This archive report was first published on 19 September 2019.
Published on September 19, 2019, Standard Chartered Plc group chief financial officer Andy Halford was recently in Kenya, discussing the effect of geopolitical events on how the multinational lender is doing business, the opportunities this presents for markets in Africa.
Halford sat down with the Business Daily to share his insights on the impact of the US-China trade war and Brexit on the global economy, particularly in the banking sector.
"The global economy is shifting fast this year, dominated by the upheavals the US-China trade war and Brexit have caused," Halford said.
One of the most affected sectors is banking, due to its role as the financial intermediary in trade. Halford emphasized that the disruptions in the market from mobile money present both opportunities and threats.
"There is both an element of opportunity and threat sitting within it," Halford said. "First of all, it is in recognition that the process of paying people is at the heart of society. It is a core part of the way we live now and will be for many years to come."
Halford noted that the bank is deploying new technologies to stay competitive, and the combination of its long-standing reputation and reliability, along with the use of new technology, gives it an edge.
Regarding regulation and market risk in Africa, Halford acknowledged that the region has different regulatory regimes in different countries, which can be complicated for a multinational bank like Standard Chartered.
"We are very familiar with that and have a good relationship with regulators. We have regular interactions with them, and it is in the heart of doing our business," Halford said.
Halford also discussed the future of a multinational bank like Standard Chartered in Africa, following the recent scaling down of Barclays Plc's presence in the region.
"Every bank has got its particular circumstances, and Barclays for its reasons has decided to go that route," Halford said. "We strongly believe in the presence in the higher growth parts of the world and are very proud of the fact that our presence for many years here in Africa and Asia is giving us a wide breadth of offering and service."
Halford also touched on the impact of the US-China trade war on the bank's operations, noting that the overall impact on the group as a whole is relatively small, at about three percent of total income.
"It is still early days to see how supply chains will amend themselves in light of what is happening," Halford said.
Halford also suggested that the trade war between the US and China could create opportunities for other regions like Africa, particularly in terms of trade.
"It could well be. Many businesses are still at an exploratory stage, but the logic of having production in other parts of the world particularly where required skill sets are available and cost of production is sensible. Then absolutely, the opportunity is open and that could be African markets or other Asian markets," Halford said.
Regarding Brexit, Halford noted that it is not a huge issue for the bank, as its focus is primarily in Asia and Africa, less so within Europe.
"Fortunately, Brexit is not a huge issue for the bank. Our focus is primarily in Asia and Africa, less so within Europe. Moreover, the extent to which it is in Europe, a lot of it is between London, Asia and Africa, and less between London and mainland Europe," Halford said.
Halford also emphasized that the bank has prepared for however Brexit may end up, with a presence in Frankfurt, Germany, and a registered legal entity in Germany, where it was previously a subsidiary of the UK business.
"We have doubled the number of staff there in the past nine months. However, Brexit unfolds we are well prepared as anyone can be," Halford said.
Finally, Halford suggested that a new trade deal between the UK and Africa could materialize after Brexit.
"If Brexit does occur, the UK is going to have to strike its trade deals with as many countries as it possibly can do. I’am sure that African markets will be right at the centre of that," Halford said.
