Banco BAI of Angola Targets Home-Grown Expansion on Oil

Banco Angolano de Investimentos SA, Angola’s largest bank by assets, is forecasting 10 percent revenue growth this year as Africa’s second-biggest oil and gas- producing nation expands.

The company wants a slice of the $1 billion that a new petroleum-industry banking law may add to the economy this year, Head of Corporate and Investment Banking Luis Filipe Rodrigues Lelis said. It also plans to add 15 branches for a total of 116 in the country, he said. The bank’s profits fell 15 percent to $180 million in 2012, while revenue rose 10 percent to $581 million.

Angola plans to start a $10 billion liquefied natural gas plant this year and has passed a law that requires foreign oil companies to start using kwanzas, the local currency, to pay taxes beginning next month. After July 1, the foreign companies must pay all domestic suppliers in kwanzas, and after Oct. 1, they have to pay foreign suppliers via Angolan bank accounts in either local or international currency.

“The law is going to be a positive event because it will increase the flow of dollars and kwanzas in the system and boost its capacity to do business,” Lelis, 44, said in an interview April 17 in Luanda, the capital. “The demand on banks and other companies to improve their efficiency is another good result.”

Producers including Total SA (FP), Exxon Mobil Corp. (XOM) and BP Plc (BP/) contributed to Angola’s March crude oil output of 1.78 million barrels a day, second only to Nigeria in Africa.

Angolan Expansion

New BAI branches this year will be located in Luanda, where more than 70 percent of the bank’s business is conducted, as well as oil-rich Cabinda, and the cities of Benguela, Namibe, Lubango and Huambo, he said. The number depends on how many new managers can be trained at the bank’s $60 million academy, he said.

“We want to consolidate our position and market share within Angola,” Lelis said. “We want to be the reference bank here before we go abroad.”

BAI has five branches in Cape Verde, two in Portugal and a 20 percent share in Banco Internacional de Sao Tome and Principe. Plans to open offices in London and Asia and to expand in South Africa beyond a representative office have been put on hold, he said. BAI is not looking at acquiring any of Angola’s 22 other banks, Lelis said.

The bank also wants to help finance some of Angola’s infrastructure projects, such as the $3.5 billion Lauca hydroelectric dam scheduled for construction by 2017 on the Kwanza River in Kwanza North province, Lelis said.

Sonangol Stake

State oil company Sonangol EP is the largest shareholder in BAI with an 8.5 percent stake, according to company documents. The chairman is Jose Carlos Paiva, managing director of Sonangol UK Ltd. One of the bank’s two vice-chairmen is Francisco de Lemos Jose Maria, chief executive officer of Sonangol.

BAI had 22.1 percent of Angola’s 5.11 trillion kwanzas ($53.3 billion) in banking assets, according to an annual analysis by Deloitte & Touche Auditores Lda., a unit of Deloitte LLP. Banco Espirito Santo Angola SA followed with 16.5 percent, Banco de Poupanca e Credito SA at 14.7 percent, Banco de Fomento Angola SA with 13.2 percent and Banco BIC SA at 10.3 percent.

A 2010 U.S. Senate report on foreign corruption in the U.S. cited BAI for having a hidden list of shareholders and not supplying its anti-money laundering procedures (TO WHO?). Angola ranks 157th out of 176 countries on Transparency International’s 2012 Corruption Perceptions Index.

The bank is following Angola’s new anti-money laundering laws and BAI has a code of conduct, Lelis said.

“We’re making sure BAI is not used for any transaction that will put the Angolan financial system at risk,” he said.

To contact the reporter on this story: Colin McClelland in Luanda at cmcclelland1@bloomberg.net

To contact the editor responsible for this story: Antony Sguazzin at asguazzin@bloomberg.net

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