VZCZCXYZ0016
PP RUEHWEB

DE RUEHCL #0066/01 0941811
ZNY CCCCC ZZH
P 041811Z APR 07
FM AMCONSUL CASABLANCA
TO RUEHC/SECSTATE WASHDC PRIORITY 7668
RUEHAS/AMEMBASSY ALGIERS 2882
RUEHBP/AMEMBASSY BAMAKO 0235
RUEHBJ/AMEMBASSY BEIJING 0044
RUEHEG/AMEMBASSY CAIRO 0767
RUEHRY/AMEMBASSY CONAKRY 0012
RUEHDK/AMEMBASSY DAKAR 0252
RUEHLC/AMEMBASSY LIBREVILLE 0030
RUEHLO/AMEMBASSY LONDON 0267
RUEHMD/AMEMBASSY MADRID 3716
RUEHNK/AMEMBASSY NOUAKCHOTT 2246
RUEHRB/AMEMBASSY RABAT 7931
RUEHTU/AMEMBASSY TUNIS 2008
RUEHFR/AMEMBASSY PARIS 0543
RUEHYD/AMEMBASSY YAOUNDE 0070

C O N F I D E N T I A L CASABLANCA 000066 
 
SIPDIS 
 
SIPDIS 
 
STATE FOR NEA/MAG AND NEA/PI 
 
E.O. 12958: DECL: 03/25/2017 
TAGS: ECON EFIN KDEM MO
SUBJECT: BANK CEO SAYS OPTIMISM JUSTIFIED IN MOROCCO 
 
Classified By: PRINCIPAL OFFICER DOUGLAS GREENE FOR REASONS 1.4 (B) 
AND (D) 
 
REF: A) 06 CASABLANCA 1325; B) 06 CASABLANCA 676 
 
¶1. (C) SUMMARY: When it comes to Morocco, optimism characterizes the 
view of Othman Benjelloun, chairman and CEO of BMCE Bank. He 
attributes Morocco's positive environment to a healthy banking 
sector, a cooperative-minded Central Bank, and a booming economy. 
BMCE itself is doing well, and will soon launch a new strategy for 
selling financial products, as well as limited Islamic banking 
services.  According to Benjelloun, neither upcoming parliamentary 
elections, nor the March 11 suicide bombing in Casablanca, will 
disrupt Morocco's positive environment.  His deputy, however, 
acknowledged the need for continued reform and suggested several 
measures that he would like the GOM to implement.  END SUMMARY. 
 
------------------------- 
POSITIVE ECONOMIC OUTLOOK 
------------------------- 
 
¶2. (U) On March 21, 2007, CG and Econoff met with Othman Benjelloun, 
Chairman and CEO of BMCE Bank, Morocco's third largest bank and the 
most internationally-focused.  Jaloul Ayed, BMCE's Administrative 
Director General, was also present.  The two shared a very positive 
view of Morocco's future, citing a growing economy and increased job 
creation.  Mr. Benjelloun went so far as to say that the situation in 
Morocco has not been as favorable as it is now for several years, and 
stated that, ?the optimism is justified.? 
 
¶3. (U) When asked what accounts for Morocco's positive environment, 
Benjelloun cited three factors.  First, he said that several of 
Morocco's previously state-controlled banks, including Credit 
Agricole, Credit Immobilier et Hotelier (CIH) and Banque Centrale 
Populaire (BCP), had been ailing, but have now recovered.  Second, he 
credited a much-improved relationship with the Central Bank for the 
new, positive environment.  He explained that Bank Al Maghrib used to 
have a reputation for being punitive and aggressive, and for treating 
banks as police would citizens.  With the arrival of Bank Governor 
Abdellatif Jouahri, however, Morocco's banks have developed a good 
working partnership with Bank Al Maghrib, even meeting as a group 
every six months.  Benjelloun added that the Minister of Finance, 
Fathallah Oualalou, has also been helpful, thanks in part to his 
knowledge of banking and nine years experience as BMCE's president. 
 
¶4. (U) The third factor contributing to Morocco's positive 
environment is the simple fact of the economy's good health. 
According to Benjelloun, there is a lot of liquidity in the market, 
and projects in sectors including tourism, textiles and construction 
continue to flow.  He cited the lack of unskilled workers in 
Marrakesh (as a result of the plethora of projects) and an official 
unemployment rate of ten percent as evidence that things are on the 
up and up.  Benjelloun emphasized that the surfeit of activity in 
Morocco is a reality, not just a phenomenon reported in the press. 
 
