Their investment has been marginal in comparison to the top three industry leaders in Morocco. They have also been sluggish in real estate and the MRE niche market. Are French bank subsidiaries sitting idly by the wayside?

By Adama Wade, Casablanca

The actual figures paint a clear picture of what’s really happening on the ground. The leading three Moroccan banks opened 210 new branches in 2007 as opposed to 57 opened by the French. At this rate, the 22% foreign-owned share in the assets of Moroccan banks is likely to shrink much faster than industry estimates predicted.

These indicators issued by the Moroccan central bank are even more poignant when they reflect the standing of individual companies. For example, among French banks, Crédit du Maroc, which is majority owned (52%) by Crédit Agricole, is the most actively engaged French bank subsidiary in the North African kingdom in terms of network expanse with a minimum of 30 branches opened in 2007. This number is pretty close to BMCI’s (BNP Paribas) 27 branches but dwarfs SGMB, an establishment that has opened virtually no new branches since 2007. If this trend continues, French banks, which once held 47% of the banking sector in 2007, could lose even more ground.

A virtually unstoppable trend

According to a documentation head of a major bank in Morocco, “this trend is virtually unstoppable. Moroccan banks are focusing more on opening branches that will be used to expand their banking network and services to rural areas. French banks,” he explained, “are doing quite the opposite. They are clinging to urban areas, targeting clients of a certain socio-economic background.” Thus, these are two completely different visions of banking – one focusing on providing banking services throughout the nation while the other, a traditional bank, continues to concentrate on SMEs and SMIs needs, particularly insurance and export credit.

“However, the French brand in banking is not as eye-catching as it once was. Clients have become somewhat like the blushing bride who will only say yes to the largest diamond.” 

From this angle, the changes in French banking in Morocco are first and foremost qualitative, oriented towards the implementation of new services for individual clients (sophisticated savings products) and for institutional ones (export credit insurance). But which of these strategies is more profitable? Opinions are divided, but an executive of CIH, a subsidiary of the Caisse d’Épargne Group with no agency openings on the scoreboard for 2007, notes that, “Moroccan banks will tend to more easily attract rural and lower urban clients in search of basic banking services. But when will they make a return on their investment?” Industry players with whom we spoke failed to answer this sticky question, convinced that investing at 100 mph will naturally be a source of unprofitable returns and deposits but also, at least in the first few years of investment, a relatively high exploitation coefficient. This is the case of BMCE, which opened 72 branches in 2007 – fifteen more than Attijariwafa Bank with its 57 branches. Lastly, one must note that BCP holds on to its number one position, having opened 81 branches in 2007.

The Blushing Bride

On the other hand, continues the CIH executive, “French banks that are generally Casa-Rabat oriented and also in tourist destinations like Marrakech, Agadir, Fes, and Tanger will always be able to rely on more affluent clients conducting larger transactions. But they’ll certainly have to invest two to three times more to hold on to that clientele.” Apart from these technical factors, the financial expert and consultant Belkacem Boutayeb reiterates that “French banks have yet to understand that Morocco is an ideal platform to access North Africa and Sub-Saharan Africa. There is no aggressive policy aimed at appealing to clients. However, the French brand in banking is not as eye-catching as it once was. Clients have become somewhat like the blushing bride who will only say yes to the largest diamond.”

Sophisticated taste

“Sophisticated taste” (a term used by a high-end customer relations head of a branch in the Casablanca) is costly to French banks as they fail to anticipate industry trends. How do you explain the fact that, in real estate, SGMB made a bid to join the parade after the float had already gone by or that BMCI Finance still hasn’t got its activities off the ground? With fewer than half the number of branches that their Moroccan counterparts possess, French bank subsidiaries will have to hold on tightly if they are to keep their share of the real estate market or, if nothing else, nab a few Moroccans working abroad who are looking for the best offer they can find.