KHARTOUM: Bank of Khartoum, Sudan’s biggest private bank, is expanding in South Sudan to benefit from rising bilateral trade with the new African nation and eyes more Islamic bond sales, top executives said on Tuesday.
The lender, owned by Dubai Islamic Bank, also sees opportunities with Chinese banks looking to finance imports from Sudan’s biggest trade partner and oil buyer, said General Manager Fadi Salim Faqih.
Despite a severe economic crisis with inflation hovering around 20 percent and a scarcity of dollars, Sudan still offers potential as foreign investors consider the expanding minerals industry and the agricultural sector, he said.
A focus for Bank of Khartoum is South Sudan, where it set up a bank to tap the underdeveloped oil-producing nation which broke off from Khartoum in July under a 2005 peace deal.
"We are looking to expand. We are looking at two more branches in Juba and another four in other cities across South Sudan," Faqih told Reuters, adding that the expansion would be probably completed early next year.
Tensions have flared between north and south over violence in the joint border region and over how to share oil revenues but Faqih saw opportunities to help Khartoum-based firms to do business in the South.
Much of the South’s imports such as food or consumer articles comes from the north which has the only Red sea port.
"Everything relies on trade there (in the South)," he said. "One of our first targeted clients are the ones like telecoms or agricultural (firms) who want to go to the south or are already there."
But Bank of Khartoum would steer clear off lending in the South until regulations had improved. The new nation is struggling to set up efficient state institutions and fight corruption.
China
The bank sees also opportunities with Chinese banks after the US lifted trade sanctions on Bank of Khartoum in place on Sudan in general since 1997. The bank was removed from the list in April because it is no longer controlled by the government.
"Chinese banks have welcomed this," said Faqih who is just back from a trip to China. "It was a bit tough communication at our first time. It was a totally different attitude this time."
China is the biggest political and trading partner of both Sudans as most Western firms shun especially the north due to the U.S. sanctions.
"Close to 70 percent of imports come from China," he said. "Doing (financing) directly cost less, is more secure and efficient," he said.
Chinese banks also had offered clearing services for the yuan. So far trade Sudan’s foreign trade is carried out mostly in dollars and euros.
"If the central bank here allows banks to trade yuan I think the dollar would be just dropped," Faqih said.
On its home market, Bank of Khartoum has several Islamic bond issues, or sukuk, in the pipeline, said Khaled Zada, head of treasury and foreign relations at the bank.
A local airline was interested in sukuk sales worth $60 million, while foreign investors were looking to finance real estate projects worth around $200 million.
