1 responsible investing – a banking perspective march 28, 2013 mark watts, cfa head of fixed...

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Responsible investing – A banking perspectiveMarch 28, 2013

Mark Watts, CFAHead of Fixed Income

2Region’s Best Asset Manager” by Takaful International Awards 2012 & 2013, Arab Achievement Awards 2012, MENA Fund Manager 2012 and Global Investor 2011Region’s Best Asset Manager” by Takaful International Awards 2012 & 2013, Arab Achievement Awards 2012, MENA Fund Manager 2012 and Global Investor 2011 2

Disclaimer

This document outlines particular services provided by National Bank of Abu Dhabi (“NBAD”) and does not constitute or form part of any offer or invitation to sell, or any solicitation of any offer to purchase or subscribe for, any shares in NBAD nor shall it or any part of it form the basis of or be relied on in connection with any contract therefore. This presentation was prepared by NBAD exclusively for the benefit and internal use of the recipient. This presentation is incomplete without reference to, and should be viewed solely in conjunction with the associated oral briefing provided by NBAD. The presentation is proprietary to NBAD and may not be disclosed to any third party or used for any other purpose without the prior written consent of NBAD. The information in this presentation reflects prevailing conditions and our views as of this date, which are accordingly subject to change. In preparing this presentation, we have relied upon and assumed, without independent verification, the accuracy and completeness of all the information available from public sources or which was otherwise reviewed by us. In addition, our analyses are not and do not purport to be appraisals of the assets, stock or business of the recipient. Even when this presentation contains a kind of appraisal, it should be considered preliminary, suitable only for the purpose described herein and not be disclosed or otherwise used without the prior written consent of NBAD. NBAD Mena Dividend Leader (the “Fund”) is a sub-fund of OneShare Plc (the “Company”), an open-ended umbrella type investment company with segregated liability between sub-funds and authorized by the Central Bank of Ireland as a UCITS pursuant to the European Communities (Undertakings for Collective Investment in Transferable Securities) Regulations,2011, as may be amended from time to time. Past performance is not indicative of future performance. The value of investments can go down as well as up and the Investor may not get back all of the initial investment. There is no guarantee for the performance during the investment period. It is recommended that every Investor seeks independent financial advice about the risks involved before considering investing. The sale of the Fund is subject to the conditions stipulated in the Prospectus and Key Investor Information Document of the Fund, which can be obtained from the offices of Northern Trust International Fund Administration Services (Ireland) Limited , Georges Court, 54-62 Townsend Street, Dublin 2, Ireland [or are available from www.nbad.com]. NBAD is licensed by the Central Bank of the UAE.

http://www.nbad.com/


Responsible investing – A banking perspectivePerception is reality?

Question: If you had to vote for who you think has the worst reputation today from a job/industry perspective, who would you vote for?

A. Real estate broker/agent

B. Lawyer/Solicitor

C. Traffic warden

D. Banker


Responsible investing – A banking perspectiveMain areas to cover

Ethics and good governance

Activities in the community

Approach to investors

Wider industry issues


Ethics and good governance


Responsible investing – A banking perspectiveEthics and NBAD

Principles of professionalism

Client confidentiality

Bank confidentiality

Bank internal & external image

Trading in Bank’s shares

Outside interests

Gifts

Bribes

Relatives within the Bank

Commitment to the Bank and its

customers

Commitment to Society

Know Your Customer & Anti Money laundering

Reporting

Conflicts of interest

Code of Ethics


Responsible investing – A banking perspectiveBanks have to follow stringent guidelines

Regulatory bodies:• Central Bank of UAE & Government of UAE• Securities & Commodities Authority (SCA)• Abu Dhabi Stock Exchange (ADX)• Dubai Financial Market (DFM)• Dubai Financial Service Authority (DFSA)• Guernsey Financial Services Commission (GFSC)• Central Bank of Ireland• Cayman Islands Money Authority

Laws/regulations:• United Kingdom Bribery Act• UCITS IV• United Nation Sanctions• United States Sanctions• The Foreign Account Tax Compliance Act (FATCA) - is a US law

aimed at foreign financial institutions and other financial intermediaries to prevent tax evasion by US citizens and residents through use of offshore accounts.


