banking & business review nov '10

BANKING AND BUSINESS REVIEW February 2010

PUBlIShER & MANAGING DIREctoR

Sankaranarayanan [email protected]

MANAGING EDItoR

K Raveendran [email protected]

EDItoR

c l Jose [email protected]

coNSUltING EDItoR

Matein Khalid [email protected]

DIREctoR FINANcE

Anandi Ramachandran [email protected]

GENERAl MANAGER

Radhika Natu [email protected]

EDItoRIAl

contributing EditorsAnand VardhanVanit Sethi [email protected] Ramanan [email protected]

DESIGNUjwala Ranade [email protected]

AccoUNtS Sujay Raj [email protected] Supervisor Ibrahim A. hameed PRINtING

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Vol. VI. No. 49 November 2010

cL Jose

editor’s note

Amlak’s bail-out key to market

Indeed, we have started seeing signs of recovery. This is not just echoing the views expressed by International Monetary Fund (IMF) or World Bank or studies doled out by financial institutions through their periodical research papers. Not only the corporate houses, even individuals now get to feel this positive change.Whether it be the crowd seen on the roads or malls, or the huge responses to bond/sukuk issues launched by the UAE companies, all these point to the fact that the downturn has bottomed out in the UAE. But as we have attributed as the main reason for the slow-down in the UAE, especially Dubai, the property sector needs to recover from its more than two-year-old slump to accelerate the growth and sustain the steam. Though the valuation of properties has become attractive on any given standards, getting finance now poses the biggest challenge for the aspiring buyers. It was heartening to learn that Tamweel has been bailed out by Dubai Islamic Bank (DIB) helping the latter enter the mortgage market once again. It remains a fact that together with Amlak Finance, the Islamic mortgage financier duo controls almost two-third of the mortgage market in the country. This highlights a big market reality that Amlak also needs to enter the market in order to accomplish the mission of market recovery. Dubai’s recovery depends a lot on the recovery of the real estate sector. We are sure the authorities would certainly do something to address this.

BANKING & BUSINESS REVIEW November 20102

CONTENTS

COVER STORY

11 Amlak needs a roof over it Stand-alone finance company a wrong model in today’s market

42 REAL ESTATE

46 TRENDS

Dubai pins down Abu Dhabi property market

Meet the bank customer of 2012

HOT PICK

8 Are bank deposits really guaranteed? Confusion prevails

INTERVIEW

14 Islamic firms will dominate market in 5 years Dr Hussain Hamid Hassan


ROUND UP

Global sales of sukuk are down 22 per cent at $11.8 billion as of mid-October, from the same period in 2009, accord-

ing to data compiled by agencies. Debt in developing markets has outperformed Islamic bonds in 2010, returning 16.5 per cent, JPMorgan Chase & Co.’s EMBI Global Diversified Index shows.

The difference between the average yield for emerging- mar-ket sukuk and the London interbank offered rate has narrowed 19 basis points during October to 354, according to the HSBC/NASDAQ Dubai US Dollar Sukuk Index. The spread has shrunk 114 basis points this year.

A recent survey conducted by Lloyds TSB International has revealed that the majority of British expats living in the

UAE are aware of the importance of a maintaining a varied financial portfolio.

The survey shows that whilst 92 per cent of British expats have a current account and 53 per cent have a savings account in the UAE, nearly 60 per cent also maintain an offshore savings account. These findings indicate that customers are willing to keep savings in both their current country of residence as well as offshore.

The survey was conducted online by FreshMinds with 412 expats of British nationality living in France, HK, Spain, South Africa, UAE and the United States.

Richard Musty, managing director of Lloyds TSB Middle East said, “The recent economic downturn has highlighted the importance of having a responsible attitude to managing your finances. We are already seeing a clear increase in deposits and a reduction in the number of requests for new loans. This indicates that British expats have a good understanding of their finances. They are making the most of the positive options living abroad presents such as exchange rates and appreciate the importance of maintaining a combination of financial options on and off shore.”

The survey of British expats, living in the UAE, also shows that when banking offshore, their confidence in sterling is high in comparison with other currencies, with 50 per cent of respondents believing that sterling is the strongest currency for their savings. Only 4 per cent polled selected the Euro.

Jakob Pfaudler, managing drector of Lloyds TSB International commenting from a UK perspective, said it is reassuring to see so many British expats are confident in the future of sterling which, after depreciating over the past few years, has stabilised.

Spreads to tighten

Survey shows expat Brits keen on savings

The two years of global economic downturn and a cou-ple of corporate troubles that hit the UAE banks have

reshuffled the bank rankings in the country in terms of profit, which saw National Bank of Abu Dhabi (NBAD) taking the numero uno position once again.

The Abu Dhabi-based NBAD was followed by another Abu Dhabi bank, First Gulf Bank (FGB) pushing the larg-est bank hitherto, in terms of profit and assets – Emir-ates NBD, into the third slot in profit when the banks announced their 2010 nine-months results and other fi-nancial details in the last couple of weeks.

Interestingly, the rankings in profit were the same even when the first half results of the current year were released three months ago. More importantly, NBAD is fast catch-ing up with Emirates NBD on the asset rankings also with the difference between the asset size of these two banks has already narrowed down to just above Dh70 billion.

Following the merger between National Bank of Du-bai (NBD) and Emirates Bank International (EBI), Emir-ates NBD had emerged the unquestionable number one in terms of assets as well as profit by posting a net profit of Dh3.681 billion for 2008 when NBAD finished a close second with Dh3.018 billion in net profit, and this was fol-lowed by First Gulf Bank with Dh2.997 billion.

One shouldn’t forget the picture of 2007 when ADCB was leading the show in profit along with NBAD. But thereafter the ever-increasing impairment losses brought the bank down to a slot way behind all the front-runners.

The year 2009 saw NBAD maintaining the same level of profit at Dh3.019 billion whereas FGB overtook the former by netting a net profit of Dh3.312 billion, close be-hind Emirates NBD which boasted a net profit of Dh3.342 billion for that year.

However the picture took an overhaul during 2010, which saw both NBAD and First Gulf Bank establishing their positions as the largest profit makers in the UAE’s banking sector. However, Emirates NBD maintained high operating profit through these years proving that the im-pairment losses have taken a heavy toll on their prospects during the current year.

ADCB which posted a relatively low net profit of Dh1.358 billion for 2008, ended up with a dismal show in 2009 when the bank posted a loss of Dh512.799 million – a scene rarely witnessed in the UAE’s banking sector in the recent history. The bank had to be satisfied with a low net profit of Dh19 million for the 9 months ending September end, 2010.

Impairment loss reshuffles bank profit rankings

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Ernst & Young MENA plans to hire at least 2,000 new people to fulfill ambitious growth

plans in 2011. These new recruits, according to a statement from E&Y, will be across all four serv-ice lines: Assurance, Tax, Transactions and Ad-visory.

Already the largest of the Big 4 professional services organisations in the region by size of revenues and numbers of staff and offices, this will add to its 4,200 people across 20 offices in 15 countries in the Middle East and North Africa.

Over 3,000 Ernst & Young partners from across Europe, the Middle East, India and Africa (EMEIA) met in Paris recently to discuss future plans for growth and areas of further investment.

Mark Otty, EMEIA managing partner, Ernst & Young, said the company’s global integration has enabled it to operate more effectively across country borders. “Realising this competitive ad-vantage means bringing it to life for our people and our clients. The year 2010 also marked the fourth year of our previously announced $1 bil-lion global investment initiatives. Underlining the shift in global economic power, much of our new investment has been earmarked for emerg-ing markets and the programme exceeded expec-tations, with more than $1.2 billion ultimately invested,” he added.

Ernst & Young earlier announced combined global revenues of $21.3 billion for the fiscal year ended June 30, 2010. Global revenues in the sec-ond half of the financial year increased by 5.3 per cent in dollar terms.

This year, Ernst & Young says it expects to support the global economic recovery by increas-ing its recruitment of new people in full-year 2011, including recruiting heavily in the emerg-ing markets, with over a 1,000 people in Africa, 2,000-plus in the Middle East & North Africa, 2,500 in India and China and more than 1,000 in Russia.

The 2010 Universum global recruitment survey of nearly 130,000 students, released earlier this month, placed Ernst & Young as number three among all employers worldwide and as the most attractive place for graduates to work in more markets than any of its competitors.

Emirates NBD has set up a new company- Emirates NBD Auto Finance Limited (APC), incorporated under the

Companies (Jersey) Law, 1991 and registered in Jersey.This was mentioned as part of the notes to consolidated

statements for the bank’s 9-month period ending Septem-ber 30, 2010

The principal activity of the company is to purchase portfolios of loan receivables through the issuance of notes. The same day, another company, Emirates NBD Auto Financing Ltd (Repack), was also incorporated under the Companies (Jersey) Law, 1991 and registered in Jersey.

“The principal activity of the second company, Repack, is to invest in notes and securities through the issuance of notes. APC and Repack are consolidated within the Group in compliance with SIC Interpretation 12 – Consolidation – special purpose entities,” the notes have mentioned.

E&Y to hire 2,000 for MENA in 2011

ENBD sets up two firms in Jersey

Investors poured a net $1.5 billion into emerging-market bond funds in the second week of October, bringing the

inflows until mid-October to $41 billion, according to a report from EPFR Global, a Cambridge, Massachusetts-based research company.

Qatar Islamic Bank SAQ received orders for $6 billion as it sold $750 million of Islamic debt on September 30. Dubai’s government sold $1.25 billion of bonds in Sep-tember and Emaar Properties, the UAE’s biggest property developer, raised $500 million from selling convertible bonds in non-Islamic sales.

Dubai Electricity & Water Authority (Dewa), the gov-ernment-run utility, sold $2 billion of non-Islamic senior unsecured debt a few weeks ago in its largest dollar-de-nominated bond sale.

Islamic Development Bank (IDB), a Jeddah-based mul-tilateral lender, plans to sell $1 billion of bonds this quarter under a $3.5 billion sukuk programme, Vice President Ab-dul Aziz Al Hinai had said in August. Saudi Arabian Oil Company, based in Dhahran, and Total SA, based in Paris, plan to sell $1 billion in sukuk this year, Simon Eedle, glo-bal head of Islamic banking at Credit Agricole SA, the lead arranger of the sale, said a few weeks ago.

Huge demand for emerging market bondsMore than $40b netted until mid-october

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HOT PICK

Are bank deposits really guaranteed?Confusion prevails over a scheme that never took offBy Amit Chettupuzha

BANKING & BUSINESS REVIEW November 2010 9

A recent speech by Sultan bin Nasser Al Su-waidi, the Governor of the Central Bank of UAE, delivered at a seminar in Dubai, has once again sparked discussions about the

bank deposit guarantee scheme.While the announcement by Al Suwaidi that the

government scheme to protect or guarantee deposits parked with the UAE banks will be in operation only until 2011 went largely unnoticed, bankers seem to be divided over whether there offically exists any scheme called deposit protection within the banking regime.

“This has not been put to test as no one has sought the ‘so-called guarantee’ from the bank and we don’t know how this would have worked,” a banker told BBR.

BBR also reached out to a few other bankers, includ-ing those representing or even heading foreign banks to understand what the real shape of the guarantee scheme looked like.

What really confounded BBR was a statement that appeared as part of the Base Prospectus Supplement dated September 27, 2010, issued by the Dubai Govern-ment department at the time of its bond issue. It un-ambiguously states that there is no deposit guarantee scheme in the country.

Law remains unapprovedIt reads as follows: “There is currently no formal deposit protection scheme in the UAE. While no bank has, so far, been permitted to fail, during the 1980s and early 1990s, a number of them were restructured by the authorities. In October 2008, in response to the global financial crisis, the UAE federal government announced that it intended to

guarantee the deposits of all UAE banks and foreign banks with core operations in the UAE. Thereafter, in May 2009, the UAE’s Federal National Council (FNC) approved a draft law guaranteeing fed-eral deposits although the law remains unapproved.

BBR in a bid to get a clearer picture on the issue approached several large banks including HSBC, Standard Char-tered Bank, National Bank of Abu Dhabi (NBAD), Mashreqbank, Citigroup, to name a few, on certain basic questions such as:

Is there a deposit guarantee scheme •by UAE Government or Central Bank in place?

If so, have you been officially intimated •on this by the authorities concerned?

Are you offering guarantee for the de-•posits being placed with your bank?

If yes, are you issuing any certificates •to this end?

Though officials of many banks pri-vately confided that they have not yet been intimated on this officially through a circular, no banks contacted by this magazine responded to the queries.

