Cablegate: Angola's Expanding Banking Sector

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RR RUEHBZ RUEHDU RUEHJO RUEHMR RUEHRN
DE RUEHLU #0763 2041614
ZNR UUUUU ZZH
R 231614Z JUL 07
FM AMEMBASSY LUANDA
TO RUEHC/SECSTATE WASHDC 4191
INFO RUCNSAD/SOUTHERN AF DEVELOPMENT COMMUNITY COLLECTIVE
RUEHHK/AMCONSUL HONG KONG 0005

UNCLAS LUANDA 000763

SIPDIS

STATE FOR AF/S
JOHANNESBURG FOR USFCS
CAPETOWN FOR USFCS

SIPDIS
SENSITIVE

E.O. 12958
TAGS: EFIN ECON SNAR AO
SUBJECT: ANGOLA'S EXPANDING BANKING SECTOR

1. (SBU) Summary. The Angolan banking sector continues its rapid
growth with two new Angolan-owned banks opening in June, bringing
the total number of banks to seventeen, a thirty-five percent
increase over two years ago. In addition, Angola's Banco BIC will
expand to open a new Portuguese bank. The Angolan banking sector is
also expanding to the provinces but the range and quality of
services is limited. End Summary.

President's Daughter Expands into Portuguese Banking
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2. (SBU) According to the Portuguese newspaper, Diario de Noticias,
Isabel dos Santos, daughter of Angolan President Jose Eduardo dos
Santos, and Americo Amorim of the Portuguese Amorim Group have
received approval by the Portuguese Central Bank to open a bank in
Portugal. The bank, Banco Bic, will operate as a branch office of
the Angolan Banco Bic, but will in fact be incorporated in Portugal.
Isabel dos Santos and Amorim are also the principal shareholders in
Angola's International Bank of Credit, Banco (BIC), which in two
years has become Angola's third largest bank. Isabel dos Santos and
Amorim are the major shareholders of the Portuguese Banco Bic and
have already announced that Mira Amaral, a former Portuguese
Minister of Finance, will serve as CEO of the Bank. Isabel dos
Santos and Amorim are partners in many Angolan businesses, from
banking to cement manufacturing, and are also starting up an
insurance company.

Fininbanco
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3. (U) The Portuguese Bank Finibanco announced on June 14 that it
had received approval from the Angolan Council of Ministers to
establish a bank. Finibanco Angola will have starting capital of
USD 10 million. Finibanco-Holding owns 60 percent of the shares;
the Portuguese group Iberpartners 7.5 percent, and Angolan private
businesses 32.5 percent. Finibanco Angola will be an investment
bank offering corporate and asset management services.

BANC Bank
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3. (SBU) The new Angolan Bank of Trade and Business (BANC) opened
its doors on June 15. BANC started with USD 5 million in
capitalization and aims to be a new strategic partner in countries
such as Portugal, Brazil and Spain. Stanley Ho's Geocapital was
slated to go in with a fifty percent stake but pulled out of the
deal at the last minute. (Note: Stanley Ho is a prominent Macau
businessman whose properties include, among others, Macau's Lisboa
Hotel and Casino and the Emperor casino in North Korea's
Rajin-Sanbon Special Economic Zone. End note.) The bank now plans
to sell 40 percent of its shares to an unidentified international
partner. However, rumors identify Minister of Finance Jose Pedro de
Morais as both the new Bank's landlord and a principal shareholder.
Note: Angola has no conflict of interest statutes or regulations in
place. End note.

How much growth is too much growth?
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4. (SBU) While the banking system is holding USD 10 billion in
deposits, according to the government-owned Jornal de Angola, the
banking system is only offering 40 percent of that in credit.
Speaking at the inauguration of BANC, Deputy Prime Minister
Aguinaldo Jaime gave a much lower figure of three percent. The new
Angolan banks appear to be looking to overseas investments in order
to offer their depositors some return on their money.

5. (SBU) Comment: Angola's banking sector is expanding by leaps and
bounds, the number of banks growing by one-third from 2005 to July
2007. Still, the range of banking services is weak and customer
service even weaker. Looking at the phenomenal rise of Banco BIC,
it is easy to assume that clients moved their business to BIC to
support the President's daughter. While probably true, industry
insiders also credit Banco Bic's success to management's hiring
top-notch bankers, offering a wider range of banking services and
providing better service delivery through an expanded network of
retail branches sprouting up around the countryside. It is
difficult to say for how long the sector can support this
accelerated level of growth; Angola's dearth of skilled labor will
certainly hamper provincial expansion. Sector experts expect that
the next step will be mergers and acquisitions within the current
pool. However, for banks to play a greater role in the country's
economic development further reform of the financial sector will be
necessary.
FERNANDEZ

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