Brokat is dead, long live Cambista

Cambista emerges from the wreckage of bankrupt Brokat and will focus on corporate banking, says regional sales director Nigel Spear. A question mark hangs over the fate of former Brokat customers, however.

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By  David Ingham Published  May 1, 2002

Corporate banking focus|~||~||~|Brokat, the once high-flying e-finance and telecomms software company, has risen from the ashes of bankruptcy. In the UK, Scandinavia and Middle East, the former management of Brokat has bought up the bankrupt company’s remaining assets and formed a new company called Cambista. German company, DataDesign AG, has acquired Brokat’s German and Eastern European assets.

The management buyout is the final act in a breakup that began in late 2001 when certain Brokat products, including the flagship Twister, were sold to eOne Global and folded into a division called Encorus. After further unsuccessful efforts to reduce costs and raise cash, Brokat filed for bankruptcy in December 2001. Management reached the deal with creditors that led to the formation of Cambista in early March.

Cambista, from a Latin word meaning ‘one who deals in bills of exchange’, will specialise in corporate financial applications and will operate from the Dubai Internet City office used by Brokat. Nigel Spear, who moved to the region in 2001 to become Brokat’s regional manager, becomes Cambista’s regional sales director.

The regional office of Cambista has, therefore, been inherited, but Spear argues that there is enough potential business to justify its existence. “We’re focusing on high-end cash management, treasury systems and business banking, as opposed to the retail customer,” says Spear. “Most of the competitors are US-based, and most of those competitors haven’t started addressing Europe... It’s a relatively competition free area at the moment.”

Regional banks, he believes, will begin looking at corporate e-banking seriously for fear of losing corporate customers to foreign banks that can easily tailor existing services for the local market. Only last month, mighty Citigroup launched its corporate e-banking system into the region.

“What most companies want is zero balance accounting — where there’s no more money in your system than you ever need. Anything that’s spare is off earning interest,” explains Spear. “The threat is that international banks have these services, and there’s a risk that if banks here can’t offer these services they’ll lose business.”

Financial applications were only a smaller part of the Brokat portfolio (Twister was the main product) when Brokat went bust. Spear says, however, that they had become a key focus area in Brokat’s latter days, because Twister’s product segment was becoming commoditised. Cambista intends to take a fledgling product line and build on its potential.

Cambista has received investment of € 5.1 million from Favonius Ventures, a European venture capital firm that counts ABN Amro, ING and Calpers, the California state pension fund, amongst its investors. Work is underway on a second product called the Cambista Financial Framework, which we will hear more about in the coming months.
||**||Encorus and Twister|~||~||~|
The regional plans of Encorus, whose Twister product is used at Emirates International Bank and Riyadh Bank, remain unclear. For the time being, regional Twister customers will continue to be taken care of by the channel partners, such as Emirates Computers and NewTek, that were appointed some years ago by Brokat.

The dilemma that those customers and channel partners now face is whether or not to stick with Encorus and Twister. Hani Harik, president at Emirates Computers, told Arabian Business that this decision depends entirely on how much commitment Encorus shows to the region.

An IT manager at Emirates Bank International (EBI), which uses Twister, told Arabian Business that the bank is still receiving technical support through Emirates Computers. However, Asked if EBI will stay with Encorus, he replied, “We continuously evaluate our products. This is normal.” Encorus has apparently agreed to support Twister until the end of 2003, but the feeling is that this is a product that is now effectively in maintenance mode.

The demise of Brokat is another one of those stories of ‘New Economy’ boom and bust. Founded only in the mid-1990s, Brokat expanded rapidly across Europe and into North America from its German base. It also made its mark in the Middle East, snapping up big accounts such as Emirates Bank International, Riyadh Bank and Arab Bank.

It all unraveled when IT spending suddenly tanked in 2000, and Brokat, like many IT companies, faced a cash squeeze. The company was forced to divest its American acquisitions, which triggered the repayment of a high interest bond.

Unfortunately, it could not cover the repayments and after unsuccessful attempts to save itself, Brokat filed for bankruptcy at the end of 2001. With the establishment of Cambista, something has at least been salvaged from the ruins.||**||

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