Sultan bin Nasser Al Suwaidi


To a question whether there is a legal framework to support a deposit guarantee in place, Emmanuel Volland, Senior Director - Ratings Analytical - Fi-nancial Institutions Standard & Poor’s (S&P) said he hasn’t heard of such a framework that is in place.

“We understand that, as of today, there is no legal framework behind the guarantee of deposits in the UAE. At the same time, various officials have mentioned that bank deposits would be guaranteed, helping to maintain confidence among depositors,” Volland said.

He also added that, overall, it is relatively rare that sovereigns decide to guarantee all deposits through a formal legal framework. “One noticeable exception in the Gulf region is Kuwait that passed a specific Law in November 2008,” he said.

However, IMF believes there is a formal deposit guarantee in place in the UAE. In response to a query on the same issue, Taline Koranchelian, Mission Chief to UAE, Middle East and Central Asia Depart-ment, IMF, stated that in response to the global financial crisis, the Central Bank of UAE announced a three-year blanket federal government guarantees on all bank liabilities (deposits and inter-bank loans) in September 2008. He added that this scheme would end in 2011, but so far no bank has failed.

“Deposit guarantees have been a standard re-sponse to the crisis in several countries both in the region (e.g., Kuwait, Saudi Arabia) as well as interna-tionally, as a tool to restore confidence,” Koranche-lian elaborated further.

At the height of the credit boom witnessed through 2004 to 2008, banks have been aggressive on lending and the period witnessed a loan growth upwards of 30 per cent, at times reaching about 40 per cent.

However, this fell to single-digits during the glo-bal liquidity crisis that started impacting this region towards the last quarter of 2008.

“We need to control this kind of fluctuation in the credit markets,” Al Suwaidi had said at that meeting, where he made the mention on the expiry of deposit guarantee scheme. “The UAE will continue guaran-teeing bank deposits until 2011 when the three year guarantee will come to a close,” Al Suwaidi had said.

The three quarters of the current year ending September 30 saw marginal growth in the inflow of deposits into the banking system. The aggregate deposits grew at a rate of 3.7 per cent between Sep-tember end, 2009 and September end, 2010 – from Dh977.2 billion to Dh1.013 trillion.

An official release from Emirates News Agency (WAM) reported on May 20, 2009:

The Federal National Council (FNC) passed a federal bill on bank deposit guarantee yesterday after debate (discus-sions) between the Minister of State for Financial Affairs Obeid Al Tayer and Governor of the UAE Central Bank Sultan Al Suweidi.

The house committee for financial, economic and indus-trial affairs said the federal draft law aims at boosting confi-dence on sound financial situation and reduce conventional risks in the function of the banking system. It said the issue of the bill fits well with current conditions born out of the international financial crisis.

Al Tayer said the legislation whose enforceability ends in 2012 guarantees deposits and spur financial firms to deal with banks. “It will also bolster the financial situation and attract foreign capital,” he added.

“The aim is to protect national economy and state’s rights and assure international financial institutions,” he said.


Stand-alone finance company a wrong model in today’s market

The home finance business is perhaps the biggest casu-alty of Dubai’s property crash, barring the real estate sector itself. Dominated by the two Islamic mortgage companies of Tamweel and Amlak, the UAE’s mortgage

industry has virtually got stuck in the rut left behind by developers abandoning their projects post haste. The developers were rather lucky to extricate themselves, but the two companies had the igno-miny of having virtually financed very risky assets, finding them-

Amlak needs a roof over it

By c l Jose

selves in a crippling liquidity crunch.So grave was their situation that there were question marks over

their very survival, which prompted the two companies to initiate the process for a merger with the blessings of the government. The plan bandied around was that the merged entity would get a banking licence that could help them raise retail deposits and then carry on.

Two years passed without the merger process getting anywhere while trading in the shares of the two companies on the Dubai Fi-

COVER STORY


based CAPM Investments. BBR’s analysis of Dubai Bank’s finan-

cials for 2009 (no statistics was available for 2010 until this issue went to the press) shows that the bank has posted a loss to the tune of Dh290.642 million for the year 2009 as against a net profit of Dh226.09 for the previous year. During the same period, the bank has seen Dh73 million impair-

2010 has been estimated to be Dh9.693 bil-lion and by March end 2011, this could be in the region of Dh12 billion, meaning that the company needs to raise about Dh12 bil-lion within five months from now, if Amlak Finance fails to attract fresh deposits or is unable to roll over the existing deposits be-yond the contractual period.

“This is quite unlikely in the present

The net liquidity gap of Amlak by the end of this year has been estimated at Dh9.693 billion and by the end of March 2011, this could be in the region of Dh12 billion

ment losses on balances and deposits with banks, Dh371 million impairment losses on Islamic funding and investment assets and Dh100 million losses on available for sale (AFS) investments – all contributing to the loss after having made a Dh613.732 million net operating income.

Dubai Bank, which sits on a networth (total equity) of Dh1.725 billion, has cash balances with Central Bank to the tune of Dh1.475 billion. There is a ‘disturbing’ con-centration of risk on the asset book of Du-bai Bank as, according to the notes to the financials of Dubai Bank, five parties rep-resent almost half of the Islamic financing and investments portfolio of the bank as of December end, 2009.

The maturity analysis of third quarter assets and liabilities of Amlak Finance, which along with Tamweel controlled al-most 65 per cent of the UAE’s mortgage market, points to a huge liquidity gap in its books.

The net liquidity gap by December end

market situation as financial institutions, irrespective of their size or standing, are running frantically for liquidity,” said an analyst. The best possible way for Amlak would be to become part of a bank like what Tamweel did. “Since the funds requirement is substantial, the best possible way will be for more than one Islamic bank to get to-gether to buy Amlak’s assets,” Yasin noted.

Amlak, tamweel model can’t workThe Amlak-Tamweel model, a stand-alone finance company, is difficult to work in this market, especially at a bad time like this, according to finance experts. Mortgage fi-nance needs long-term deposits, which has always been a tough thing in the GCC mar-ket even at the best of times (prior to reces-sion). Moreover, finance companies are not allowed to tap deposits from individuals making it a harder option for them to ac-cess deposits.

“You cannot expect banks to park long-term deposits with Amlak or Tamweel when long-term funding doors are closed or rendered highly priced for them. There is no yield curve that can project long-term inter-est rates in this market, making it further difficult for banks to park long term depos-its. Securitisation can become hardly an op-tion during this time as Dubai Government itself had to pay more than 6.5 per cent to raise funds from the markets recently,” ana-lysts say.

The lack of a natural source of long-term funding is certainly an issue in this market for any mortgage finance player

nancial Market stood suspended. It was at this juncture that Dubai Islamic Bank stepped into the rescue act and bailed out Tamweel by raising its ownership in the ailing firm to 57.33 per cent.

Tamweel is now back in business, as stated by Varun Sood, Chief Executive Of-ficer, Home Finance Division of DIB. Sood said that beginning November 1, 2010, Tamweel would offer up to 80 per cent fi-nancing of the current value of ready resi-dential properties in Dubai and Abu Dhabi. Demonstrating its commitment to meeting the needs of end users, the company said it would extend finance to salaried and self-employed residents who meet the required eligibility criteria.

Assuming that the Tamweel side of the story is clear, now another vital question remains to be answered is: Who will save Amlak Finance?

Working with Amlak numbers, it emerges that the company needs to find a massive Dh12 billion within the next five months. Interestingly, the Amlak Finance third quarter financials (2010) released on October 16 (well after the decision on Tamweel in September) has expressed its hopes on the merger talks. The report says: “The Government Committee for Amlak’s affairs continues to explore the possibilities of a ‘merger’ and balance sheet restructur-ing of the company. This has entailed a full review and assessment of the company’s business operations and liquidity position providing guidance to the company’s man-agement and regulators where necessary, with a view to making recommendations to the UAE Government on the company’s long-term stability, liquidity and assets and liabilities management requirements.”

Everyone for sure knows that a merger between Amlak and Tamweel is ruled out. Tamweel had a DIB to save it, but will Du-bai Bank play a similar role in helping out Amlak Finance? This is a valid question as both these entities have a common strate-gic shareholder in Emaar Properties, which owns more than 45 per cent in Amlak and 30 per cent in Dubai Bank, which is also an Islamic bank.

“I don’t think any Islamic bank single-handedly would be in a position to put in the required funding for Amlak, especially Dubai Bank,” says Mohammad Yasin, the chief investment officer of the Abu-Dhabi-


Back in businessTamweel recently announced the

relaunch of its core activities. The Islamic mortgage finance company said that following the recent an-nouncement on a significant increase in the equity stake in the company by Dubai Islamic Bank, the company was now well positioned to support the country’s real estate sector.

Tamweel said that beginning No-vember 1, 2010, the company will offer up to 80 per cent financing of the current value of ready residential properties in Dubai and Abu Dhabi. Demonstrating its commitment to meeting the needs of end users, the company said it was extending fi-nance to salaried and self-employed residents who meet the required eli-gibility criteria.

“Tamweel is back in business,” said Varun Sood, Chief Executive Officer, Home Finance Division. “While the past two years have been extremely challenging for the compa-ny – during a period of unprecedent-ed turmoil in the global real estate and financial services sectors – we have persevered. All of us at Tamweel are grateful for the support of our stakeholders over that period.

“With a renewed focus on pru-dence and conservatism, we are focused on booking a high-quality portfolio of select customers and properties,” he said. “Today, our mis-sion is to contribute to the stability and growth of the UAE real estate market, and to ensure that individu-als can avail of the same high stand-ard of products and services that made Tamweel a benchmark for the home finance industry.”

Sood concluded: “We would es-pecially like to thank the Govern-ment of Dubai, under the guidance of His Highness Sheikh Mohammed Bin Rashid Al Maktoum, Vice Presi-dent and Prime Minister of UAE and Ruler of Dubai and the UAE Govern-ment-appointed Steering Committee for facilitating the return of Tamweel to the market.”

Mortgages are by their nature long-term assets, while corporate or retail de-posit funding is short term. Consequently, if there is something that spooks the de-posit market, it is difficult to ensure that mortgage companies have enough liquidity to meet their obligations.

Responding to BBR queries on the topic, Raj Madha, Senior Banking Analyst, Rasmala Investment Bank, said even in good times, profitability is weak for mort-gage and the mortgage finance companies are raising high cost financing on corpo-rate/wholesale markets at a much higher rate than the banks, and lending it to the mortgage market at a price which has to be competitive with the banks.

“Consequently spreads are high, and with little chance of cross-selling other products, the chance for good returns is lost. Overall, returns during a buoyant market are inadequate and in a bad market, these are even harder,” Madha added.

According to him, if the companies were to act just as originators, syndicating out risk and funding, either to the markets or to the public sector, then it becomes a perfectly viable proposition. “That, of course, would be a challenge in itself, espe-

Mae or Freddie Mac, which are backed or sponsored by the US Government. “Dubai had tried its hands on a similar venture some time in 2005 by establishing Emir-ates National Securitisation Corporation (ENSeC),” Mahalingam recalls.

In fact, ENSeC had successfully closed the first-ever, AAA rated, asset-backed se-curitisation to come out of the UAE about that time. ENSeC Home Finance Pool I Ltd, a company organised by ENSeC, is-sued $350 million floating rate, secured notes, due 2104.

Madha also subscribes to this view. “The government could take an active role in providing liquidity for long-term financ-

Tamweel has announced plans to offer up to 80 per cent financing of the current value of ready residential properties in Dubai and Abu Dhabi

Analysts say the panacea to the development of a successful mortgage market is the creation of a government backed or sponsored refinancing corporation on the lines of Fannie Mae, Ginnie Mae or Freddie Mac of the US

cially given the concentrated risk, the lack of long-term funding, and the volatility of local property markets, but some of that will change,” Madha pointed out.

The lack of a natural source of long-term funding is certainly an issue in this market. Pension and life assurance funds are never going to have the same penetration here as they have in the West, primarily due to the lack of taxation.

Ramesh Mahalingam, a senior finance expert based in Dubai, believes the panacea to the development of a successful mortgage market is the creation of a government-backed or sponsored refinancing corpo-ration on the lines of Fannie Mae, Ginnie

ing. However, the most critical thing is to re-duce the uncertainty in the property market. The banks are perfectly capable of providing more mortgage financing, and I believe they will, as the economics of the business stabi-lise. Only when the banks are beginning to reach a ceiling (regulatory or self-imposed) does there need to be some institutional ad-justment to make mortgage funding more freely available,” he said further.

He also expressed hope that the property companies would do a better job of control-ling supply. “We need to see health comes back to the job market as it plays a key role of drivers of more mortgage finance,” he added.


