Environment of Banking

International Strategy

A group as divers as South African Bank cannot be replicated in any one country. Therefore we have a ‘rifle shot’ approach to international expansion. We are a ‘Rand Specialist’ and we do not have a specific target for off-shore income which we wish to achieve. More importantly our off-shore strategy is driven at business unit level but prioritised and co-ordinated at the centre. Any proposed off-shore expansion must have a strategic fit with the business unit’s domestic strategy and the business unit expanding overseas must be able to demonstrate a substantial competitive advantage.

1. CHINA ANALYSIS

Growth of about 9.7 percent per annum since the late 1970s has helped to lift several hundred million people out of absolute poverty. China market orientated reforms over the last two decades also dramatically improved the dynamism of both the rural and urban economies and resulted in substantial improvements in human development indicators.

China’s 11th Five Year Plan (2005-2010)

· To achieve annual GDP growth of 7.5 percent
· To reduce energy consumption per unit of GDP by 20%

Strategic Priorities

· Rebalancing pattern of growth
· Deepening reforms and opening further to the outside world
· Increasing the capacity for independent innovation

2. Look at Conditions relating to Banking

· Integrate China into the world economy, reducing internal and external barriers to trade and investment
· Deepen financial intermediation by expanding access to financial services
· Improve public and market institutions by improving firm competitiveness

1. India ANALYSIS

With a population of 1.1 billion people, diverse regions and a vibrant democracy India has been making progress on a scale, size and pace that that is unprecedented in its own history. It has been successful on a number of fronts:

· Become one of the worlds fastest growing economies
· Emerged as a global player in technology
· Worlds fourth largest economy in purchasing power parity terms

Challenges that India face :

· Improving delivery of core Public Service
· Making growth more Inclusive
· Sustaining Growth

Look at Conditions relating to Banking

Finance – Financial products range from investment loans to government loans for small and medium enterprises
Investment Opportunities – Investing services can help individuals and firms explore foreign direct investment opportunities

Facilities for Small and Medium Enterprise – The International Finance Corporation offers various facilities to promote small business growth
Guarantees – Investment guarantees are available to commercial lenders

1. Russia ANALYSIS

Russia is a middle income country with a population of 143 million. Russia is a collection of diverse territories at different stages of development. Russia contains the greatest reserves of mineral resources of any country in the world.

Challenges ahead:

· Diversifying the economy
· Raising productivity growth
· Building human capital

Strategy:

· Sustaining rapid growth
· Improving public sector management
· Improving delivery of Social and Communal services
· Enhancing Russia’s Global role

Look at Conditions relating to Banking

Russia has succeeded in stabilising the financial system and Russia’s full integration into the global markets will increase trade and it will also increase competition on its domestic industry. Part of Russia’s reform efforts will be:

· Strengthening the supervisory framework
· Enhancing the transparency of financial reporting
· Facilitating the consolidation of private banks
· Levelling the playing fields between private and state banks

Brazil ANALYSIS

Brazil has reached important economic advances. The country is also increasing its participation in the international community. Brazil is benefiting from a stable economic growth, low inflation rates. Economic stability and conditional cash transfers are a result of the efficient Bolsa Familia Program.

Challenges:

· Sustained growth
· Size of government
· Poor business climate

Strategy:

· Investing in growth and infrastructure
· Improving environmental sustainability
· Building human capital for improved equity and growth

Look at Conditions relating to Banking

To increase the systematic benefits of Bank support, sector wide approaches are expected to become a key investment lending instrument. This will allow banks to finance existing government programs. Findings I a study suggest that Brazil is not under banked in terms of bank branch presence. Increase financial access would be promoted by sound financial sector policy. The government needs to undertake regulatory reforms to enable financial markets and this would direct the focus towards review of incentives.

2. Best way SOUTH AFRICAN BANK can approach these countries for potential business is through Imports and Exports

As Mathews state with South Africa’s focus on entrepreneurial business being the force that will lead to growth in the economy and job creation the role of the commercial importer or exporter has started to become more significant. SA’s strong trading picture reflects the country’s open economy Mathews reinforces his claim when stating that ” Good trade means that trade finance is doing well”. Encouraging businesses to participate in international trade is important for South Africa and so solutions to assist new entrants are crucial from SOUTH AFRICAN BANK’s perspective. The balance of trade is turning towards newer world trading powers such as China. Mathews states that the correlation between imports and exports is a natural trend due to the rising importance of specific trading routes. This patter is likely to strengthen as more emerging markets such as China, Brazil, Russia and India come to the fore.

As Mathews stated there are Three steps to success:

Business planning – This may involve travelling to other countries to investigate the markets there
Negotiations with the relevant foreign parties – Establish a price
Risk management – Business must asses whether the overseas counterpart has the ability to pay

As Mathews stated the expertise available with in international banking means that we can provide advice on every element of the process and not only in terms of typical banking but also things like the currency and payment issues. Business should not lose out on the opportunities offered through SOUTH AFRICAN BANK International banking.

International Banking access to the Global Village

The concept of the “Global Village” is a growing reality which could lead to changes in our services needs as we interact in a increasingly globalised economy. Ashburton is the Asset Management division of First Rand and is SOUTH AFRICAN BANK Private Clients offshore partner of choice They provide a commitment to product development to Chindia (China and India).