways. The relevant programme was called Indimaj 2005 and aimed at regaining market share - which indeed went beyond 25% in the last couple of years.
Furthermore, as the BCM already had a large workforce, the acquisition made it reach its managerial capacity, creating significant cultural issues and operational inefficiencies. Nevertheless, the use of MIS (management information systems) was the key to allow more efficiency in the communication process between the two entities and facilitate decision making. And since information in our era represents power, information systems were used for strategic surveillance, keeping competitors under watch as well as market dynamics in order to be noticed of any upcoming changes or events which are directly or indirectly relevant to Attijariwafa Bank's scope. That is how they utilised benchmarking tools to learn from previous mistakes and be able to take action at the right, thus avoiding strategic drifts.
ATW CONTRIBUTION TO THE MOROCCAN ECONOMY
Continuously progressing figures within Morocco
In Morocco, the financing activities of AWB group have recorded an important evolution as of 2009. Such success is the result of the bank's solid positioning as well as a strategy adapted to its environment.
With a total savings of MAD 217.5 billion, AWB positioned itself as an unchallenged leader in this activity. Deposits have reached MAD 154.2 billion which is a slight 1.8% evolution in relation to 2008, allowing therefore a market share of 26.1%. Assets under management are worth MAD 55.3 billion, allowing a 29.6% market share. In terms of bank insurance, the Group is leading with its MAD 8 billion outstanding.
Moreover, AWB is the first loans distributor in Morocco, with MAD 44.1 billion in favour of households, and MAD 119.3 billion for enterprises. Also, it represents the first network of financial and banking services in Morocco thanks to its 1396 agencies.
AWB has also confirmed its leadership position along all its divisions of market activities and investment bank through a strategy that promotes innovation and anticipates customers' needs. The foreign exchange and bondholder activity added up a volume of transactions of MAD 508 billion as of December 2009. As for the activities related to strategic enterprise consulting, stock brokerage, asset management, custody and investment capital, the group asserted a leading position.
An accelerated international expansion
By the second semester of 2009, the Group Attijariwafa bank had finalized the acquisition of 4 subsidiaries of the French Group Crédit Agricole (Société Ivoirienne de Banque, Crédit du Senegal, l'Union Gabonaise de Banque and Crédit du Congo), thus consolidating its vocation of leading regional actor in the Maghreb and the sub-Saharan Africa, and as the regional economic vector for development.
In Tunisia, AWB has ended the year 2009 with a strong evolution of its outstandings and its results. Deposits reached MAD 16.87 billion, a growth of 16% in comparison to 2008. The Net Banking Income recorded an advancement of 16% with MAD 890 million, and the network now comprises 149 agencies.
Present in 4 out of the eight countries of West Africa, AWB's overall resources in this area reached MAD 15.62 billion, an increase of 13% in comparison to 2008. Owning 217 points of sale, AWB's aggregated Net Banking Income is increasing by 6% with MAD 1.47 billion.
In Central Africa, the newly acquired subsidiaries represent MAD 5.7 billion in terms of overall resources and MAD 2.94 billion in terms of disbursement credits.
In Europe, AWB's branch, which operates within 7 countries, is in an ongoing development process of its activities in these countries. It has in effect enriched its network with seven bank agencies, making a sum of 57 selling points.
CONCLUSION & RECOMMENDATIONS
Deregulation and raising competition allowed more diversification and innovation in the banking industry. This opened the door for financial institutions to be more competitive, more efficient and above all attractive and encouraging to investors, either locally or on in international scale. In this context, after the elimination of a number of monopolies, the restructuring and rehabilitation of financial institutions have focused on public sector banks (Banque Nationale de Développement Economique, Crédit Agricole du Maroc and Crédit Populaire du Maroc) aligning them with the private sector in order to nurture a more fertile micro environment for businesses to stimulate the market.
Attijariwafa Bank is a significant example of organisations that capitalised on their strengths and sought the right opportunities at the right time. It certainly represents a giant monster as described by the press which will be one of Morocco's significant drivers to effectively face globalisation and free trade pressures, and be up to the international standards in business. Not only did it prove itself domestically, it is now a regional leader with a significant weight on the international level.
Moreover, information being now the most valuable product, Morocco was plausibly aware of the necessity to adopt information technology on time. Indeed, it has a modern telecommunications infrastructure which is not only vital for the service industries but above all an imperative ingredient to attract FDI especially in the call-centres domain. In effect, Morocco has benefited from many early foreign investments in terms of technology transfer and has been encouraging education in such fields through the creation of specialised higher education schools as well as professional training centres. In recent years, e-government services emerged and a large proportion of public data digitalised; an initiative that encouraged also e-commerce and e-businesses.
However, the banking sector's adoption of new technology remains limited. Internet or online banking, as practiced in developed countries, is unfortunately not available in Morocco. In effect, customers have the possibility to sign up at most banks for an on-line service where bank balances can be checked by mobile phone, or computer. This implies a monthly fee, yet no transactions can be made yet over the internet.
If Attijariwafa Bank wants to maintain its leading position, it has to consider internet banking because it is the coming trend, especially that consumer practices are shifting nowadays. Both professionals and individuals are seeking time and cost efficiency, and the successful company is the one that builds upon its customers' needs to produce what will not only satisfy them, but go beyond delight.
SOURCES
http://www.morocco-today.info/finance_morocco.htm
http://www.propertyshowrooms.com/morocco/guide/banking-in-morocco.asp
http://www.animaweb.org/en/pays_maroc_financesbanques_en.php
http://www.expatfocus.com/index.php?name=Content&pid=927
http://en.wikipedia.org/wiki/Bank
http://www.english.globalarabnetwork.com/201004155497/Finance/morocco-based-attijariwafa-bank-ratings-reflect-a-very-strong-domestic-franchise.html
Press releases by Attijariwafa Bank
Internal communication documents
Interview with 2 employers of Attijariwafabank
http://www.thefreelibrary.com/MOROCCAN+BANKING+SECTOR-a062926847
http://www.casafree.com/modules/news/article.php?storyid=9222&com_mode=t read&com_order=1&com_id=138293&com_rootid=136955
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