ISLAMIC BANKING SPECIAL

Dr Hussain Hamid Hassan


Islamic firms will dominate market in 5 yearsDr Hussain Hamid Hassan, eminent scholar and chairman of a number of Islamic financial institutions, has always been considered the living authority on Islamic finance in the region. He serves on the Sharia’h boards of most of the leading Islamic financial institutions in the UAE, including Dar Al Sharia’h – the Sharia’h board of Dubai Islamic Bank (DIB), and is presently the chairman of the United Sharia’h Board in the UAE. Islamic finance, being in its infancy, is obvioulsy evolving by the day, and the process involves a lot of brainstorming among the scholars, who set standards for this relatively new branch of finance. Hence views expressed by Dr Hussain, a doyen of scholars in Islamic finance, go a long way in forming opinion in the industry. Excerpts from an interview Editor CL Jose did with Dr Hussain Hamid Hassan on how the Islamic institutions fared during recession.


BBR: Do you think the Islamic insti-tutions have been able to weather the crisis better than their conventional counterparts?Dr Hussain: It has been proved be-yond doubt the world over that the coneventional financial system has failed during the crisis and I strongly believe it is high time the Islamic sys-tem was tried and tested globally as an alternative to the vulnerable financial [conventional] system.

BBR: Do you believe the crisis has ex-posed the weaknesses of the conven-tional system, and hence the region will witness faster growth in Islamic finance in the future?Dr Hussain: Not only I believe, I have started seeing the new trend emerg-ing from the behaviour of the players in the industry, investors and business people. The participants in the indus-try have started increasingly repos-ing faith in ‘equity-based’ financial system, where the risk is limited and shared among the participants. Now the concerns are not woven around lesser profit, but about how to avert a gross loss. The current crisis has shown us how the assets are fast losing their value. Though the crisis has started off as a financial issue, the after-effects have had their impact on the economy itself.

BBR: Do you think Dubai is now com-ing out of its issue?Dr Hussain: Dubai’s issue is more of liquidity-linked. Its base is strong and hence it can come off its pains once its liquidity issues are sorted out; Which is happening now, as anyone can see.

BBR: We are now hearing about banks, Islamic banks, talking about mergers. What is your view on this?Dr Hussain: To become big means to become strong and this is not applica-ble to Islamic banks alone, but all fi-

nancial institutions, including finance companies and Takaful (Islamlic in-surance), which itself is a sort of Is-lamic bank. I would love to see large fi-nancial institutions operating from the region. But I should, at the same time, warn that mergers should not thwart competition in the industry. We need competition to push innovation which, in turn, helps establish quality of serv-ice to the customers.

BBR: Do you think more convetional banks will convert themselves into Is-lamic entities in the new context?Dr Hussain: No, I don’t think so, as there is no need for that. But on the contrary, more new Islamic entities will get established in the market, like what we have been witnessing in the past couple of years. I strongly believe that within five years from now, the re-gion will have more number of Islamic

Sukuk outstanding should be off-balance sheet itemThough there have been some shortcomings in the structuring of sukuks, gradually, the authorities concerned have been addressing this key issue effectively. In future securitisation, the real [legal] title will go to the sukuk holders. Earlier, though the title was on sukuk holders in terms of documentation, but when it comes to practice, it has been regarded as a debt from the sukuk holders. “Now with this crucial change being imminent, the sukuk Ijara will not sit on the balance sheet of the issuer, and hence will be considered as an off-balance sheet item. Unlike in the case of conventional bond, sukuk Ijara cannot be a liability of the sukuk issuer. The returns are coming from the rental, and this is not considered as interest,” Dr Hussain points out.According to him, the recovery of sukuk market has started and the market has before it examples to prove that. There have been sukuks issued by financial institutions from Qatar, Kuwait, Turkey, UAE, etc during the last few months. “I know that some institutions from Singapore also are currently working on sukuks,” he says. Some Saudi institutions are also working on large sukuks denominated in riyals, according to sources. The market, according to Dr Hussain, will grow to the level of 2007 when the sukuk market has seen its peak.

Standardisation of Islamic rulesDr Hussain says the Islamic financial services industry in Kuala Lumpur (Malaysia), Bahrain’s standard setting organisation, Accounting and Auditing Organisation for Islamic Financial Insti-tutions (AAOIFI) and other Sharia’h bodies are working on how the Islamic finance industry can be practically standardised. “I am of the strong view that Islamic fi-nance is still evolving and in the coming five years, the standardisation will be complete,” he says.


institutions than the conventional ones. We have been seeing steady growth in the shareholders’ equity, profit, dividend distribution and asset base in the Islamic institutions during the last decade.

BBR: There were reports and you yourself have said that UAE will set up an academy for Islamic studies. What is the status of this move?

Dr Hussain: Yes, it is true. We are cur-rently working on that. Dubai will in the near future itself, set up this with the cooperation of prominent Sharia’h bodies led by Dar Al Sharia’h, the sub-sidiary of Dubai Islamic Bank (DIB). This academy, once set up, will have facilities to offer training in Islamic studies at different levels. The academy will, to a good extent, be able to address the issue of shortage of Islamic schol-ars in the market. We are planning to forge tie-ups with some European Universities, which can play a mean-ingful role in bringing world-standard study schemes and faculties to the re-gion. Mind you, France already has an academy for Islamic studies.

BBR: Are you currently involved in conversion of any conventional banks into Islamic?Dr Hussain: The most current one is the conversion of Bahrain Saudi Bank, for which the conversion processes are currently on. We have already submit-ted the plan and recommendations for the conversion process, and it is likely to be completed very soon. We will soon see branches, or new Islamic banks themselves, getting established in some Arab countries including Lib-ya, Tunisia and Algeria.

BBR: Islamic banks have been very active in mortgage financing. Obvi-ously, these banks have been affected by the downturn in the real estate sec-

Islamic cDs and liquidity windowThe Central Bank of UAE is finalising an Islamic certificates of deposits (CDs) regime, which will function on the theory of profit, instead of interest as in the case of conventional CDs.“We can now place our (Islamic banks) surplus through Islamic instruments and withdraw funds without disturbing Islamic rules. This will not only help improve liquidity within Islamic banks, but will also help improve their bottom-line by way of returns from CDs,” Dr Hussain says.In fact, lots of money, even running into billions of dirhams, used to get parked with the Central Bank without any return. The Central Bank is also said to be working on an Islamic liquidity window, which can be used by Islamic banks in case of emergency fund requirement. This has also not been available for Islamic banks as the system basically works on interest.“As of now, liquidity is the biggest challenge for Islamic banks as all liquidity windows are interest-linked, and now with the Central Bank facility in the offing, Islamic banks stand to gain a lot,” Dr Hussein who is also the chairman of the United Sharia’h Board in the UAE, points out.

tor. Going forward, what is next?Dr Hussain: Anyone would guess that this would have been the case with any mortgage financiers. But with various options available through the Shariah routes, Islamic banks were able to tide over this is-sue. Islamic institutions were able to restructure these mortgages by changing the Murabaha (if any) con-tracts into Ijara. By resorting to this, these institutions could take over the ownership (in Murabaha, the prop-erty title is with the client) from the parties and reschedule the financing from Murabaha into Ijara. Since Ijara involves leasing, the contract can be made of longer term and the institu-tions (mortgage financier) will con-tinue to receive the rentals from the client until the title is transferred to the party. While the Murabaha con-tracts are profit-based and of shorter term, Ijara deals are rental-based and relatively longer in term. The rentals are benchmarked against Libor or Ei-bor as the case may be.

BBR: So do you mean to say that many Murabaha contracts have been con-verted into Ijara contracts during this recession period?Dr Hussain: Yes, at least 25 per cent Murabaha mortgage contracts have been converted into long-term Ijara contracts since the recession shook the real estate market in the country. So I would put it this way: because of Sharia’h, most Islamic institutions were able to restructure their mortgage contracts without suffering any notice-able losses.

BBR: What option does the mortgage company have if the client fails to pay even under Ijara plan?Dr Hussain: Under Ijara, the owner-ship is with the mortgage financier and the property is rented out to the client and hence the company can take the property back if something goes wrong. Contrary to this, in Murabaha, the title is in the name of the client. In Ijara, flexibility in term and instal-ments is possible.

18

NBC eyes new initiativesSukuk portfolio is profit driver, says CEO Mohammed Qasim Al Ali


Mohammed Qasim Al Ali


By C L Jose


which have established clear-cut codes for investment. “Of course, there are cer-tain principles, which guide all our deeds, whether investments or distribution of re-turns to subscribers,” Al Ali explained.

NBC is bound by Shariah laws, which insist that at least 50 per cent of the corpo-ration’s investments should be kept in cash or money market instruments. “This has helped the corporation maintain liquid-ity, which is paramount to an entity such as NBC that takes money from the public,” the NBC chief explained.

Scull when these tapped the market. Noting that it has paid a cumulative re-

turn in the region of 22 per cent until now, with the average clocking around 5.5 per cent to its subscribers, NBC claims to have given them a return which is better than that offered by any bank. Moreover, the liquidity of this investment is comparable to that of a savings account with a bank.

“We would say this is a very good savings scheme with a 30 days liquidity whereby the subscribers can withdraw their money par-tially or fully,” Al Ali reminds.

“Real estate constitutes hardly 20 per cent of our investment portfolio and this itself will shrink once our mega Skycourts project is handed over”

Though the corporation currently trades only in the UAE’s sukuk market, according to the CEO, it is in the process of short-listing other GCC markets where it can enter in the future

The sukuk portfolio has been the main strength behind the suc-cess of National Bonds Corpo-ration (NBC), despite the fact

that controversies still chase the structur-ing of this instrument.

According to Mohammed Qasim Al Ali, chief executive officer of National Bonds, investments in sukuk yielded a minimum of 10 per cent return at a time when protecting the investments itself poses a challenge. Notwithstanding the rumours taking rounds in the market that, like many other investors, National Bonds also may have burnt its fingers in real es-tate market, the corporation is absolutely comfortable with its real estate portfolio. “No, it is not true. Real estate constitutes hardly 20 per cent of our investment port-folio and this itself will shrink once Sky-courts, our mega project in real estate, is handed over,” Al Ali told BBR. In fact, NBC claims to have made a profit in this project also. NBC has also restricted its in-vestments in stock market to a very mini-mal, Al Ali said.

National Bonds was established in 2006 when the region was speeding towards the height of its boom period. The state Invest-ment Corporation of Dubai (ICD) owns 50 per cent of the corporation, with each of the other local shareholders -- Emaar Properties, Dubai Holding and Dubai Bank -- holding 16.6 per cent. Though the company was set up with an initial paid-up capital of Dh150 million, this has grown substantially over the years and the cor-poration now boasts a decent capital base. During this period, more than Dh50 mil-lion worth of prizes have been disbursed among the NBC subscribers, whose total tally is nearing the 600,000-mark.

Al Ali makes it a point to attribute the whole credit for the success of NBC’s investments so far to Shariah principles,

The rest of the investments can be in real estate, sukuks or similar instruments. NBC’s cash investments are in deposits with Islamic institutions, money market income generating instruments such as wakala, sukuk, etc. “But as I said before, we make good returns from sukuks, where we are an active player, especially for the papers issued by the UAE entities,” he added.

With the expertise gathered, NBC has plans to gradually enter other markets as well. Though the corporation currently trades only in UAE’s sukuk market, ac-cording to the CEO, it is in the process of short-listing other GCC markets where it can enter in the future. Around 15 per cent of NBC’s investments are in sukuk, which has always paid good returns. Though the corporation has been very cautious about investing in stocks, it has participated in the IPOs of Ajman Bank and Drake &

Real EstateAl Ali explained that the corporation has not invested heavily into real estate. Its lone project, Skycourts, launched in 2006, is all set to be handed over to customers soon. Skycourts is a residential develop-ment being completed in Dubailand, the multi-billion dollar theme project. Nation-al Bonds had transferred the development and management rights of Skycourts and Flamingo Creek to Deyaar earlier in 2008.

Deyaar has since returned the man-agement of the Skycourts project to its owner National Bonds. “Once Skycourts is handed over, we will book a revenue and a corresponding profit through that and once the deal is over, the size of NBC’s real estate portfolio will fall far below 20 per cent,” Al Ali pointed out. The company has converted most of its current real estate portfolio into rent generating investments. “Of course, we had been into trading in


real estate until 2008 end when the sector was booming, but thereafter we have quit that business,” he added. NBC claims that it has been able to exit the risky real estate assets unscathed at the right time.

