Once an untouchable banking behemoth, Barclays Bank of Botswana (BBB) is close to losing the fight for dominance in the commercial banking space, with Standard Chartered threatening to snatch the market from the struggling bank, available data shows.
It has come to light that Standard Chartered, listed on Botswana Stock Exchange (BSE) under a Stanchart banner, is close to being valued at par with Barclays in terms of market capitalisation, and possibly snatch market share from Barclays.
Barclays bank, which has been dogged by controversy for years now, has seen its market capitalisation crumbling by P2 billion an equivalent of 34 percent in a two-year period. By 2010 the bank, which saw two of its former managing directors being controversially fired, was valued at P4.6 billion before upping its market value significantly to P5.8 billion in 2011. But that was the bank’s last growth and highest market value ever. Headed by new broom Reinette van der Merwe, Barclays’ market capitalisation started to take a nosedive in 2012 to settle at P5.5 billion, before taking a deep plunge to the current market value of just P3.5 billion.
When this happened, Standard Chartered was half Barclays Bank’s market value in 2010 at just P2.4 billion. Under the stewardship of Moatlhodi Lekaukau, Botswana’s oldest bank in the commercial space continued growing to P2.7 billion and P2.9 billion in 2011 and 2012 respectively. Standard Chartered market capitalisation is currently pegged at P3.5 billion, making it only P300 million less valuable than Barclays, although it was half Barclays’ value two years ago. On the other hand, Barclays’ muscular competitor, First National Bank Botswana (FNBB) has continued to widen the gap between itself and Barclays. Valued at P5.6 billion by 2010, FNBB’s value was only P1 billion higher than that of Barclays. FNBB, currently headed by Lorato Boakgomo-Ntakhwana would then skyrocket its value vigorously to P6.7 billion and P7.1 billion respectively in 2011 and 2012, at a time when Barclays Bank’s value was diminishing. Boakgomo-Ntakhwana has however managed to propel FNBB’s value to the current P9.9 billion being almost three times bigger than Barclays’ value. FNBB was the biggest and most highly valued company on the BSE by 2010 seconded by Barclays Bank. While FNBB has managed to remain the biggest on the local bourse, Barclays failed to maintain its second position. Barclays is now valued at 4th position trailing behind the iconic micro lender, Letshego and the pan-African retail store Choppies valued at P5 billion and P4.6 billion respectively.
Barclays’ profitability has been on a decline for years now, with its share price also taking a strain. For the year ended December 31st, profits fell by 34 percent to P296 million, while the loan book saw a 17 percent growth to P7.3 billion. Standard Chartered on the other hand has a vigorously growing loan book at P5.7 billion while profits are also threatening to surpass those of Barclays. FNBB remains a giant in the industry with profits just over P700 million by December last year, while its loan book is just over P11 billion.
The problem with Barclays
Despite the controversy that tainted Barclays’ name during the past few years, sources within the banking space blame Barclays’ operating model and products as less competitive in Botswana’s banking market. According to observers, Barclays lost the gist of competition and started being too complacent with the model that had brought it success during its good times.
They said that during the good times, Barclays bank at that time targeted highly paid individuals and was more of an ‘executive’ banking institution. “Being too comfortable, they failed to look for new markets and different clientele,” said the source. To him, FNBB saw an opportunity. It is the first bank to cater for almost anyone, no matter how much they got paid. It is also the first bank to introduce student banking, scooping tens of thousands of tertiary students as their clients to a point of even having student loans. “This gave FNBB a push, it significantly boosted FNBB’s clients and loan book, while Barclays’ ‘high class executive banking’ left it with less clients and a stunted growth since highly paid individuals and businessmen are less than the lowly paid masses. At the same time, FNBB also had its executive banking products. Standard Chartered, as a competitor, also came up with products such as SMEE banking and even availed a banking platform for less ‘financially resourced’ clients.
“This also attracted a lot of people to the bank and thus its growth,” said a source also adding that the bank’s long history also worked wonders. Meanwhile sources are afraid that should Barclays continue this way it would soon be less valuable than Standard Chartered. The unlisted Stanbic Bank is also a threat to Barclays and is likely to claim the third biggest bank spot on the market pushing Barclays further down. Barclays’ new MD van der Merwe introduced SMME banking, just a few months into her job. The move according to insiders is meant to diversify the bank’s clientele to move away from its ‘executive banking’ mindset and to hopefully restore the bank’s profitability.