VZCZCXRO5566
RR RUEHROV
DE RUEHDJ #0439/01 1241300
ZNR UUUUU ZZH
R 041301Z MAY 09
FM AMEMBASSY DJIBOUTI
TO RUEHC/SECSTATE WASHDC 0364
INFO IGAD COLLECTIVE
RUEHDJ/AMEMBASSY DJIBOUTI

UNCLAS SECTION 01 OF 02 DJIBOUTI 000439 
 
SIPDIS 
SENSITIVE 
DEPARTMENT FOR AF/E 
E/EEB 
 
E.O. 12958: N/A 
TAGS: ECON EFIN EINV PREL DJ
SUBJECT: TWO NEW BANKS MAKE SEVEN IN DJIBOUTIS GROWING FINANCIAL 
SERVICES MARKET 
 
REF: 08 DJIBOUTI 553 
 
¶1. (SBU) SUMMARY: Between 2006 and 2007, three new commercial 
banks joined the two historically dominant banks in Djibouti 
(reftel); and two additional banks opened their doors in 2008, 
bringing the total number to seven.  The arrival of these new 
banks has spurred an active competition to court the small 
Djiboutian market with innovative banking services.  However, 
many of the newly established banks are primarily interested 
in serving the international market drawn in by new state-of- 
the-art facilities at Djiboutis port, and in using Djibouti 
as a launching-point to gain entry into other regional 
markets, notably in Somalia. END SUMMARY. 
 
¶2. (SBU) Djiboutis liberal economic policies, stable currency 
pegged to the dollar, and lack of foreign exchange 
restrictions have long attracted regional businessmen looking 
for a banking hub.  As part of President Guellehs overall 
strategy to grow Djiboutis reputation as a full-service 
transport and logistics platform, the GODJ has recently 
promoted significant additional growth in the financial 
services sector.  Three new banks--the Banque de Depot et de 
Credit de Djibouti (BDCD), the International Commercial Bank 
(ICB), and the Saba Islamic Bank (SIB)--opened in Djibouti in 
2006 and 2007.  These three newcomers joined two institutions 
which had long dominated the market, the Banque Indosuez Mer 
Rouge (BIMR), and the Banque Pour Le Commerce et LIndustrie 
(BCI) (reftel). 
 
---------------------------- 
COOPERATIVE AND AGRICULTURAL 
CREDIT BANK 
---------------------------- 
 
¶3. (SBU) The Djibouti Branch of the Cooperative and 
Agricultural Credit Bank (CAC) has been operating for several 
months out of offices located in Djiboutis old port.  The 
bank will be officially inaugurated once it moves to permanent 
offices in downtown Djibouti City, near the traditional 
banking district and in a more convenient location for 
businesspeople and foot traffic.  CAC was created by the 
government of Yemen in 1982.  According to the Djibouti CAC 
Branch Manager, CAC is the second largest bank in Yemen, where 
it has 54 branches.  (NOTE. Djibouti and Yemen are closely 
linked by family and commercial ties, and an important 
minority of Djiboutians trace their family history to Yemen, 
and speak Arabic as a mother tongue.  END NOTE.) The Branch 
Manager said that CAC would like to further expand into Saudi 
Arabia (Jeddah) and Doha (Qatar).  Internationally, CAC has 
business arrangements with CommerzBank (Frankfurt), Citibank, 
the Bank of New York, the National Commercial Bank (Saudi 
Arabia), Doha Bank (New York), and the Arab Investment Bank 
(Bahrain) 
 
¶4. (SBU) CACs Djibouti Branch Manager said that the banks 
mission in Djibouti was to deliver banking and financial 
services to both retail and corporate customers, and to offer 
clients the best managerial and technical systems.  A range of 
e-banking services are a important part of CACs offerings in 
Djibouti, and the Branch Manager said that CAC was planning to 
install Automated Teller Machines (ATMs) at several sites 
throughout Djibouti City, and to offer Point-of-Sale card 
purchase options.  Other services offered for corporate 
clients include management of payrolls, and cash delivery to 
and from business premises.  For the individual market, CAC 
offers consumer loans at a zero percent interest rate, after 
arranging for a commission with the vendor. 
 
¶5. (SBU) CACs Branch Manager praised the Central Bank of 
Djibouti as competent and professional.  He also said that CAC 
had worked with the Djibouti National Investment Agency (ANPI) 
while establishing the Djibouti branch.  According to the 
Branch Manager, CAC currently employs only Djiboutian national 
staff, with the exception of two expatriate managers.  Every 
employee has a university degree, and receives two months of 
in-house training. 
 
------------------- 
SALAAM AFRICAN BANK 
------------------- 
 
¶6. (SBU) President Guelleh inaugurated Salaam African Bank 
(SAB) on December 27, 2008.  SAB operates under Islamic 
banking rules, and does not charge interest.  It is 
headquartered in Djibouti.  According to SABs Branch Manager, 
 
DJIBOUTI 00000439  002 OF 002 
 
 
the banks goals are to become the leading provider of Sharia- 
compliant financial products and services in East Africa, 
mobilize the ideas and wealth of the regional Somali Diaspora, 
offer technologically advanced services, and contribute to the 
economic development of East African communities.  SAB is held 
by a group of shareholders from the region, not all of whom 
are Somalis. 
 
¶7. (SBU) According to the Branch Manager, SAB already provides 
e-banking services, and plans to offer SMS notifications of 
account actions, ATM machines, and linked credit cards.  SAB 
is currently negotiating with state-run Djibouti Telecom to 
offer SMS notifications at a reduced tariff to SAB customers. 
SAB currently employs about 30 people, most of whom are 
Djiboutian.  SABs Branch Manager said that SAB followed the 
Central Bank of Djiboutis procedures very closely, and has 
worked to adhere to the Know Your Customer standard. 
 
¶8. (SBU) The Branch Manager said that SAB was trying to 
attract the Somali Diaspora, and other regional Diaspora 
groups.  It is also targeting companies which may play a role 
in Somalia reconstruction efforts.  (NOTE.  Central Bank 
contacts confirmed that SAB appeared to do very well in the 
first quarter in terms of securing accounts among the Somali 
Diaspora.  END NOTE.)  SAB would like to open its next branch 
in Mogadishu, followed by a branch in Hargeisa.  The Branch 
Manager said that staff for the Mogadishu branch were already 
in training.  Djiboutian businesses present in Somalia, the 
Branch Manager noted, will benefit from these planned 
branches, especially if it lets them avoid carrying cash in 
and out of Somalia.  SAB would be interested in opening an 
outlet in Ethiopia as well, the Branch Manager said, if 
Ethiopian law allowed it. 
 
------- 
COMMENT 
------- 
 
¶9. (SBU) The two latest additions to Djiboutis banking 
landscape, like several other recent arrivals, appear to have 
chosen Djibouti not just for its relatively small, albeit 
growing, domestic market, but also for its strategic location 
and regional commercial ties.  As the new competition helps 
Djibouti boost its profile as a regional financial hub, GODJ 
authorities are also moving to ensure that ordinary 
Djiboutians benefit from the new range of choices.  To help 
reach this goal, the Central Bank recently established a 
policy guaranteeing the right to open a bank account at a 
commercial bank for any Djiboutian earning a monthly salary of 
at least 40,000 Djiboutian Francs (approximately USD 225). 
END COMMENT. 
SWAN