On the issue of geographical diver-sification, Al Ali says at the moment the company will stick to UAE rather than enter untested territories. “This is not a favourable time to do all these things as the company is committed to giving good returns to its valued patrons”.

Al Ali also explains the impracticality associated with NBC’s entry into private equity business. “We are a savings scheme and liquidity is of utmost importance to us. We need to keep a good amount of our funds in liquid assets and until we grow to a comfortable size, we cannot think of parking funds in private equity.”

Al Ali says the corporation has pre-pared a white paper on the possibility of

establishing a finance company. “The market is dying for such companies”. It has to be a 100 per cent subsidiary, and hence the corporation may join hands with a third party who need not be nec-essarily from the UAE, he suggested. The size of the company will also depend on the appetite of the third party who joins the new venture. Once the finance com-pany materializes, the company hopes to tap the huge corporate deposit market.

NBC, which is by far the biggest raffle

The success of NBC’s investments is attributed to Shariah principles, which have established clear-cut codes for investment

draw now, has a distribution network of 600 points of sale (POS).

With very strong corporate govern-ance, Deutsche Bank is NBC’s administra-tor and KPMG is the internal auditor.

The company is planning to come out with innovative and short-term more se-cured investment schemes. It is in talks with corporates to launch a group invest-ment scheme for their employees with an objective to inculcate savings habit in them.

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‘Last Mover’ advantageAjman Bank CEO says the bank has a near zero-toxic book

Ajman Bank is now enjoying the ‘last mover’ advantage, as it is the newest of all banking institutions cur-

rently operating within the UAE. “Entering the business (real bank-

ing operations) late has helped us in building up a book that is near-zero toxic. More importantly, as we move through the recession, we are now able to assess different aspects of risks in-volved in banking,” said Mubashar H. Khokhar, CEO of Ajman Bank in an exclusive interview with BBR.

But that doesn’t mean that Ajman Bank is sitting quiet. “We are very ac-tive now as if no recession has affected us,” he added. Ajman Bank has created a new region putting together the op-erations of Abu Dhabi and neighbour-ing Al Ain and put the new Deputy Chief Executive Officer in charge of the operations there. Khokkar has also created a strong team to support activi-ties of the bank. It was a few weeks ago that the bank announced the appoint-ment of Mohamed Amiri as Deputy Chief Executive Officer. A UAE finan-cial services veteran, who has held management positions at both Shari-ah-compliant and conventional banks, Amiri brings more than two decades of industry experience to his new role at Ajman Bank.

Khokhar said Amiri joined the bank at a time when the bank was rapidly expanding its physical branch network and range of products and services.

Another key appointment was of Akram Khan as head of the bank’s corporate banking division. With 22

years corporate banking experience in the Gulf region at well-known inter-national and regional banks, Akram Khan will lead Ajman Bank’s corpo-rate banking division to the next stage of its development in the market. Prior to this, Akram Khan was with Dubai Islamic Bank for five years as its senior vice president and head of wholesale corporate banking.

banking knowledge and practice in the UAE and a culture of excellence within Ajman Bank itself.

On the new trend in financing, the Ajman Bank CEO said the liquidity situ-ation has improved substantially during the last couple of months. “The market will soon see a number of syndicated deals taking shape with large and reput-ed groups standing to attract the banks


UAE is overcrowded for banking and I am sure some small or medium-sized banks will have to merge with larger and healthy banks, and Islamic is no exception to this. Globally also, the banking sector has been seeing consolidation taking place in a big way

Network expansionAjman Bank has expanded its branch network from four a few months ago to seven and is all set to add one more by the year-end by when the ATM number is also expected to grow from the present 35 to 50.

A major initiative embarked on by the bank this year is the new UAE-wide education program under the patron-age of Sheikh Ammar bin Humaid Al Nuaimi, Crown Prince of Ajman and Chairman of Ajman Bank. The ‘Sheikh Ammar Banking Excellence Program’ has been developed in collaboration with New York-headquartered Edcomm Group Banker’s Academy to promote

in the initial phase’” said Khokhar. The signs are very clear. The inter-bank rate has been coming down gradually, banks are liquid now, and are slowly loosening up their purse for corporates, if not for the retail.

Time ripe for consolidationKhokhar said the market might see con-solidation in the banking sector. There is no denying the fact that several banks have taken hits in the last two years. “UAE is overcrowded for banking and I am sure some small or medium-sized banks will have to merge with larger and healthy banks, and Islamic is no excep-tion to this. Globally also, the banking

By Rajni.C


sector has been seeing consolidation tak-ing place in a big way,” he added. However, Khokhar ruled out the possibility of Aj-man Bank being bought out by any other institutions in the near term. “We are new in this market and this has helped us in enjoying a healthy asset book. Our capi-tal base is sound and we as a bank are not averse to exploring good opportunities available in the market,” he said.

He feels Islamic banks are likely to come across good opportunities as there are banks with same client base and fol-low the same business model philosophy. Tamweel has set the ball rolling as DIB has decided to take over that institution, which has been the UAE’s market leader in Islamic mortgage. “It is a fact that there are problems in the Islamic mortgage market and the DIB move will certainly help sort out Tamweel’s problems to a good extent,” he added.

One thing Khokhar stressed in his interview was that Islamic banks are relatively better placed on the liquidity front compared with their conventional counterparts. “While many large conven-tional banks are stuck with higher-than-permitted lending-deposits ratio, at above 100 per cent, Islamic banks enjoy a much healthy ratio. According to him, while the bank is in the process of structuring in-novative trade finance products, it is also planning to enter the real estate financing in a big way through Musharaka deals.

On the issue of the much-debated standardisation in Islamic finance, Khokhar is of the view that before the mar-ket welcomes more Islamic banks, there is a great need for the industry to stand-ardise and codify the principles on which the Islamic finance or banking is based. “This has to be taken at the level of regu-lators – Central Banks. There are several Shariah boards, and they issue different Fatwas, of which many are at variance on so many counts. Having said this, I should acknowledge that 90 per cent of these Fat-was are standard; only ten per cent need further standardisation.” he added.

The products that face the challenge of standardisation include Tawrooqs (which is close to Murabhaha), Sukuks, Arboun (options), etc. There are divergent views expressed on these products by different Islamic scholars through their Fatwas.

“Until now, Ajman Bank has not been able to report profit. I would say that we want to do it this year itself. We are currently making huge investments. We are young and we have not built up toxic assets. We are investing in our people, consultants, technology and our branches. The message is that our vision is to bring human touch to modern banking though the ‘present’ is driven by technology.

“If you compare our performance between two quarters, we have done well. Between the two past quarters, our revenues have gone up by 27 per cent; our cost has come down by three per cent despite the substantial investments we made during this period. Our assets have grown by 58 per cent. We are all set to announce some big deals. We are open to insurance business, but for the time being, we are focused on banking, especially investing in real estate financing. We will have some innovative products in trade finance soon.”

Mubashar H. Khokhar

Financial Performance

24 BANKING & BUSINESS REVIEW November 2010

Badr Al Islami set to roll out standardized productsLengthy process, but a good deal of work already done, says CEO

Absence of standardization within the product offer-ings has been identified as one of the biggest chal-

lenges Islamic finance the world over faces now. And this has been one of the most debated shortcomings of Is-lamic finance.

Though scholars defend this with their oft-repeated argument that it is only a couple of decades since this branch of ethical finance has come into existence as against the long-staying conventional finance, the leaders have long been working towards standard-izing the business model and the prod-uct offerings with Islamic finance. The absence of standardization has neces-sitated the need for large number of scholars to endorse each class of new product offering or each big deal a bank or finance company signs up.

But Badr Al Islami, one of UAE’s leading Islamic finance companies, which is also the Islamic subsidiary of Mashreqbank, has to a good extent succeeded in its endeavour towards this goal. “We are finalizing standard-ization in several Shariah-compliant products. We started the work more

With the investment banking activity coming under pressure during the post-recession period, many banks have shifted their focus onto the SME sector and commercial banking activities and this has necessitated the Islamic banks to speed up the process of standardization of products

than two years back and before long, we are sure that the bank will have a range of products ready – for both small and medium enterprises (SME) sector and retail, to be offered out- of-the-shelf,” said Moinuddin Malim, chief executive of Badr Al Islami, dur-ing an interview with BBR.

Badr Al Islami was established by Mashreqbank in 2006 and now holds two licences – one for the Islamic fi-nance company and the other for the Islamic subsidiary of Mashreqbank. Moinuddin explains the benefit of

having two licences thus:“While a fi-nance company cannot accept retail deposits, a bank subsidiary can. At the same time, the finance company licence allows us to take the title of an asset, which is very important while doing home mortgage business – especially Ijara finance.”.

With the investment banking activ-ity coming under pressure during the post-recession period, many banks have shifted their focus onto the SME sector and commercial banking activities and this has necessitated the Islamic banks


By Amit Chettupuzha


Moinuddin Malim

to speed up the process of standardiza-tion of products.

“It is a lengthy process as it involves preparing product menu, structuring guidelines, documentation and final approval, but we have completed a great amount of work on this,” he added.

Moinuddin said his bank has al-ready re-launched its home mortgage offering. The standard products list will have retail, SME, personal finance, credit cards, etc. He believes a lot more needs to be done jointly among Islamic banks to achieve the desirable goal of standardization within the industry.

He indicated that Badr Al Islami was currently in talks with other in-stitutions on structuring more inno-vative products that can support the treasury needs within the bank. The International Islamic Financial Mar-ket (IIFM) and the International Swaps and Derivatives Association (ISDA) have recently launched the ISDA/IIFM Tahawwut (Hedging) Master Agree-ment.

“The development is a breakthrough in Islamic finance and risk manage-ment, and marks the introduction of the first globally standardized docu-mentation for privately negotiated Is-lamic hedging products,” he added.

The mid-2000s saw a large number of conventional banks in the UAE seeking Islamic subsidiary licence, and Mashreqbank was among the first to get such a licence from the Central Bank. Today, most large local banks in the UAE have Islamic banking subsidi-ary licences. Interestingly, most inter-national banks run Islamic windows, which allow them to sell Islamic prod-ucts. According to estimates within the industry, auto finance and home mort-gage are dominated by Islamic finance, which is said to be growing faster than its conventional counterpart in the country.

Mashreqbank is one of the largest and oldest private sector banks in the GCC and has presence in almost all

Moinuddin believes a lot more needs to be done jointly among Islamic banks to achieve the desirable goal of standardization within the industry


One of the major internal challenges for Badr was about effectively using the Islamic platform to change its operating model from business-driven to product-driven

Needed a retail market for sukuks Islamic banks in the UAE want authorities to create a retail market for sukuks as this can give an opportunity for individuals to participate in sukuk issues.

Though UAE has witnessed several sukuk issues in the past few years, these have mostly targeted institutions in the local market, regional mar-kets and overseas. In the last couple of months the market saw Dubai Gov-ernment, Dubai Electricity and Water Authority (Dewa) issuing sukuks that were hugely oversubscribed.

According to Badr Al Islami chief executive Moinuddin Malim, su-kuks would help individuals to create a balanced investment portfolio. “When it comes to a local retail investor what is his investment horizon? Either invest in limited stocks or keep his funds in banks as deposits, or buy insurance products or real estate. All these are typical cyclical invest-ment avenues, and hence sukuks or bonds could fill the role of a negative cyclical investment product in their portfolio,” Moinduddin points out.

For a retail investor who wants to have a risk-adjusted portfolio, he needs to have a balanced product mix. “That is the reason whey the need to develop a bond market is very important in today’s market conditions.”

However, for a domestic sukuk/bond market to nurture and grow, the presence of local rating agencies is key as they are the ones who can give guidance to the individual investors on the quality of the issuers. In a very important move, Central Bank is addressing a long-overdue need of Islamic banks by establishing a framework for Islamic certificates of deposits (CDs). This, according to Moinuddin, will not only help Islamic banks in making a return on their surplus kept with the Central Bank, but at the same time, encourage them to accept greater amount of deposits. Sources told BBR that the Central Bank is also working on a liquidity win-dow structure for Islamic banks.

The smarket is fast picking up in the UAE and the region. Badr Al Is-lami is currently working closely on a few mandates in the GCC. Accord-ing to Moinuddin, it is not that long before we could see the initial public offering (IPO) market also making a come back in the country. Islamic finance is growing and maturing with more and more product offerings and innovative structuring.

GCC markets. “We have banking ar-rangements in Saudi Arabia, whereas Oman business can be done from the UAE offices,” Moinuddin said. Cur-rently, Badr Al Islami controls more than three per cent of the market as-set share, which constitutes more than ten per cent of the Mashreqbank group book, he said. Again, Badr Al Islami is the first entity to be approved by the Real Estate Regulatory Authority (RERA) to open Escrow account, and it still continues to be the market lead-er in this space.

