REBRANDED as BMCE Bank, with big name shareholders and a growing network, Morocco's former state-owned foreign trade bank is busy developing its new image. In 1995 it was the subject of the biggest financial sector privatisation in the Arab world; three years on BMCE is in the throes of a major local and international expansion.

The aim is clear: BMCE intends to become the biggest financial institution in Morocco and a key partner for foreign investors in the country. Domestic expansion has accelerated in recent months with the implementation of the so-called 'Leader 2000' programme. This will include buying into local leasing and other financial services companies, while divesting those parts of the portfolio which are no longer seen as essential and are the legacy of BMCE's previous role as a public sector bank answerable to civil servants rather than commercial managers. Non-essential holdings include assets in sectors as diverse as real estate, tourism and public relations, which are slowly being shed as BMCE concentrates on core business areas.

Going shopping

BMCE started the ball rolling in late January, acquiring shares in a leading local leasing company. In a notice to the Casablanca bourse regulators, BMCE said it was 'buying up shares in Maghrebail with a view to taking control of the company.' It is also buying the 14.28 per cent stake held by France's Credit Lyonnais in the Casablanca-based Intrafina, while selling its share in local finance house Moussahama to Banque Centrale Populaire (BCP).

No Moroccan bank has such a high profile abroad as BMCE. This has been aided by shareholders that include Commerzbank and Japan's Nomura, and strategic alliances with partners such as the UK's Barclays Bank. Both Commerzbank and Nomura have expanded their holdings in BMCE in the past year.

Since privatisation, the progress of the former Banque Marocaine du Commerce Exterieur has been moulded by the financier and industrialist Othmane Benjelloun. The BMCE Bank chairman is also president of the Moroccan bankers' association.

Benjelloun proved his mettle when he put together the consortium which successfully bid for BMCE against stiff competition. His partners included Germany's Commerzbank, Deutsche Morgan Grenfell, Morgan Stanley and funds managed by global investor George Soros.

In recent years, Benjelloun has developed such a powerful image that he was mentioned as a potential prime minister, although last year's elections have since opened the way for opposition party politicians to form a government.

Benjelloun's penchant for trail-blazing was underlined in 1996 when BMCE was the first Moroccan bank to issue a global depositary receipt (GDR), initially asking the market to raise $50 million and eventually receiving commitments of $217 million. '[This] showed the credibility of Morocco as a borrower, even more than the status of the bank, which was only a vehicle,' Benjelloun declared at the time. 'Seventy per cent of those who bought into the GDR had never invested in Morocco before. [The GDR] has opened the way for other Moroccan banks to come to the market.' A second Moroccan GDR can be expected this year, according to Anas Alami, director of research at Casablanca-based Upline Securities.

Benjelloun is keen to mobilise BMCE as a vehicle to promote investment flows into the kingdom, especially from Asia and the US, where he has his own property and business interests. The bank is understood to have taken a lead in financing the arrival of Daewoo Corporation in Morocco. The South Korean chaebol first bought the Rabat Hilton Hotel and is considering a range of investments in the country.

BMCE's own foreign expansion has been carefully controlled. Operations were established in Paris, Brussels and Madrid in the late-1980s, but the current international expansion strategy is based on developing closer relations with partners rather than a distinct separate identity. The Madrid presence has already been scaled back.

Recently BMCE has opened new offices in the premises of partner banks in London and Germany with more to come, starting with Italy and the Netherlands. This gives BMCE a presence in key financial centres 'at the lowest cost,' says Benjelloun. BMCE has also enlarged its stake in the New York-based Arab American Bank, taking a controlling interest by buying the holdings of banks which used to make up the global banking group UBAF. Elsewhere, BMCE has worked with Nomura to develop a presence in Japan, Korea and other Asian markets. Latin America is next on the list.

This internationalisation of BMCE has been linked to the reshuffling of shareholdings, a process completed in June 1997 when Nomura bought a 10 per cent stake for $80 million from state holding company Caisse de Depot & de Gestion (CDG). Nomura was a leading participant in BMCE's GDR issue and has developed a strategic interest in North African markets.

Pursuing a similar strategy, Commerzbank also paid CDG nearly $60 million last April to raise its stake in BMCE to 10 per cent from 1.6 per cent. Commerzbank has opened an office in BMCE's Casablanca headquarters to gather information for German investors and generate new business.

Although all of BMCE's shares are now held by private investors, with 40 per cent of the bank's capital in foreign hands, operating control remains very much with Benjelloun.

Despite its local retail ambitions and international aspirations, BMCE's core business is still trade. The bank finances over a third of Morocco's external trade and is a major manager of export credits and other financing. For example, it took FF 100 million ($16 million) out of a total FF 142 million ($23 million) credit package provided by Proparco, the private sector subsidiary of Caisse Francaise de Developpement, for on-lending to local private projects.

The Proparco representative in Rabat, Bernard Larfeuil, says BMCE was chosen to lead the facility because of its reputation since privatisation as 'one of North Africa's best performing banks.' Not a bad reputation for a former stalwart of the state sector after only three years of independence in the private arena.