CEO of Maubank
Mauritius' financial services sector is becoming the island's leader in the world view that Mauritius is the next world investment hub. Sridhar Nagarajan, CEO of MauBank, shares his views on the financial services sector's role in this.
"Economist Alistair MacMillan noted in 1914 that Mauritius had become geographically out of the trade route. Now Mauritius is perfectly located in the middle of a 300 billion trade corridor; all ships will stop here...I believe it is a foregone conclusion that many banks will be establishing themselves in Mauritius because it is my opinion that this international banking sector has just started; it is the appetizer. When it comes to the main course there will be over 100 banks here.”
FDI Spotlight: On January 2016, MauBank Ltd was formed following the merge of National Commercial Bank Ltd (NCB) with Mauritius Post and Cooperative Bank Ltd (MPCB). When you were offered this opportunity, what made you accept it?
When I was approached about coming to MauBank I knew it would be a very challenging assignment due to it being a time of financial collapse for some major insurance companies. The Government approached me and asked me to conduct a study to evaluate a possible merger; this factor attracted me to the project in the first place as it demonstrated to me the Governments genuine intent to take two banks that were struggling in the current economic climate and making something good out of it. Priority of intent is very important to me, as is clarity of purpose; I knew that this was a project I wanted to be a part of.
I strongly believe bankers and their attitudes have contributed to the financial crisis. An attitude of ‘profits first’ being pushed by the markets is starting to lose its shine for me. Banking is a business already established for hundreds of years; it’s strength lies in it’s years of accumulated experience and knowledge, therefore when there were talks of starting a whole new bank I advised that a merge was a much better option.
I joined the company in September 2015 and in ninety days managed to merge the two banks together using no project consultants but managed only by my own teams. It was such a successful transition that we have been given the runner up 2016 Project Management Award.
You can do social banking and be profitable. Banks have become so influenced by bonuses; it is the award for most achievements and now they have overused it. With global banks, most employees will not do something just for the sake of doing a good job. However this was not the case with these two companies. They were both in a difficult position independently and needed to merge to become strong again. This was not a matter of bonus calculations, this was to save two businesses. When the Government informed me that I should spend this money as I would my own, I did just that. I was careful with all decisions and reduced risk as much as possible.
Now that we have merged we have 34 branches plus a strong connection to the postal service. We are also very proud of our MauBank Internet Banking Service, allowing customers to access their accounts anytime online. It also reduces our carbon footprint by giving the customers the option to go paperless.
FDI Spotlight: What is your message to regional and international banks who are looking to use Mauritius as an investment platform into Africa?
Twenty years ago Asia did not have economies of scale. It was seen as a very small selection of fragmented economies and they knew in order to change this a consolidation point was needed. Singapore became this consolidation point and it was very successful. Now Singapore is a thriving international financial centre with over a hundred banking organisations.
The other very fragmented market today is Africa. A consolidation point, or access point, must be found for Africa. The options are limited as mainland Africa invites all the politics and issues happening on land. Dubai is a good consolidation point for the Middle East, however it is too far to be the main access point for Africa. Rwanda, another good option that could handle becoming an international financial transfer centre, has too many border issues; therefore Mauritius is the obvious choice.
Mauritius is moving into a position of strength in becoming an access point for trade to Africa and more and more companies are seeing this unfold. An international financial centre like Mauritius could sustain up to fifty banks in the next three years, and in the next three to five years it could sustain one hundred. Mauritius should have far more banks than it currently does. This is not because the Government is very selective about which banks are permitted to establish themselves in the country, but rather that the right banks haven’t chosen to come to Mauritius yet. The Government have been tough but fair in their issuing of licenses. Licenses will be easily granted to certain banks more than others, for example there are currently lots of opportunities for American banks, Singaporean banks and Indian private sector banks.
The Mauritius banking sector will only transform and grow. I believe it is a foregone conclusion that many banks will be establishing themselves in Mauritius because it is my opinion that this international banking sector has just started; it is the appetizer. When it comes to the main course there will be over 100 banks here.
Alistair MacMillan was an economist and in 1914 wrote the book ‘Mauritius Illustrated’. He spent 4 years in Mauritius and noted that it had become geographically out of the trade route. Now Mauritius is perfectly located in the middle of a 300 billion trade corridor; all ships will stop here.
FDI Spotlight: What effect, if any, do you think the new taxation treaty is having on businesses wishing to move to Mauritius?
There has been quite a misconception of Mauritius due to the mainstream media and its reports regarding the taxation treaty. There is an editorial problem in that the editors who put out these tabloids have never actually travelled to Mauritius and therefore the editorial has been constrained by its own views. I can discuss with you for hours how great Mauritius is but these editorials will not change. This time next year the story will be gone and no longer mentioned as it is not true. This type of stereotyping was wrong even when the old treaty was there, now there is a new one in place the opinion is unsustainable. There were some dramatic changes to the taxation treaty however very little changed between Mauritius and South Africa because the businesses were not affected by this. South African businesses did not come to Mauritius for tax reasons and therefore very little has changed.