One of the major internal challeng-es for Badr was about effectively using the Islamic platform to change its op-erating model from business-driven to product-driven. Moinuddin says: “We realized that this could be achieved by having increased focus on products rather than on sheer business.” He said it has entrusted the role of ‘relationship building and business development’ to the Mashreq people so that Badr can focus more on products.

Badr’s Shariah board, consisting of members from different parts of the GCC, believes that there is no harm in the conventional side of the bank selling Islamic products. Badr has done a lot of work to facilitate this. “We trained more than 400 sales, di-rect sales and customer service offic-ers to deal with Islamic products. So, all branches have counters for Islamic products and you will meet Shariah certified officers to deal with you, whichever branch you visit,” Moinud-din points out.


STRATEGY

Small is not beautifulRBS says new strategy to fetch more fee income as the bank focuses on core businesses

The year 2011 is expected to see so many debt capital market deals where RBS hopes to play a big role, meaning that, going forward, the fee income is going to be a bigger driver for RBS’ revenue

Simon Penney

By CL Jose


RBS has withdrawn from re-tail business in the Middle East as of October 1, 2010. The move comes as part of a

global strategy of focusing on its core business. The deal to sell the retail op-erations to ADCB has already been wrapped up and this has brought down the size of the RBS balance sheet to al-most half. Through the deal, ADCB ac-quired three branches from RBS along with 250,000 customers.

The RBS new business strategy seeks to achieve a surge in fee income as the bank focuses on big-ticket businesses. “I believe we will have more fee income than interest income in 2011 as there are a lot of investment banking deals lined up for us for the next 6 to 12 months,” Simon Penney, RBS Chief Executive Officer for the Middle East and Africa region, told BBR in an interview. He said the year 2011 will see so many debt capital market deals where RBS is likely to play a big role, meaning that, going forward, the fee income is going to be a bigger driver for RBS’ profitability.

Asuming that the global markets are likely to see signs of recovery, the next year is expected to be a big year. There will be less activity in the M&A and the focus is going to be refinancing of out-standing loans and new fund raising, according to market experts. Next year is going to be massive in refinancing with $60 billion worth of deals coming up for refinancing in the GCC, Pen-

ney said. Dubai alone will account for about $12 billion refinancing in total during this period. “We will be there in some of the deals, and refinancing may bring in new players to the market. This doesn’t mean that there won’t be any fresh lending taking place next year, but the action is going to be dominated by refinancing. The next 6 o 12 months will be marked by refinancing of out-standing debts,” Penney added.

To a question why RBS wanted to quit the retail business, Penney said: “The sale of retail does not point to any lack of faith or urge to grow in the re-gion, but rather the move was designed to help us focus more on investment banking and wholesale banking in the region in line with the global strategy of selling businesses that are not our core.”

With the sole focus now shifting on

RBS will have a relatively large investment banking team of about 200 people in the Middle East, though 90 per cent of this will be deployed in the UAE alone

More fee income“I think we could see IPO activity also picking up in 2011 and this will lead to a general pick-up in the market activ-ity, which by definition is more fee in-come for us also,” he added.

RBS will have a relatively large in-vestment banking team of about 200 people in the Middle East, though 90 per cent of this will be deployed in the UAE alone. The vast majority of the 1200-strong retail team has been transferred to ADCB along with the retail operations.

to the investment banking and corpo-rate business, the scale of business on the corporate side will witness a sub-stantial growth from the current level.

The pure lending will certainly come down.

“I believe RBS used to have a dis-proportionate volume of lending on its book and this has to be addressed soon,” Penney pointed out. He said RBS has been huge lenders in the regional market, not necessarily from the local balance sheet, but from the London bal-ance sheet. The bank’s head office has


made large dollar lending to Dubai. In fact, the local balance sheet is a tiny portion of the aggregate balance sheet of RBS, he said.

It is obvious that the new business philosophy with the bank will natu-rally see the balance sheet shrinking going forward. Banks in general had maintained large balance sheets prior to recession and hence entered the cri-sis with bloated books; and post-crisis, the banks have been de-leveraging and pruning their balance sheets. “We are following the same philosophy. So by definition, de-leveraging essentially means that we will be lending less,” the RBS regional chief explained.

Without dwelling much on the Du-bai World crisis and its after-math, Pen-ney said, “I think most foreign banks must have lent to the Dubai World - mostly dollar lending.” With the banks and Dubai World having signed on the debt restructuring terms, there is a very good amount of certainty as to how much each banks need to provide for. Different banks will have their own ways of approach and policies on provi-sioning. “However, from what I heard, read and understood, the provisioning levels could be in the range of 10 to 20 per cent. I am just giving an indication and this need not be necessarily what we are going to provide for ourselves,” he underlines. Many banks have al-ready set aside this, as a best practice followed during bad times, though may not be in the form of specific pro-visions. “Anyway I don’t want to give you any numbers, estimates or guess on our exposure to Dubai World,” he added.

Penney said the ADCB deal was a profit-making one for RBS and the bank hopes to book a reasonable profit from this during the last quarter as technically the deal was concluded af-ter September this year. “Anyway, I don’t want to quantify it now.”

Penney feels it was not only a good deal for RBS, but for ADCB as well. Noting that RBS had a good first half, he said the investment banking busi-ness will remain profitable. “If you look at the debt capital market busi-ness, RBS has been very active in this

region,” he said. RBS participated in the bond sales of Dubai Electricity and Water Authority (Dewa), which were oversubscribed many times. It was one of the book-runners for the $3.5 billion Qatari Diar Finance’s dual issue and a few other deals in the region.

Between now and the coming few months, RBS hopes to come up with close to half a dozen transactions in bond market in significant sizes.

This could include sovereigns that fall in the billion-dollar class. The to-tal funds to be raised through these is-sues, according to the bank estimates, are likely to be anywhere in the region of $6 billion to $10 billion. The issuers include more of sovereign and sov-ereign-related entities but with fewer private sector corporates, according to Penney.

“The sale of retail does not point to any lack of faith or urge to grow in the region, but rather the move was designed to help us focus more on investment banking and wholesale banking in the region in line with the global strategy of selling businesses that are not our core”

would now deal with only large clients with turnover of upwards of $1billion and clients with cross-border business-es and those who have the full range of investment banking needs.

This may sound to be in stark con-trast with the ‘new-found’ enthusiasm of the region’s majority of banks that have been increasingly shifting their focus to small and medium enterprises (SMEs) sector as the pricing is quite at-tractive there and the risk relatively less in that sector.

RBS believes it will make much bet-ter business sense if it elects to deal with clients that have international M&A needs and international debt capital markets requirements.

Penney has more reasons to defend his bank’s stand. “The pace of lending, as you know, will slow down until the

Penney stressed that UAE opera-tions were significant to the bank and the Middle East was fast growing to become one of the bank’s core hubs. The commitment to the region will be no less than before, and Dubai World episode has not diluted this even to a small measure, he said. “RBS has long-term ambitions in the region,” he added.

As part of the new strategy, the shape of the clientele is also expected to undergo a drastic change in number and profile. In order to confine its op-erations to high-end investment bank-ing clients in the Middle East, RBS may slowly move away from the small and medium businesses (SMEs).

It was reported earlier that RBS

old loans on the book are repaid. And obviously, it will be no one’s aim to in-crease lending at least for the time be-ing,” the RBS official notes.

The bank will have the whole range of investment banking products that obviously include M&A, private equity, capital markets, debt capital markets, lending, providing researches on equity markets, trading in forex, cash manage-ment and trade, etc. In the GCC, RBS has branches in Abu Dhabi, Dubai and Sharjah, all licenced by Central Bank of the UAE. The bank has a wholesale banking branch in Qatar Financial Centre (QFC). The branches in Abu Dhabi, Dubai and Qatar also run the bank’s wealth management under the brand name of RBS Coutts.


Central Bank in talks with AAOIFI on Shariah Standards

Eleven new standards

The Bahrain-based Accounting and Auditing Organisation for Islamic Financial Institutions (AAOIFI) is in talks with UAE

Central Bank and Islamic financial institutions in the emirates to make AAOIFI standards a regulatory requirement for IFIs operat-ing from the UAE.

AAOIFI is the official body responsible for creating and estab-lishing standards for the Islamic institutions the world over. Talk-ing to BBR on the sidelines of a function organised to launch 11 new Shariah standards, Khairul Nizam, assistant general secretary of AAOIFI, said the organisation has now 200 institutional mem-bers from 40 countries, where these standards are followed.

Though it is not obligatory on the part of the UAE Islamic insti-tutions, as is the case with many institutions from other countries, to follow these standards, all institutions are currently following these without fail. “And hence the question whether it has been made mandatory in the UAE doesn’t arise,” Nizam told BBR.

The ten jurisdictions that have made AAOIFI standards a regu-latory requirement include Dubai International Financial Centre (DIFC), Bahrain, Qatar and Pakistan. Nizam said though the deci-sion whether these standards are required to be followed has been left to the market, the Shariah boards in the UAE encourage the UAE institutions, including eight banks to follow them, and this has really resulted in all institutions adopting these standards.

Though AAOIFI is responsible for setting standards in five ar-eas including audit, accountancy, ethics and governance, the recent launch of 11 new standards was for Shariah.

These standards were launched recently by the Du-bai-based Shariah consultancy Minhaj and AAOIFI jointly. The main aim behind the launch of these new standards is to help the regional and global Islamic financial institutions (FIs) tackle contemporary is-sues of banking, finance and investment, according these institutions.

Officials with Minhaj and AAOIFI said the new Islamic norms have been conceived in the wake of the challenges faced by the Islamic FIs in the current times and paves the way for them to sort out a vari-ety of issues in the light of Islamic jurisprudence.

According to Sheikh Dr Abdul Sattar Abu Ghud-dah, Minhaj chairman, the new Shariah standards would have great positive impact on the growth of the Islamic financial industry. “Moreover, the launch of these standards is also a salient indication of the constant evolution of Islamic banking and fi-nance with contemporary focus, particularly in the aftermath of the global financial crisis,” he added.

He said the 11 new standards are intended to address issues relating to uncertainty (gharar) in financial transactions and arbitration, endowments (waqf), labour leasing (ijarah), zakah, contingent obligations, credit facilities, online financial trans-actions, pledge (rahn), investment accounts and profit distribution, and Islamic reinsurance.

“These laws also have brought in greater harmo-nisation to the Shariah principles, which will help further the growth of the Islamic banking and fi-nance,” Sheikh Abu Ghuddah said.

AAOIFI’s Nizam noted that despite the econom-ic meltdown, the Islamic finance and banking sec-tor has shown considerable resilience and has kept a pace of growth.

“This has been possible because we have adapted to the economic changes and innovate on Shariah principles to the benefit of the Islamic society and economy across the world. The new standards are launched in this perspective,” he added.

He said more than 90 per cent of the Islamic banks around the world go by the AAOFI stand-ards. “The new standards will contribute to the growth and evolution of Islamic financial industry, which now has Shariah-compliant assets estimated at $1.275 trillion. The industry is growing at an av-erage annual rate of 15-20 per cent and the positive trend will continue despite economic fluctuations thanks to the in-built prudence in Shariah princi-ples,” Nizam added.

Khairul Nizam


UPDATE

‘We still remain active in lending’Bank has always supported borrowers and even new corporates, says CEO

Bank of Baroda (BoB) has made steady progress in the last three to four years, with the business growing manifold.

Being the only Indian bank with full-fledged branch operations present in the country, the bank believes it has a bigger role to play in this market. That must be the reason why BoB remained active during the recession when many preferred to go slow on lending.

“The bank has always supported its borrowers and even extended financial support to new corporates when many other banks were finding it difficult to support even their existing corporates,” Ashok Gupta, chief executive officer (CEO) of the bank for GCC, told the BBR in an interview. Gupta detailed the bank’s expansion plans for the bank in the GCC. Excerpts from the interview:

How did Bank of Baroda (BoB) per-form in the difficult times of recession? What is your outlook for the current year?Bank of Baroda (BoB) as a whole has performed exceedingly well. In spite of the global turmoil, the bank has shown a robust growth of 24 per cent in global business and 37 per cent in global net profit and has become the third largest bank in India.

In the UAE, where the impact of the turmoil was higher, the performance of

During the last three years, the total business of the bank has grown close to five times, which is an extraordinary performance, particularly keeping in view the impact of financial crisis on the financial services sector in the UAE

Chief Executive Ashok K. Gupta

By BBR Staff


the bank has been even better. During the last three years, the total business of the bank has grown close to five times. This is an extraordinary performance, particularly keeping in view the impact of financial crisis had on the financial services sector, especially banking, in the UAE. During the current year also, the bank has done exceedingly well and has posted a growth of over 36.21 per cent.

