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DE RUEHCL #1325/01 3540854
ZNR UUUUU ZZH
P 200854Z DEC 06
FM AMCONSUL CASABLANCA
TO RUEHC/SECSTATE WASHDC PRIORITY 7531
RUEHAS/AMEMBASSY ALGIERS 2842
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RUEHRB/AMEMBASSY RABAT 7793
RUEHTU/AMEMBASSY TUNIS 1965
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RUEHYD/AMEMBASSY YAOUNDE 0063

UNCLAS CASABLANCA 001325 
 
SIPDIS 
 
SENSITIVE 
SIPDIS 
 
E.O. 12958 
TAGS: ECON EFIN KDEM MO
SUBJECT: MOROCCAN BANKS ON REGIONAL GROWTH, REFORM 
 
REF: A) CASABLANCA 523; B) 05 CASABLANCA 1220; C) TUNIS 2899 
 
¶1. (SBU) SUMMARY: A recent series of meetings with Morocco's three 
national banks showed that while they have distinct personalities, 
they share a strong interest in expanding to francophone Africa and 
other countries in the Maghreb.  They also agree that the economic 
climate in Morocco has improved significantly since King Mohamed VI 
came to power, but acknowledge the need for further reform to create 
a transparent environment that fosters business and job creation. 
END SUMMARY. 
 
------------------------------------ 
DIFFERENT PERSONALITIES, APPROACHES 
------------------------------------ 
 
¶2. (U) Each of Morocco's three national banks has a distinct 
personality.  Attijariwafa was created by the merger of Wafa Bank and 
Banque Commerciale du Maroc in 2003.  It is held in part by North 
African Omnium Group (ONA), the King's investment vehicle, and is 
therefore known as "the King's bank."  It has about 25% of the market 
share, as does its prime competitor, BCP.  BCP, however, has a very 
different history and persona.  Founded after Moroccan independence, 
BCP has been the State's bank since its inception and continues to be 
partially state-owned.  Its original mandate included providing 
financing for artisans and small and medium-sized enterprises (SMEs), 
and it retains this focus.  For its part, BMCE has only 10-15% of the 
market share and considers itself an internationally-oriented 
corporate bank.  Privatized in 1995, it prides itself on the freedom 
that comes with being private. 
 
¶3. (SBU) Along with different personalities come different 
approaches. Attijariwafa considers its strength to be the Moroccan 
market and has plans to expand nationally, though it is also pursuing 
a strategy of regional development.  According to its General 
Manager, Mohammed El Kettani, the integration of the Maghreb is 
crucial for middle term growth.  He believes that economics should 
come before politics, and expressed regret that the bank had to put 
aside efforts to open in Algeria. 
 
¶4. (U) Like Attijariwafa, BCP has a strong presence in Morocco with 
600 branches throughout the country.  In keeping with its commitment 
to local clients, it is the only bank to operate in certain rural 
areas, and was until recently the only one with no minimum for 
deposit.  It also distinguishes itself for its decentralized 
approach.  Each of its eleven regional banks in Morocco operates 
independently and has its own president, making the process of 
evaluating loan applications more efficient. 
 
¶5. (SBU) BMCE is less focused on the domestic market, and more 
interested in expanding internationally.  It is the only Moroccan 
bank with a branch in China (Beijing), and is ready to start 
operations in London, where it plans to position itself as an 
international player in corporate and investment banking.  According 
to the bank's Administrative Director General, Jaloul Ayed, BMCE 
strives to create a strong common identity among the bank's various 
interests, including banking, insurance, media, industry, 
transportation, and telecommunications. 
 