Responsible investing – A banking perspectivePrevention of money laundering is a key subjectProcedures are in place for the following across NBAD to ensure compliance with the Bank’s Anti Money Laundering policy:

Know your customer (KYC) – stage where we request relevant documents

Customer due diligence – further checking by conducting investigation/audit to customer

Anti money laundering (AML) - Compliance with obligations to identify and report unusual and suspicious activities/transactions

Regulatory compliance – adherence to regulations issued by the Central Bank of UAE, the Government of UAE, and other bodies


Activities in the community


Responsible investing – A banking perspectiveIt’s not all about P&L!Charitable organizations which NBAD has supported through the ADNIF-Zakat Fund:Khalifa Bin Zayed Al Nahyan Foundation

االنسانية لألعمال نهيان آل زايد بن خليفة مؤسسةGeneral Authority of Islamic Affairs & Endowment

واألوقاف االسالمية للشؤون العامة الهيئة

The Sheikh Zayed Bin Sultan Al Nahyan Charitable & Humanitarian Foundationالخيرية لألعمال نهيان آل سلطان بن زايد مؤسسة واالنسانية

Zayed Higher Organisation for Humanitarian Care & Special Needsاإلحتياجات وذوي اإلنسانية للرعاية العليا زايد مؤسسةالخاصة

Khorfakkan Club for Handicapped (Braille method printing of Holy Quran)

للمعاقين خورفكان نادي

Aid Campaigns (Yemen Relief Campaign through UAE Red Crescent)

Friends of Cancer Patients - Sharjahالسرطان مرضى أصدقاء

UAE Red Crescentاالماراتي األحمر الهالل هيئة

Sharjah City for Humanitarian Servicesاإلنسانية للخدمات الشارقة مدينة

Faraj Fund

Al Noor Training Centre for Children with Special Needs - Dubai

الخاصة االحتياجات ذوي االطفال لتدريب النور مركز

King Hussein Cancer Foundation – Ammn, Jordan

للسرطان الحسين مؤسسة

UAE Zakat Fund - المتحدة العربية االمارات دولة الزكاة صندوق


Responsible investing – A banking perspectiveA vital player in helping advance community aspirations

NBAD supports the product programs for SMEs offered by Khalifa Fund through:

Administering Khalifa Fund Loans under the terms of the MOU agreement.

facilitating companies with annual turnover of up to AED100million.

Providing expertise and technical support in different fields to support and develop small and medium sized development projects by providing training and awareness sessions.

Education in conjunction with the Western Region development Council to educate the SMEs on how to read balance sheets, develop a business plan and analyze statements.


Responsible investing – A banking perspectiveAlso a major player in advancing national projects…

NBAD has been involved in the financing of the following projects:

Khalifa Port Project & Khalifa Industrial Zone Abu Dhabi (KIZAD)

Etihad Rail (phase 1 of the project)

Various Independent Water and Power Projects (IWPPs)

A host of additional private initiatives helping countless individuals and companies across the country and across the region…


Responsible investing – A banking perspectiveOur stakeholders and priority focus areas

Relevant Stakeholders Material Issues Priority Focus Areas

Investors and shareholders, employees, regulators and society

Strong Financial Performance, Shareholder Returns

Economic performance

Investors and shareholders, employees, regulators and society

Governance, Transparency and Accountability, and Tackling Financial Crime

Embracing new accountability realities

Employees Training and Education, Emiratisation, Salary & Benefits, Health & Safety, Diversity and Equal Opportunities

Investing in Our People

Investors and shareholders, employees, The Environment

Water consumption, energy consumption, GHG Emissions, paper use and waste

Environmentally smarter

Customers, investors and shareholders, regulators

Responsible Lending and Investing, Product and Service Innovation, Quality Services and Customer Satisfaction, Financial Inclusion, and Product Responsibility