How did you manage to forge ahead despite the unfavorable economic envi-ronment?A complete strategic overhaul and cul-tural change has been brought into the working of the bank by making it very vi-brant, efficient, highly customer-centric, proactive and visible, so as to completely change the functioning and image of the bank. Banking operations were restruc-tured on different lines of business and specialised outfits created for each of them, like Retail Banking Shoppe, SME Loan Factory, Syndication Centre, Cor-porate Banking unit, Trade Finance, etc.

We have achieved exceptional results, mainly due to a combination of various factors such as a highly customer-centric approach, continuous addition of new products and services, improvement in customer services and deliveries, in-crease in delivery channels and expan-sion of the bank along with substantial increase in visibility and focused mar-keting. All these have repositioned the bank, leading to significant improve-ment in the bank’s image and this has resulted in our customers reposing their increased confidence in our bank.

Are you active in lending now? Do you take part in large syndications? Can you name some deals where you have already participated in?Bank of Baroda is quite active in lending and has started separate outfits to cater to the requirements of different segments i.e. individuals (Retail Banking Shoppe), small & medium enterprises (SME Loan Factory), corporates (Corporate Bank-ing Unit) and large corporates (Syndica-tion Centre). In addition, the bank has a full-fledged Trade Finance Department, Treasury Operations to meet other re-quirements of corporates/large corpo-

rates. The bank has various tailor-made products to meet the requirements of all segments of our clientele.

The liquidity position of the bank continues to remain sound and the bank has even extended loans to the compa-nies at the peak of the financial crisis. The bank has always supported its borrowers and even extended financial support to new corporates when other banks were finding it difficult to support even their existing corporates. BoB is an important player in the syndication market. We are arranging/underwriting syndicated loans and even participating in syndi-cated loans arranged by other banks.

BoB has been part of various prestig-ious syndicated loan transactions in the country and other parts of the world. Some of these transactions include Emirates Steel Industries (EIS), Allana International, Dewa, First Gulf Bank (FGB), Gems Group, RAK Ceramics and JBF RAK.

The bank is also acting as an Ar-ranger for some syndicated loans/club deals. In addition, the bank is also active in arranging syndicated loans for Indian corporates here.

BoB is an important player in the syndication market, arranging and underwriting syndicated loans and even participating in syndicated loans arranged by other banks

BoB is continuously studying the mar-ket trends and requirements of the bor-rowers and devising products to suit them accordingly. SME units certainly will en-joy the feeling of having the right banking partner, once they are in the safe company of Bank of Baroda.

What are your expansion plans for UAE and GCC?In UAE, Bank of Baroda is present for last 36 years. It is the only Indian bank in the UAE offering the entire range of products and services through its six branches (Bur Dubai, Deira, Abu Dhabi, Shajrah, Ras Al Khaimah, Al Ain) and four Customer Service Centres (Jebel Ali, Mussaffa, Al Qusais, RAKIA). The Bank is opening its fifth Customer Service Centre on the Sheikh Zayed Road very shortly.

The bank is further expanding its reach by opening two more Customer Service Centres (CSCs) at National Paints in Shar-jah industrial area, and Karama Dubai). In addition to this, we have plan to open two more CSCs in Sharjah (Near Ajman and Hamriya Free Zone) and Kalba (near Fujairah).

In GCC, we plan to have a presence in

How strong is your SME business? Bank of Baroda is very active in financ-ing SMEs in the UAE. With a view to focusing on SMEs and provide them with specialised and focused services, BoB has established a specialised outfit – SME Loan Factory. This is an exclusive outfit for meeting all kinds of banking and financial requirements of the SMEs in a very professional, time-bound, reli-able and flexible manner. We at BoB fully understand and appreciate the require-ments of SMEs and offer them suitable financial solutions to take care of those requirements.

Kuwait, Qatar and Saudi Arabia, thereby aiming to become the only Indian bank present to be present in all GCC coun-tries.

Are there new products in the offing?We keep offering new products and serv-ices for our customers. We have a lot of plans for the future. These include remit-tance through mobile, Gold Lounge Serv-ices for our high networth individuals (HNI) customers, Wealth Management Services, online trading of shares, debit cards & credit cards, bill payment, remit-tance through ATMs, etc.


SBI spreading wings in GCCCEO says business has already hit billion-dollar mark

Over the past one year or so, several Indian banks have established presence in the UAE through the setting up

of representative offices or opening branch operations within Dubai International Fi-nancial Centre (DIFC) from where they are allowed to do wholesale banking in foreign currency. The list of banks that have set up DIFC offices in the last two years includes State Bank of India (SBI), Punjab National Bank (PNB), Axis Bank, IDBI Bank and Hinduja Bank (ME) Ltd.

SBI has been the leader in this respect. Having completed more than 18 months in this market, SBI has set its target to enter other GCC markets such as Saudi Arabia, Qatar, etc, and add more offices in Bahrain where the bank already has two offices up and running - one offshore banking unit and another one for full range of commercial banking operations. It has also plans to establish presence in Qatar by setting up office in Qatar Finan-cial Centre (QFC).

A.J Vidyasagar, chief executive, SBI DIFC branch, told BBR that his bank, which also has a full-fledged branch oper-ation in Muscat, has set its eyes on a GCC expansion. He said SBI is all set to make its entry into Saudi Arabia towards Janu-ary next year, by setting up an office in the kingdom’s commercial capital, Jeddah.

“The business is fast growing in the re-gion and I am sure the growth will speed up in the coming years for us also,” Vid-yasagar said. SBI, the largest Indian bank with more than 15,000 branches, includ-ing 80 overseas branches in 35 countries, and more than 200,000 employees, made

DIFC-based banks like SBI while lending to the UAE corporates cannot create charge on collateral as these banks are not regulated by the UAE Central Bank

A. J Vidyasagar

UPDATE

By BBR Staff


its entry into Dubai International Fi-nancial Centre (DIFC) as a Category 4 entity in 2007. In early 2009, the bank got the Category 1 licence, which allows it to do wholesale transactions in for-eign currency early 2009. “I am proud to state that our business has crossed the $1 billion mark (Dh3.67 billion) during the more than 18 months we operated from here,” Vidyasagar said.

More importantly, this one-and-a-half years’ time was one of the most dreaded periods for banks in general, when most institutions preferred to go slow on their business, thanks to the recession.

Issues on collateral securityThe biggest problem facing the DIFC-based banks, according to Vidyasagar, is about creating charge on collateral while lending. As of now, banks like SBI, which are into lending to the UAE corporates, cannot create charge on collateral as these banks are not regu-lated by the Central Bank of UAE.

“What we do right now is seek the help of any of the UAE banks regu-lated by the Central Bank to function as security agent. But this involves fee, which is not that small. But we don’t have a choice if we have to be in this market,” Vidyasagar said.

“This is not only time-consuming and cumbersome but also expensive, and will certainly have a bearing on our profitability.”

NRI servicesSBI DIFC branch will soon offer the full range of non-resident Indians (NRI) services to Indians residing here though this doesn’t include physical transactions. As this will involve a lot of work, the bank will require more staff to attend to the large flow of customers expected to visit the branch. “We have asked for additional staff though some can be recruited from this market it-self,” Vidyasagar said.

He said this is going to be a big busi-ness, given the large number of Indians living in the UAE. The new mandate will be given to the banks operating from DIFC once the regulator, DFSA, completes the formalities for establish-

ing a representative office regime with-in DIFC. However, it is learnt that the banks that already enjoy a licence from DFSA need not acquire an additional licence to carry out the representative office job.

This means that banks like SBI with a Category 1 licence will be able to do all the rep office functions from the same office. Vidyasagar said this will not only help the large section of NRIs here but will also help the bank capture a good amount of business.

The key incentive for SBI in this market is the presence of hundreds of Indian companies that feel comfortable to deal with an Indian bank because of the banking relations they have back in India. “This doesn’t ever mean that we

cated deals. Though SBI doesn’t under-write loans in this market right now, it has plans to take on underwriting also in the future. “In fact, we are currently working on a few initiatives that include the scope for doing underwriting,” he added.

Vidyasagar is full of enthusiasm for Dubai and UAE. He said the recent de-velopments point to the positive growth Dubai is headed for.

The recent bond issues are testimony to that, he asserts. Bonds issued by Du-bai Government and Dubai Electric-ity and Water Authority (Dewa) were well-received by the local, regional and overseas investors resulting in multi-fold over-subscription in these issues. This shows the growing appetite for

DIFC-based banks are expected to be given the mandate for establishing a representative office regime within DIFC without the need to secure any additional licence, which means these banks can perform the rep office functions from the same premises

have a bias for Indian companies. We are always open to lending to any com-panies irrespective of where the compa-ny hails from,” Vidyasagar stressed.

As of now, SBI is participating in many corporate deals where the bank feels comfortable about the risk. It is a fact that recession has prompted banks to tread a cautious path. As a strategy, SBI chief said, his bank is open to all sectors and all sizes of loans. “Having said this, like many other institutions, currently we are going slow on the real estate sector,” he added.

The business for SBI in this market can be divided into four categories – suppliers credit, bilateral deals, partici-pation in syndicated deals and buyer’s credit.

Right from the beginning, SBI has been active in lending through bilateral deals and participation in big syndi-

Dubai risk regionally and globally. The interesting part is that Dubai is not even rated by international rating agencies.

Things are improving for the DIFC banks as well. Recently, DIFC officials have announced that the Centre will rationalise the cost of operations for the DIFC entities. In the CEO Connect meeting some time back, DIFC authori-ties explained the new DIFC strategy for growth as one of the leading financial centres in the world.

“I believe it is time for more Indian banks to come here and establish their presence. There are lots of Indian busi-nesses not only in the mainland but also in various free zones including the Jebel Ali Free Zone. Indian banks should see this as an opportunity and play a more meaningful and dominant role in help-ing build up this economy,” Vidyasagar suggested.

36 BANKING & BUSINESS REVIEW November 2010

DGCX set for more contractsNo plan to drop inactive commodities, says CEO

“Of course, there is hedging taking place through futures trading. But certainly, there is a lot of trading taking place for investment purpose also”

Eric Hasham

UPDATE

Dubai Gold & Commodi-ties Exchange (DGCX), the only commodities ex-change in the region, is all

set to add a few more contracts to its ever-growing list.

Currently 11 futures, including sev-en currencies, trade on the platform of DGCX, which is regulated by Securities and Commodities Authority (SCA), the watchdog for Dubai Financial Market (ADX) and Abu Dhabi Securities Mar-ket (ADX).

Eric Hasham, the exchange’s chief executive, told BBR that the addition of new contracts is likely to happen within a few months. “I don’t want to name the contracts right now. We will announce when they are ready,” he said. DGCX also enjoys the distinction of being the only regulated exchange outside India, where rupee contracts are traded with guaranteed settlement. “The INR/dol-lar futures contract is witnessing new interest from businesses, arbitrageurs and investors. This is spurred by the contract’s higher liquidity, competitive trading costs, the settlement guarantee and reduced counter-party risk,” said Hasham.

More importantly, DGCX remains open after Indian exchanges are closed, giving the Dubai-based exchange an added advantage of facilitating trade

through extended hours as it oper-ates from 8.30 am to 11.30 pm (10 am to 1am Indian Standard Time) as far as those who reside in India are con-cerned. “Hence these contracts are available to a wide range of interna-tional participants and non-resident Indians (NRIs),” he further adds.

While the Indian Rupee contract size is 2 million rupees (approximate-ly $45,000) on DGCX, the minimum

Steel was physically delivered on futures trading, and unlike currencies, where the futures trading is predominantly used for hedging and investment and also by speculators, steel futures are used very much as a hedging tool by the construction industry

up to twelve months forward. Outside India, Singapore is the only market for rupee futures, offering non-deliverable contracts through over-the-counter (OTC) trading.

Stating that DGCX has done very well in relation to expectations, Ha-sham says his exchange has established a number of records in terms of futures trading. “Take for example the case of Swiss francs, which has seen enviable


non-deliverable forward (NDF) con-tract size is approximately $100,000. The Indian Rupee futures contract is cash-settled in US dollars, based on the reference rate published by the Reserve Bank of India (RBI), India’s regulator, on the last day of trading and monthly ‘expiries’ on the contracts are available

levels of trading on DGCX. Maybe, Swiss franc is viewed today as a safe haven currency, compared with many others, especially when many govern-ments are said to be controlling their currencies’ value as per their wish. Swiss franc may be one of the very few currencies that is viewed as neutral in


this context,” Hasham explains.DGCX believes that its platform

is used for hedging risk by both trad-ers as well as by investors. UAE is a sought-after hub for trading and hence goods and money keep moving in and out. “Of course, there is hedging tak-ing place through futures trading. But certainly, there is a lot of trading tak-ing place for investment purpose also,” Hasham said.