--------------------------------------------- ------- 
SHARED VIEWS ON REGIONAL EXPANSION, ECONOMIC CLIMATE 
--------------------------------------------- ------- 
 
¶6. (SBU) While the three banks take different approaches, they all 
express strong interest in establishing a presence in the Maghreb and 
sub-Saharan Africa.  Attijariwafa opened four branches in Dakar, 
Senegal in July 2006 and recently purchased a majority stake in 
Tunisia's Banque du Sud (REF C).  It also has a majority share in 
Senegal's fifth largest bank, and is considering other purchases. 
BCP has subsidiaries in Guinea and the Central African Republic, and 
is looking at opportunities in Mauritania, Gabon, the Democratic 
Republic of Congo, and possibly Libya.  True to its international 
focus, BMCE also has numerous interests in the Maghreb and Africa, 
including Tunisia, Mali, Congo Brazzaville, and Senegal, where it 
created a regional investment bank.  BMCE plans to open offices in 
Cameroon, Gabon, Mauritania, and perhaps Algeria, Ivory Coast and 
Angola, as it believes francophone Africa is highly receptive to 
Moroccan interests due to a history of trade, common religion, and 
cultural affinity. 
 
¶7. (SBU) Morocco's national banks also share the view that the 
country's economic situation is strong.  Ayed of BMCE went so far as 
to say that conditions are the best in a generation, allowing the 
bank group to promote synergies between diverse interests in a way 
that would not have been possible a few years ago.  Attijariwafa's El 
Kettani echoed this point, saying that the dynamic and reform-minded 
Mohamed VI has alleviated the concerns of five years ago by fostering 
an open environment.  He cited as examples the fact that a private 
company, Jorf Lasfar, now provides over 60% of Morocco's energy, 
while the French company Lydec supplies water and electricity to 
Casablanca. 
 
--------------------------------------------- -- 
SHARED CHALLENGES - BANKING, SMEs, TRANSPARENCY 
--------------------------------------------- -- 
 
¶8. (U) Attijariwafa, BCP and BMCE face several of the same problems 
as well.  Since only ten to twenty percent of the Moroccan population 
banks, large sums of money bypass the banking system entirely.  Both 
Attijariwafa and BCP agree on the need to develop initiatives that 
encourage people to bank, and that bring individuals from the 
informal to the formal sector. 
 
¶9. (SBU) The banks also agree that they must find ways to develop 
SMEs.  El Kettani argued that the state's investment in large 
projects such as Tanger Med is key to developing infrastructure and 
creating diverse opportunities for SMEs in the future.  He admitted 
that it is difficult for entrepreneurs to get funds, and that Morocco 
needs to create a structure for capital risk.  As Mr. El Morjani of 
BCP pointed out, Moroccan banks do not currently have an adequate 
mechanism for recouping credit, making lending risky. 
 
¶10. (SBU) Bank representatives from loan officers to CEO's cited 
transparency as a vital issue that needs to be addressed, though they 
conceded that at root it is Moroccan tax policy that encourages 
non-transparency.  They agreed that the government would be better 
served by significantly lowering taxes and having a higher percentage 
of people pay.  Rates surpassing 40 percent induce people not to 
declare their true earnings, and not to keep accurate accounts. 
This, in turn, forces banks to require personal guarantees on loans, 
since they cannot rely on a company's books as an accurate indication 
of risk. 
 
¶11. (SBU) Not only is tax reform deemed necessary, but judicial 
reform as well.  One senior executive noted that while the judiciary 
tribunals have improved, young judges earning eight or nine hundred 
USD per month are all too willing to take bribes.  He emphasized the 
need to punish corruption, accelerate reform and institute a system 
of arbitrage so that disputes can be resolved more fairly and 
efficiently.  According to Mr. Tadili of BCP, disputes currently take 
anywhere from four to twenty years to resolve.  Bank representatives 
agreed that tax and judiciary reform, as well as increased 
transparency in general, are key to improving the lending environment 
for SMEs. 
 
¶13. (U) COMMENT:  Banking professionals are reacting with relish to 
the new opportunities Morocco's recent economic boom has offered 
them, even moving to address such tough issues as finance for small 
enterprises.  That said, they acknowledge that further reform is 
needed to foster a more transparent environment which, in turn, will 
promote opportunities for business creation and employment.  END 
COMMENT. 
 
GREENE