----------------------------------- 
HANOUTI AND ISLAMIC BANKING AT BMCE 
----------------------------------- 
 
¶5. (SBU) Just as the Moroccan economy is fairing well, so too is BMCE 
Bank.  Having reconfigured its domestic banking network, and 
redefined its corporate bank, BMCE Capital, the bank plans to launch 
an innovative strategy for selling financial products in mid-April. 
To start, the bank will open one hundred ?hanouti,? or small shops, 
which will operate like convenience stores where consumers can buy 
not only coke, gum and newspapers, but also financial services such 
as insurance plans and telecommunications packages.  BMCE envisions 
opening three thousand shops, later expanding to other parts of the 
Maghreb and Africa.  The bank has been looking ahead internationally 
as well, as indicated by its recent purchase of thirty-five percent 
of Bank of Africa, which has a presence in twelve African countries. 
 
¶6. (SBU) BMCE, like its counterparts, will also begin to offer some 
Islamic banking products.  Recently, the Bank Al Maghrib and the 
Professional Group of Banks of Morocco (of which Benjelloun is 
President) agreed to allow Islamic banking in Morocco, though not 
Islamic banks.  Benjelloun stressed, however, that the Central Bank 
and the banking association will refer to these services as 
'alternative products,' and not as Islamic or sharia or halal.  The 
banks also agreed on specific names for the three products on offer, 
and will use only these names to sell them.  The hope is that such 
products will increase banking participation. 
 
¶7. (SBU) At the end of April, Bank Al Maghrib Governor Jouahri will 
meet with the banks to discuss each one's public relations approach 
to marketing their new services.  While the GOM accepts that banks 
will offer Islamic banking products, everyone involved (including the 
king) is keenly aware that certain groups may try to politicize the 
issue.  According to Benjelloun, the banks will offer the new 
products and reevaluate the decision to do so in six months. 
 
-------------------------------------- 
NOT WORRIED ABOUT ELECTIONS, TERRORISM 
-------------------------------------- 
 
¶8. (U) When asked for his opinion on upcoming parliamentary elections 
in September 2007, Benjelloun said he believes they will bring no 
significant change.  He contends that even if the Justice and 
Development Party (PJD) gains fifteen or twenty seats, they will not 
win a majority, leaving the majority of parliament the same.  He 
mentioned that the constitution gives the king the right to name the 
Prime Minister, implying that even a surprise in parliament would not 
destabilize Morocco. 
 
¶9. (U) Similarly, Benjelloun did not think that the March 11 suicide 
bombing in Sidi Moumen would hurt the country.  Though the event may 
force Moroccans to become more vigilant, he said it has not stopped 
people from investing or visiting, as evidenced by hotels and 
restaurants that continue to be full. 
 
------------------- 
WISHLIST OF REFORMS 
------------------- 
 
¶10. (SBU) When asked what changes he would like to see from the GOM, 
Benjelloun's Tunisian deputy, Jaloul Ayed, had several ideas for 
reform.  The need for greater foreign exchange flexibility topped his 
list.  He conceded that there has been some progress already, but 
believes there is still a long way to go.  He would also like to see 
more flexible labor laws, and the total reform of the judicial 
system. 
 
¶11. (SBU) Ayed placed particular emphasis on two areas.  First, he 
observed that Morocco is very behind in reforming fiscal policy, with 
banks paying six percent more in taxes than other corporate 
businesses, which are already taxed heavily.  He cited Egypt as a 
prime example of how Morocco might solve its fiscal problems.  When 
Egypt halved taxes from over forty percent to about twenty, people 
started paying and tax revenue increased.  Ayed believes this 
approach would be advantageous in Morocco.  Not only would it benefit 
investors, but it might also stem the tide of educated Moroccans who 
opt to work abroad in part because their salaries at home are taxed 
too heavily. 
 
¶12. (SBU) Second, Ayed noted that while Morocco has done a good job 
of reforming the financial system, banks such as BMCE face 
difficulties as a result of the fact that the palace has its own bank 
in Attijariwafa.  According to Ayed, Attijariwafa's existence as a 
quasi-public bank creates some irregularities in the market.  He 
admitted that while BMCE tries to establish professional and ethical 
standards, the situation sometimes makes it hard to adhere to them. 
Nonetheless, BMCE Bank has been able to profit from the current 
positive environment and is proud of its role as a pioneer in 
Morocco's banking sector. 
 
¶13. (C) COMMENT:  Benjelloun is optimistic about Morocco's future 
prospects, but acknowledges that challenges remain.  His comment that 
?there are many Moroccos,? including a large, uneducated, rural 
population, indicates he is aware that there is more to be done, as 
does his significant involvement in an organization dedicated to 
creating rural schools. Such efforts, along with the economic growth 
Benjelloun celebrates, will be the key to long-term stability and 
prosperity.  END COMMENT. 
 
GREENE