The DGCX chief sounded comfort-able with the pace of growth at the ex-change. The exchange is there to sup-port the members and investors and hence all new initiatives will have these investors in mind, he said. DGCX has made it a point to regularly hold dis-cussions with its members to get their feedback on what they want, the region wants and the clients want from the ex-change.

DGCX has over 200 members, out of which majority are broker members - maybe 140 broker members - the re-

maining ones being trading members. Hasham said the exchange is getting membership enquiries from both bro-kers and traders.

Broker members and Trade mem-bers are eligible to apply for Regular Membership of the Dubai Commodi-ties Clearing Corporation (DCCC), which entitles them to clear DGCX transactions. In addition, financial institutions which propose to clear DGCX transactions, but do not wish to trade either as a principal or for clients, may apply for Special Membership of DCCC.

Applicants for Clearing Member-ship are required to meet minimum Net Current Tangible Assets (NCTA) conditionss and open a ‘Settlement Account’ with any one of the Approved

DGCX remains open after Indian exchanges are closed, giving the Dubai-based exchange an added advantage of facilitating trade through extended hours

Clearing Banks of the DCCC. The clearing banks include Emir-

ates NBD, Standard Chartered, Bank of Baroda and HSBC. International banks such as JP Morgan, Newedge, a 50/50 joint venture between Société Générale and Calyon, are currently trading members on DGCX.

Though there are a few contracts such as steel and fuel oil (Fujairah Oil) that have failed to make any mark in trading so far, Hasham is against de-listing them.

“Steel used to be active until about three y ears ago, when construction was active in the emirate. However, we do not have any plan to drop these commodities from the list of trading commodities on DGCX,” he said

In fact, the management is cur-rently in touch with the market par-ticipants to explore what more can be done to revive these steel and fuel oil futures. “If you look at the history of even large and established exchanges,

we find there were futures that were not successful also,” he points out.

Steel, Hasham points out, is very dependent on the market realities. Steel had very high demand in UAE, especially in Dubai, when it was going through a construction boom.

Steel was physically delivered on futures trading, and unlike currencies, where the futures trading is predomi-nantly used for hedging and investment and also by speculators, steel futures are used very much as a hedging tool by the construction industry. However, the exchange is seeing increased interest coming in steel, and once the construc-tion industry picks up, steel futures are likely to see action coming back.

But Hasham says that the fuel oil scenario is different. Though fuel oil is more complicated and difficult to deal with, the exchange is working on it and is confident that a solution will be found before long.

When it comes to the performance

options tradingThough DGCX has options trading up and running in gold, volumes are very small. Hasham said the ex-change does not have any immedi-ate plans to introduce options in any other commodities. “Options are complex tools compared with fu-tures, and trading in options needs a lot of market expertise. As of now we are focusing on futures and we believe a lot more is to be done in futures in terms of introducing newer contracts,” he said. Options are linked to the underlying futures and so the exchange needs to de-velop more liquid futures before it could seriously consider options.


JRG joins hands with UAE Exchange To offer cash management & transfer system

JRG International DMCC unveiled a multi-currency cash management and transfer system in partnership with UAE Exchange, offering investors on Dubai Gold and Commodities Exchange (DGCX) a fully-com-

pliant, flexible and transparent funds transfer mechanism which can be accessed from anywhere in the world through UAE Exchange branches.

Launching the Global Cash Management and Transfer (GCMT) system, JRG International, one of the leading com-modity brokerage entities from the UAE and trading & clear-ing member of DGCX, said the new initiative was in line with its strategic objective of bringing cutting-edge financial solutions to the investor communi-ty following the global financial meltdown.

Y. Sudhir Kumar Shetty, COO - Glo-bal Operations, UAE Exchange, said the partnership with JRG Y. Sudhir Kumar Shetty Sajith Kumar P.K

on the exchange, gold is considered to be one of the forerunners. “Gold had been the best performer until recently, when Indian rupee futures overtook this precious metal in the volume of trade,” Hasham said.

Physical settlementMany of these futures trading on DGCX are physically settled, includ-ing gold, silver, steel and fuel oil. Most of the currencies are cash-set-tled and in the case of Indian rupee, it is done in dollar against an official index from Reserve Bank of India (RBI) on the last trading day. DGCX has arrangements in place to physi-

International on GCMT system comes as a value addition to UAE Exchange’s existing remittance services; it is also a new step ahead for the exchange in expanding its reach to the in-vestor community across the world.

Sajith Kumar P.K, Director and CEO, JRG International, dubbed the GCMT system as yet another radical financial solution from the JRG International portfolio, developed to support and nurture confidence among the investor commu-nity at a time when the financial world was passing through a tumultuous phase.

“By combining transparency and quick efficiency to fund trans-fers, GCMT aims to complement the growth potential of online com-modity/Forex trading on DGCX. In this en-deavour, we have part-nered with the UAE Ex-change because of their capability in seamless fund transfer,” Kumar added.”

cally deliver gold and silver, and for that the exchange has dedicated warehouses and delivery agents. Crude oil future, on the other hand, is cash-settled.

three currency futures set records on same dayDaily volume records were set by three DGCX currency futures contracts on Oc-tober 19, 2010, contributing to one of the most active months of trading for the ex-change. October has seen several trading days with daily volumes surpassing 10,000 contracts and the third highest overall daily volume of 15,350 contracts.

Continuing its ongoing growth, the DGCX Indian Rupee futures contract trad-ed a record 6,043 contracts worth $270.61 million on October 19, beating the previ-ous high of 5,376 contracts worth $242.83 million. On the same day, two of the new currency futures contracts launched in June this year also achieved record highs: Cana-dian Dollar futures traded a record 606 con-tracts worth $29 million eclipsing the previ-ous peak of 528 lots worth $26 million while Australian Dollar traded 498 contracts worth $24 million surpassing the previous record of 285 contracts worth $12 million.

On October 19, DGCX also recorded the third highest-ever total daily volume of 15,350 contracts valued at $786 million.


Abdullah brothers owe Dh614m to DamasGold valued at about $35.95 a gram in deal

UPDATE


Abdullah brothers owe Dh614m to Damas

Damas has declared in a statement sent to Nasdaq Dubai that the net amount to be repaid by Abdullah

brothers to the company in accord-ance with the Settlement Agreement is Dh614 million.

The Amendment and Gold Fixing Agreement between Damas and Ab-dullah Brothers sent to Nasdaq Du-bai on October 28, three days before Abdullah brothers were supposed to pay Dh400 million ($110 million), has waived the terms of payment and agreed to extend the payment date by three months until January, 31, 2011.

The total dues of Dh614 million, owed by Abdullah brothers, have been arrived at by adding Dh358 million, which Abdullah brothers owe to the company in cash and Dh256 million as the value of 1,940,250 grams of gold withdrawn by them from Damas.

Interestingly, the gold has been valued at $35.95 a gram against a spot price of about $42.90 prevailing on October 28, 2010 when the statement was sent to Nasdaq Dubai where the shares of Damas remain listed.

The statement has said that Damas and Abdullah brothers have agreed to fix the price of 1,940,250 grams of gold to reflect the total amount outstanding and payable by the Abdullah brothers.

“As per the fixed price, Abdul-lah brothers have undertaken to pay Dh256 million in terms of the price of gold withdrawn by them. The price of gold has been fixed after evalua-tion of several factors including the price of gold prevailing at the time of withdrawal and certain benchmark transactions that have taken place in the records of Damas thereafter,” the statement sent to the market adds

In fact, the cash component owed by Abdullah brothers to Damas has been scaled down from Dh365 mil-lion to Dh358 million in the mean-time. “Damas notes that the amount of Dh365 million, which was referenced in the Enforceable Undertaking as the cash amount owing by the Abdullah

Brothers to Damas, is now reflected to be Dh358 million after considering certain historical recoveries from Ab-dullah Brothers, which have been ac-counted for in the financial statements of Damas,” the statement has further noted.

The statement also noted that if the Cascade Agreement is not signed on or before January 31, 2011, the amount of Dh400 million ($110 million) will become payable immediately by Ab-dullah brothers, and the remaining balance will become payable in ac-cordance with the payment periods described in the announcement made on November 4, 2009.

Damas has further noted in the statement that though it expects the Cascade Agreement to be signed be-fore January 31, 2011, there is no cer-tainty that any such agreement will be signed on or before such date or at all.

“If the Cascade Agreement is signed, the terms of any final signed agreement will be reported to share-holders in more detail pursuant to Damas’ obligations,” it added.

SettlementFollowing the news of misappropria-tion of huge funds of Damas by Abdul-lah brothers, Damas announced on Oc-tober 25, 2009 that it had entered into a settlement agreement (‘Settlement

Agreement’) with the Abdullah Broth-ers under which the Abdullah brothers had undertaken to repay to Damas an amount in respect of certain transac-tions between the Abdullah brothers and Damas.

On November 4, 2009, Damas an-nounced that the Abdullah brothers had undertaken to repay to Damas an amount of $55 million within six months, an ag-gregate of $110 million (Dh400 million) within 12 months, and an aggregate of $165 million within 18 months. The bal-ance in excess of the $165 million, if any, would have to be paid within 24 months, by November 2011.

On March 21, 2010, Damas had agreed that the total amount owed to the company by the Abdullah broth-ers was approximately Dh365 million in cash plus the value of approximately 1,940,250 grams of gold, the price of which was to be fixed on a date agreed by Damas and the Abdullah brothers.

On September, 19, 2010, Damas an-nounced that it was in the final stages of negotiating a Cascade Agreement with, amongst others, the Abdullah brothers, which would provide the legal frame-work for an orderly liquidation and re-alisation of cash proceeds from the sale of the assets of the Abdullah brothers and two companies - Damas Real Estate and Damas Investments Ltd, owned by the Abdullah brothers.


REAL ESTATE

Dubai pins down Abu Dhabi property marketReports say commuter effect has a big say on Capital’s real estate outlook


While developers have scaled back many projects since the end of 2008, the additional supply entering the market has seen average rentals and sale prices decline in most sectors as the market continues to adjust

For affordable and middle market segments, there is a significant under-supply, whereas the upper segments of the market are becoming over-supplied

Market conditions in Du-bai continue to have a negative impact on Abu Dhabi due to the com-

plex inter-relationship between the two markets. Other than selective relation-ship lending, liquidity remains tight and many developers are experiencing cash-flow issues, according to one of the latest reports of Jones Lang LaSalle on the UAE market outlook.

New supply has entered the Abu Dhabi residential market in Q3 2010, in-cluding the Al Bandar project on Raha Beach. However, the market continues to experience an overall under-supply situation, particularly in the lower to mid-market segments, with multiple households sharing and significant numbers commuting from Dubai.

While developers have scaled back many projects since the end of 2008, the additional supply entering the market has seen average rentals and sale prices decline in most sectors over Q3 2010 as

Jesse Downs

the market continues to adjust from the unsustainable levels of performance recorded during 2008 and 2009, the re-port points out.

JLL says there is a mismatch between supply and demand. For affordable and middle market segments, there is a sig-nificant under-supply, whereas the up-per segments of the market are becom-ing over-supplied.

There remains substantial latent demand for affordable to middle in-come housing due to multiple house-holds sharing a single residential unit and many Abu Dhabi employees com-

muting from Dubai and therefore new supply of affordable to middle income housing will be quickly absorbed, it says.

The residential sales market has faced a major correction since end 2008. De-spite the introduction of more flexible payment plans and more competitive finance rates, transactional activity re-mains limited and sale prices continued to fall, JLL points out.

Rents have declined slightly from Q2, while quoted rents in new delivered apartments on Raha Beach are higher than the market average given the loca-


tion and type of development.Rents peaked at unrealistic levels in

2008 and have subsequently declined. Average apartment rentals have experi-enced a year on year decrease of 16 per cent, while some areas have decreased by 30 per cent.

Around 3,000 new residential units have been delivered in Q3 2010. However, there is still a market wide under-supply with multiple household sharing and significant numbers com-muting from Dubai.

While developers have announced substantial completions by year end, JLL has taken a risk-adjusted view ex-pecting that circa 3,500 units will be delivered by end of 2010.