Product & service quality and innovations

Partnerships, suppliers, community

Creating outstanding relationships with our stakeholders - business partners, suppliers and the community

Outstanding relationships


Approach to investors


Responsible investing – A banking perspectiveOur approach to Treating Customers Fairly

Treating Customers

Fairly

Product design

Product categorizatio

n

Customer categorizatio

n

Appropriateness

Exceptions Operating procedures

Marketing/Sales

documentation

Service

Employees

Complaints


Responsible investing – A banking perspectiveTreating Customers Fairly (TCF) – a charter

• Our customers can be confident that treating them fairly at all times is central to our corporate culture and values

• We will provide our customers with clear information on our products and services.

• Where customers receive advice, we aim to ensure that such advise is suitable and taken into account of their circumstances

• We value customer feedback and will respond promptly to any complaint.

• We will apply our TCF general principles to situations where we distribute products on behalf of third parties and, for any related service that is outsourced

• TCF compliance will be linked to performance management and reward across the NBAD Group


Customer profile

Customer Risk

rating

Customer Objective Important notes

Secure 1

•Your sole objective is to preserve your capital and achieve returns based on prevailing deposit rates which may or may not keep pace with the rate of inflation. •You are not willing to invest in any products where your capital is at risk.

Customer has to be provided with cash

or near cash deposit products

Conservative 2

•You seek to achieve above deposit rate returns and protect your capital against inflation. You are willing to accept very low levels of investment risk over the medium term (up to 2 years). •The value of your investment can fluctuate and may fall below your original investment. While volatility is expected to be low, short-term losses may be higher

Normal customer profiling

form/please take note of specific risk

exclusion

Balanced 3

• You seek to achieve a moderate level of capital growth on your investments and you are willing to accept moderate levels of investment risk over the medium to long term (up to 3 years). • The value of your investments can fluctuate and may fall below your original investment. While volatility is expected to be moderate, short-term losses may be higher. • You seek to achieve a moderate level of capital growth on your investments and you are willing to accept moderate levels of investment risk over the medium to long term (up to 3 years). • The value of your investments can fluctuate and may fall below your original investment. While volatility is expected to be moderate, short-term losses may be higher.



exclusion

Growth 4

• You seek to achieve a moderate to high level of capital growth on your investments and you are willing to accept high levels of investment risk and volatility over the short, medium and long term. • The value of your investments can experience high levels of fluctuations and may fall substantially below your original investment.



exclusion

Enhanced growth 5

• You seek to achieve significant capital growth on your investments and you are willing to accept very high levels of investment risk and volatility over the short, medium and long term. • The value of your investments can experience very high levels of fluctuations and may fall substantially below your original investment.

Additional customer declaration should

be sought for aggressive products

Aggressive growth 6

• You seek to achieve exceptional capital growth on your investments and you are willing to accept extreme levels of investment risk and volatility over the short, medium and long term. • The value of your investments may fall substantially below your original investment, with the potential to lose the value of your entire investment.

Responsible investing – A banking perspectiveCustomer risk profile and allocation portfolios


Conservative (2)

2 3Balanced(3)

Enhanced growth(5)

2

Secure (1)

4 53

Growth (4) 43

6

1

2

1

1

1

1 2

Vulnerable (VL) 1

Customer Investment Profile

No SalesCustomer: What a customer can buy:

Exceptional Transaction

4 531 2Aggressive growth (6)





Product Risk Rating

Responsible investing – A banking perspectiveProduct risk rating overview


Responsible investing – A banking perspectiveDiversifying – building sound portfolios


Source: NBAD/Bloomberg, weekly data 31st December 2010 to 28th February 2013, all performances are calculated net of fees, return is annualizedNBAD Institutional Clients Portfolio: Unconstrained NBAD Portfolio for institutional investors since inception, EFH Hermes FI Fund: EFG Hermes Fixed Income MENA fund , Emirates NBD MENA FI Fund: Emirates MENA Fixed Income AA, Gulf Bond FI fund: Gulf Bond MENA Fixed Income Fund, Barclays EMGCC Bond Index: Barclays Emerging Market GCC Credit, Sharpe Ratio Risk Free Rate is calculated as the 3 Month EIBOR (1.31%)

