MCB’s CEO: ‘We Can’t Share Dollars That Aren’t Ours'”

In the landscape of Mauritius’s foreign exchange availability, Thierry Hebraud, the CEO of the Mauritius Commercial Bank (MCB), has stepped into the fray to address mounting concerns. In the latest episode of MCB Talk, he eloquently delineated the root causes of the currency crisis and responded to criticisms directed at the banking sector.

Unfolding the Roots of Currency Shortages

The issue surrounding the scarcity of foreign currency is not new; it has evolved through various economic phases, particularly during the COVID-19 pandemic.

“Take the hospitality and restaurant sectors, for instance,” Hebraud explained.

“During the height of the pandemic, they were nearly immobilised—these sectors are among the primary generators of foreign currency for our nation. Yet, we continued to face import demands.”

The economy faced a stark imbalance between foreign income and expenditure during this period, particularly in energy and goods.

Since then, as the Mauritian economy gradually revived—especially in tourism and hospitality— and other sectors resumed activity, there was a substantial increase in foreign currency income.

However, Hebraud cautioned that this surge was met with multiple challenges leading to today’s situation.

Governments worldwide, including Mauritius, injected vast amounts of liquidity to bolster their economies, leading to two profound consequences: soaring inflation and the depreciation of the Mauritian rupee against the US dollar and other currencies.

Hebraud continued, “Moreover, this influx of liquidity supported increased consumption. Our nation imports nearly everything we consume, which in turn widened the gap between our foreign income and currency outflows.”

Compounding these issues were significant increases in interest rates for the US dollar and euro, surpassing those of the rupee.

“Currently, exporters holding foreign currencies have little incentive to convert their dollars into rupees; why would they when they receive lower returns?” he summarised.

Addressing the Blame on Banks

Amidst the turmoil, banks have come under scrutiny. “I must emphasise that every foreign currency, every dollar we generate through our operations, is made available to our clients to meet their needs,” he insisted.

However, he stressed an important point often overshadowed by misunderstanding:

“What we cannot do is provide dollars that do not belong to us—specifically, those held in our clients’ accounts.”

A Path Towards Resolution

Despite the tumult, Hebraud remained optimistic about finding a resolution.

“If all stakeholders, including the Central Bank, exporters, and financial institutions, collaborate towards a common goal, we can collectively steer towards normality,” he advocated.

Key Figures at a Glance

• 1.2 Million Clients: The MCB currently serves about 1.2 million clients within a population of 1.3 million.
• Leading Bank in East Africa: The MCB has emerged as the premier bank in East Africa, ranking thirteenth across the continent and establishing a strong presence in niche markets like Private Equity and Trade Finance.

Challenges and Solutions

The MCB is confronting two primary challenges: congestion in branches due to an influx of clients and difficulties in responding to requests promptly.

In light of this, measures have been instituted, including the formation of task forces to analyse the situation comprehensively and implement effective, sustainable solutions.

Additionally, a dedicated Domestic Banking department was established last year to enhance operational coherence between Retail and Business Banking, better serving local clients including individuals and SMEs.

Hebraud’s Vision for the Future

Reflecting on the state of the bank, Hebraud noted, “Client satisfaction is a key performance indicator for MCB employees.”

He also voiced concerns about losing adaptability within the institution. “It feels as though we’ve become a public bank; we haven’t equipped ourselves adequately to face these challenges.”

Furthermore, he remarked on the broader geopolitical climate.

“There is hypocrisy from Northern countries attempting to hinder the socio-economic development of the continent. Africa must unite to assert its rights to sustainable development through a Just Transition approach.”

On the implications of global leadership changes, he cautioned, “It is premature to judge the effects of Donald Trump’s government on Africa.

We have entered a landscape where superpowers will impose their viewpoints, leading bilateral negotiations to overshadow global accords.”

Moody’s Rating Response

In response to Moody’s recent revision of its outlook from stable to negative for Mauritius, the MCB acknowledged the shift yet highlighted that its sovereign rating remains Baa3.

“This adjustment reflects the broader economic landscape,” the MCB management stated, underlining the bank’s financial resilience.

Remarkably, the MCB is among the few African banks classified as Investment Grade.

“The confirmation of our rating demonstrates our ability to generate profits alongside solid capital and liquidity reserves,” they concluded.

In a testament to its exceptional service, the MCB has been awarded the accolade of African Bank of the Year for 2024. As the dust settles on this tumultuous period, the commitment to rebound and adapt remains unwavering.

Source: Defi Media