The consultancy feels that the ma-jority of existing residential supply is low quality with a relatively high pro-portion being shared villas. Despite a continued decrease in rents, relatively stable sale prices and limited transac-tions, Abu Dhabi’s residential market will continue to be under-supplied in overall terms for the coming years, it says.

While the resident population of the Abu Dhabi metropolitan area (970,000 in 2009) remains relatively low, it is ex-pected to increase at a rapid rate (5.2 per cent annually up to 2013.

But it stresses that decreased rent-als for lower to middle market housing will have a positive impact on demand. More supply is required to satisfy latent demand for lower to middle market and corporate housing.

The total current stock of 182,000 residential units is expected to reach 251,000 units by the end of 2013. Project cancellations and construction delays have decreased future supply estimates by around 60% since Q2 2008.

The agency estimates that apart-ments will comprise around 77 per cent of the total supply of residential units by the end of 2013, with a significant decrease in the number of residential units within shared villas.

The previous boom in residential sales and prices (driven by specula-tive investment rather than end-user

demand), came to an abrupt halt at the end of 2008, with prices having reached over Dh3,000 per sq ft in some developments.

The market has since witnessed a major fall in pricing, with average prices continuing to fall to Dh1,100 per sq ft in Q3 2010.

JLL points out that the introduc-tion of flexible payment plans and more competitive finance rates have sought to stimulate residential pur-chases. However, transactional activity remains limited due to low confidence levels from consumers and investors.

It points out that Abu Dhabi’s resi-dential rental rates peaked at unrealis-tically high levels during 2008 due to booming demand and limited supply, compounded by the impact of the rent cap.

kets in the UAE are relatively inter-changeable, which creates greater fluid-ity in demand and pricing trends,” says Jesse Downs, Director of Research & Advisory Services at Landmark Advi-sory.

Cumulative analysis of both markets indicates an average vacancy rate of 10% in 2010, which gradually increases to peak at 12 per cent in 2012. Accord-ing to Jesse, “While all housing supply in Dubai is not a perfect substitute for Abu Dhabi housing demand, the cur-rent vacancy rates in areas preferred by Abu Dhabi commuters are within range of these estimates. These figures tell a more robust story than when sim-ply evaluating each market in isolation. Importantly, Abu Dhabi companies also benefit through the availability of affordable and often higher quality

Despite the introduction of more flexible payment plans and more competitive finance rates, transactional activity remains limited and sale prices continue to fall

While there remains a very wide rental disparity, recently delivered buildings and increasing vacancies in existing good quality buildings have resulted in a decrease of 13 per cent to 18 per cent in average rentals.

Forthcoming over–supply in the up-per segment of the market is expected to result in a continued decline in av-erage rentals. Lower and mid-market segments will remain expensive rela-tive to affordability due to an overall shortage of supply in these segments.

The commuter effect is the theme of yet another report, with Landmark Advisories suggesting that the phe-nomenon calls for an aggregate evalu-ation of the two markets together.

“Even if the supply-demand pat-terns differ between Abu Dhabi and Dubai, the two main residential mar-

housing alternatives for staff.”In Dubai, Landmark Advisory found

that the apartment sale prices and rents continued to erode on the back of in-creasing supply with average quarterly declines of 6.3 per cent and 5.8 per cent respectively. In terms of residential vol-umes, sales and rents diverged, with sales volumes down 30 per cent on a quarterly basis and rental volumes up approximately 25 per cent. “Various factors continue to push Dubai resi-dential sale prices and volumes down like increasing supply and the existing limitations on the residency visas for property owners. Equally important, limited mortgage activity means inves-tors continue driving demand,” Jesse points out.

“The widespread expectation of additional price erosion keeps many


investors on the sidelines waiting for opportunistic investments. In some cases this is a fallacy. Although we ex-pect the average residential sale price to continue to decline into 2012, high quality, well position properties in well designed communities with limited supply pipeline are expected to remain relatively stable”, she says.

In Abu Dhabi, the asked apartment sale prices fell by 9 per cent, but the actual transaction prices remain rela-tively unchanged amid low transaction volumes in Q3 2010. Villa transaction sale prices fell by 6 per cent. “The de-cline in listed sale prices in the capital shows that investor expectations in-creasingly reflect market realities. Sale volumes, especially for apartments, remain low because of further hando-ver delays and regulatory uncertainty. Once projects like Marina Square com-mence handover and a title deed system is implemented, we expect volumes to improve,” Jesse points out.

Turning to the commercial office market, Landmark’s Q410 report found that both Abu Dhabi and Dubai con-tinue to face supply pipelines that will virtually double the existing supply in both cities. In Abu Dhabi, office sale prices declined 4 per cent, while lease rates declined 6 per cent. In Dubai, capitalization rates for offices continue to increase as office sale prices declined 6.2 per cent, while lease rates declined 11 per cent.

“Albeit at a more modest rate, com-panies are still drawn to Dubai by the high quality of infrastructure and tax-free status. Price, rent and supply trends create challenges for existing owners of offices space in Dubai, but this also cre-ates opportunities by augmenting the existing attractiveness of Dubai as a national, regional and global hub,” says Jesse Downs.

According to JLL, office rents in Abu Dhabi are expected to continue to fall inline with increasing vacancies, and the gap between Grade A and B rents is expected to widen. Decreased rentals will have a positive impact on demand creating opportunities for tenants to

The lower rentals for lower to middle market housing are expected to have a positive impact on demand as more supply is required to satisfy latent demand for lower to middle market and corporate housing in Abu Dhabi

upgrade their space without increasing costs, JLL says.

Abu Dhabi’s office market perform-ance will continue to be affected by market conditions in Dubai due to an abundance of supply, lower property rentals and more developed urban in-frastructure in Dubai, it says.

supply entered the market in Q3, although new supply will increase significantly over the next few quarters, it says.

Quoted rents have not changed from last quarter and few deals were com-pleted. Average Grade A rentals are Dh2,200 per sqm and average Grade B & C are Dh1,300. The annual de-crease is around 21 per cent.

JLL points out that the newly commenced stan-dalone office buildings ben-efit from lower construction costs and can therefore jus-tify lower rental levels, re-sulting in a two-tier market emerging. The consultancy estimates the total office stock across the

Abu Dhabi Metropolitan area to be approximately 2.2

million sqm, with an additional 1.6 mil-lion sqm of new supply is expected to enter the market by end of 2012, over 50 per cent of which will be within large-scale mixed use projects and tower buildings.Currently there is a shortage of Grade A office space and a significant proportion of new supply will not meet

The report refers to evidence of com-panies looking to upsize operations in Abu Dhabi and says this trend will continue as the attractiveness of Abu Dhabi increases.

Office vacancy rates remain the same as Q2 at 8 per dent as no major

international Grade A standards. While there is latent demand from

occupiers upgrading their office space and increasing their Abu Dhabi pres-ence, the office market is expected to enter into over-supply by the end of 2010, JLL points out.


Meet the bank customer of

Customer loyalty to banks at all-time lows, says Accenture report

The bank customer in 2012 will be less loyal and harder to please, but banks that can understand their customers

deeply and respond to them nimbly stand to gain significant ground over the competition, laying the ground-work for sustainable growth, profit-ability and high performance, says an Accenture report on customer loyalty in the banking sector.

The report, authored by Accenture’s Global Banking Managing Director Noel Gordon,

Global Managing Director for Strat-egy Financial Services Piercarlo Gera and Financial Services senior execu-tive Dorothy Armstrong, stresses that the future of banks rests increasingly on sustainable long-term relationships with high-quality customers.

Accenture says customer loyalty to banks is at all-time lows, but the good news is that the time is right for those with superior customer experi-ence and cost-to-serve management to win new business. But to do so, banks need to build trust-based cus-

The good news is that the time is right for those with superior customer experience and cost-to-serve management to win new business

TRENDS


tomer relationships, invest continu-ally in understanding and meeting fast-changing customer demands, employ technology to create winning customer experiences cost-effectively, continue their focus on cost reduction and develop new business models that eliminate silos between banks and the other companies bank customers do business with, it says. They also must provide the transparent, simple, low-cost products customers demand and work harder to keep those customers coming back.

The report points out that in the wake of the financial crisis, the expec-tations of bank customers have un-dergone a significant transformation, marked most notably by a renewed willingness to shop around. Accen-ture research based on interviews with 50 global banking executives and an analysis of proprietary and public consumer data showed that 46 percent of bank customers are more open to sourcing products from different sup-pliers as a result of the current eco-nomic environment.

In addition, two-thirds of the ex-ecutives surveyed identified shopping around, decreased loyalty and price sensitivity as the key changes they had observed in customer behavior. Im-portantly, more than half of the sen-ior executives Accenture spoke to had seen customer trust in banking brands drop. Surveys indicate that service expectations have risen faster across most sectors in the past 18 months than in the previous five years, and that during the past year two-thirds of global consumers switched service providers.

In retail banking and financial services specifically, 9 per cent of con-sumers have switched in the past six to 12 months, and an additional 13 per cent intend to switch in the next six to 12 months. Twenty-six percent stayed with the same provider but moved some accounts or added new

providers, while 11 percent intended to adopt new providers in the future, survey results showed.

Accenture says these challenges lead to price commoditization, un-bundling of higher-margin products to satisfy customer demands for trans-parency and potentially higher costs-to-serve as banks enhance service. “In a world of shrinking margins, these developments are significant. Nearly 70 per cent of retail banking senior executives believe these changes in customer behavior will last for more than three years. The key question, then, is what exactly do today’s bank customers want?,” the report said.

banks that can offer a more attractive proposition to discontented post-crisis customers. Because these customers are more likely to switch banks than before, banks that can satisfy them have an enhanced opportunity to win their business.

As winning banks move from de-pendence on short-term arbitrage of high-risk segments to maximizing the value of long-term relationships with high-quality customers, they will need to make their business models attrac-tive to those customers over longer time frames. Transparency and trust will be the underpinnings of the new contract with the customer, which ul-

Two-thirds of bank executives covered by a survey identified shopping around, decreased loyalty and price sensitivity as the key changes they had observed in customer behavior in the post financial crisis period

According to Accenture research, customers want not only value for money; but also the ability to choose independently among simple prod-ucts; and a super-responsive bank that is flawless in execution, offers the latest technology with multiple access points and is an institution they can respect and trust.

New horizonThe report stresses that falling profits are becoming a fact of life for today’s banks. In the past year, 46 per cent of retail banking executives said their institution has experienced a loss of customer profitability of 5-15 per cent, and an additional 11 per cent experi-enced a drop of more than 15 per cent. Despite the gloomy figures, Accen-ture sees a substantial opportunity for

timately can place banks firmly on the path to sustainability, the report says.

While banks need to cultivate these top-flight, longer-term customer rela-tionships, Accenture research suggests that these target customers may have other plans. They are fundamentally more volatile, more confident in their ability to make financial decisions, more price-conscious, more demand-ing of an innovative multichannel customer experience, less reluctant to punish banks when service is poor and less trusting in their institutions over-all.

Accenture says today’s customers are living in a complex world and fac-ing myriad choices, and there is a real opportunity for banks to help make sense of that complexity. It believes there are several levers a bank can use


In retail banking and financial services specifically, 9 per cent of consumers have switched in the past six to 12 months, and an additional 13 per cent intend to switch in the next six to 12 months

to gain wallet share among these volatile, demanding and confident customers.

Accenture believes that by creat-ing the self-defining customer, the crisis has intensified the need for banks to adapt their business mod-els to meet the demands of those customers, and that going forward the business model will be the pri-mary factor in a customer’s decision when he or she chooses a financial services provider. It sees a new world for banking in which the customer has more power. It also underscores that banks have a rare opportunity to create and drive the next genera-tion of financial services.

As banks mobilize to seize this opportunity, Accenture believes it is imperative for them to tackle short- to medium-term revenue rebuilding, precise understanding of customer behaviors and the type of services they value, as well as a transformed approach to segment marketing and faultless execution. Banks risk los-ing their ownership of consumer relationships to other parts of the ecosystem and must shape their strategies and expand their operat-ing models to take advantage of new consumer communities.

Based on the bank executive in-terviews and research, Accenture believes that rebuilding bank profit-ability depends on a new contract between banks and their customers. “The customer in 2012 will be more fickle, flexible and prone to flight. Banks that understand and respond to this new customer demand-driv-en dynamic can position themselves to be the institution of choice and earn the loyalty of a new breed of customers—something that will prove critical to achieving sustain-able growth, profitability and high performance in the years ahead,” it says.

banking & business review nov '10

Documents

mortgage market

mission of market recovery

todays market

uae companies

amlak finance

dubai islamic bank dib

big market reality

bank customer