NBAD INSTITUTIONAL CLIENTS PORTFOLIO 4.42

EMIRATES NBD MENA FI FUND 2.53

BARCLAYS EMGCC BOND INDEX 2.11

GULF BOND FI FUND 2.08

EFG HERMES MENA FI FUND 0.65

Sharpe ratio

Responsible investing – A banking perspectiveRisk returns


A bank should offer its customers tools to help them diversify risk.

On the 31st October 2000, we launched the NBAD UAE Growth Fund. This allowed retail as well as large investors to reduce their investment risk.

In the year 2005, NBAD launched the Shari’a compliant NBAD UAE Islamic Fund thus expanding its professional services to a wider and more observant subset of its stakeholders.

NBAD introduced new asset classes in 2012 with the launch of our flagship NBAD Cautious Income Fund, and the NBAD Sukuk Income Fund in addition to several capital guaranteed products.

2102 also saw the launch of 3 balanced funds, allowing investors access to global asset allocation and global fund management expertise

Responsible investing – A banking perspectiveDiversification initiatives - meeting client needs


Wider industry issues


Responsible investing – A banking perspectiveSome responsible investing jargon explained


Responsible investing – A banking perspectiveWhat the market is concerned about


Responsible investing – A banking perspectiveSome global challenges I The World Bank estimates that higher food prices have

increased the number of undernourished people by as much as 100 million since 2007.

There will be competition for land between those who wish to plant food crops for consumption and those who wish to use those crops to produce biofuels. This competition is expected to require a 10% increase in farmland worldwide by 2030.

By 2025 the United Nations predicts that 20% of the world’s population will not have access to adequate drinking water. Half the world’s population doesn’t have access to basic sanitation.

Some successes: wind power is growing at 30% pa globally and is likely to provide up to 15% of the US electricity needs by 2020. According to the UN global projections of $630 billion investments in renewable energy by 2030 would translate into at least 20 million additional jobs.


Responsible investing – A banking perspectiveSome global challenges II

The global population is growing at an exponential rate. From the beginning of mankind 160 thousand years ago until 1945 AD, the earth’s population grew to a total of two billion people. But in just 65 years since 1945, our population has tripled to six billion and will grow to over nine billion by 2050.

Most growth will occur in developing nations, creating unprecedented pressure on natural resources such as energy, food, water, timber and land. Increasing demand for food, infrastructure and health services will have to be met. Waste and pollution will have to be managed.

But we’re also facing an aging population. Around one fifth of the population in the developed world is now over 60. By 2050 one third of all people will be over 60.


Responsible investing – A banking perspectiveSome responsible investing jargon explained

Negative screening - excludes certain securities from investment consideration based on social and/or environmental criteria.

Divestment - is the act of removing stocks from a portfolio based on mainly ethical, non-financial objections to certain business activities of a corporation.

Shareholder activism - efforts attempt to positively influence corporate behaviour.

Shareholder engagement - less vocal than shareholder activism, requires extensive monitoring of the non-financial performance of all portfolio companies.

Positive investing - making investments in activities and companies believed to have a positive social impact.

Community investment - by investing directly in an institution, rather than purchasing stock, an investor is able to create a greater social impact:

Impact investing - an investor will actively seek to place capital in businesses and funds that combine financial and social returns.


Responsible investing – A banking perspectiveHave I changed your perception?

Question: If you had to vote for who you think has the worst reputation today from a job/industry perspective, who would you vote for?

A. Real estate broker/agent

B. Lawyer/Solicitor

C. Traffic warden

D. Banker


Thank You

1 responsible investing – a banking perspective march 28, 2013 mark watts, cfa head of fixed...

Documents

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global investor

nbad mena dividend leader

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subfund of oneshare

arab achievement awards

central bank of ireland