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Abdul Aziz Al Ghurair

July 14, 2007 10:00 by

Let’s look at banking in the UAE in general. How would you sum up the state of investment banking in the UAE at the moment? Is it moving forward healthily?

I think so. Banks in the UAE have been drawn to the next level. They are more sophisticated. They are able to handle the more complex transactions the market demands. They are adding more skin, more technology, more products, more innovations and it’s reflected in their bottom lines. Previously, many such transactions would go to Europe.

What kind of transactions?

I mean investment banking, very large complex deals, very large finances for petrochemicals would be done by markets in Europe. But now all these transactions are executed, concluded and transacted in the regional market, which is good news because you need bankers who are close to the market, who understand the market and construct the transaction according to the environment.

A lot of bigger European and American players are now coming and setting up in Dubai. Is that starting to encroach on local banks?

Look, we’ve always lived with competition anyway. There are more foreign banks in the UAE. Everyone has a niche, everyone has a need and the customer has a choice. And they do choose. Now, we love competition and are opening up the economy and everyone benefits.

What specific advantages can a bank like Mashreqbank offer to people wanting to do business in the UAE?

I think knowledge of the region and deep pockets for any project. Most banks are able to advise, structure and so on. We can structure, advise, lead the project, conclude it and fund it if necessary. So we can do it all.

Not everything is rosy for local banks, I hear. It is said that the banks are stuck with bad debt, for example.

That’s not true. We think every customer is a good customer. I think the test will be when the economy slows down, when there is a recession, and then there will be a differentiation between a very good customer and a merely good one.

It’s definitely early to be talking about that. We are looking at growth of 6 percent possibly in 2007 in the UAE?

I am not talking about next year. I am talking about five or ten years from now. Any economy goes through a cycle.

You were banking back in the 1970s during the first big oil boom. What is the difference today?

Difference in what?

Difference in how banks and financial institutions are handling the current oil money glut.

I think they are wiser. Banks that have been in business for the past 40 years have experienced ups and downs. We have learnt from the down cycle and we will not do transactions that we don’t understand. If we don’t understand a transaction we will say sorry and advise our customers to go next door.

So you think the banking system is becoming more sophisticated?


Dubai has ambitions to be the financial center of the Middle East. What would give it an advantage over, say, Bahrain or Saudi Arabia, which are equally as determined?

I think being the first one is always an advantage.

But Bahrain could argue that they have been doing structurally complex deals in an almost transparent environment for a long time.

Dubai and the UAE can grow further only if our neighbors grow. If we have a bigger market, it won’t necessarily cut across. It’s no good if we grow alone and nobody grows with us. So I think it is very healthy that the whole region grows because that will prove our GCC idea … in the market as well. So competition is good for all of us.

What needs to be done about regulation of the financial industry in Dubai?

On regulation, there is no end to it because our economy is moving, progressing and changing. And we always have to review our regulation in terms of what the rest of the world is doing.

Is that in terms of enforcement or drafting?

I think we are pretty good at enforcing what we have but the market is getting sophisticated. There are more ideas coming to the market. There are more transactions coming to the market. So the market has to be regulated and there should be more transparency and that will continue. There is no end to this updating regulation and I actually encourage looking at all our regulations every three years. Every regulation must be reexamined.

What about corporate governance? Is it being taken seriously enough?

In my opinion there is good corporate governance but we will always need to raise the bar because more and more companies are in stock markets now. It does require transparency in what happens inside the organization and more of that will see more corporate governance coming in. But again there is no end to it and we have not had any major lapses in corporate governance.

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