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Interview: Investment Banking in MENA through the Ages
The current crop of Western bankers in the Middle East would not have recognized the region two decades ago. But veteran investment banker Jacob Yahiayan came to the Gulf in the late 1980s.
February 15, 2011 8:48 by Jay Akasie
During his more than 20 years in corporate banking, Jacob Yahiayan, the founder and managing member of New York-based Continental Advisory Services LLC, has structured more than $5 billion in corporate financing in North American and international markets. In his last management role, he was the assistant general manager and head of corporate banking at a subsidiary of Standard Chartered Bank PLC, based in Beirut. Previously, Yahiayan was the vice president of the corporate and institutional group for Standard Chartered Bank’s New York branch, and head of credit and business development for the New York branch of Bank Bumiputra Malaysia Berhad.
Yahiayan is a longtime member of the Arab Bankers Association of North America, was a member of New York University’s advisory council, and a member of the International Board of Advisors for the Lebanese American University.
You have been a financier with experience in Arab markets for two decades. How have the capital markets of the Middle East and North Africa changed during that period?
Islamic finance and its level of sophistication have grown considerably from where they were when I was with Bank Bumiputra Malaysia in the early 1990s. Between 1994 and 2010, every bank in the region saw its Islamic finance services grow exponentially. The interesting aspect to this development is that the Malaysians were among the first to throw themselves into the Islamic finance mix. When they became very successful, Gulf banks soon followed.
Dubai was little more than a landing strip when you first arrived there decades ago. What does Dubai’s success say about the U.A.E. and the Gulf countries?
Most pronounced was the wave from the 1980s onward to migrate America’s best practices by way of architecture and engineering, construction, technology transfer, and intellectual collaboration. This is evident not only from Dubai’s impressive skyline, but the top-tier American research schools – from Cornell University in Qatar and, most recently, New York University in Abu Dhabi – creating new campuses. Of course, several other universities from America and the Organization for Economic Co-operation and Development countries have migrated to the Gulf as well.
What does an investor from the Gulf, the Levant, or North Africa need to know about successfully navigating the North American markets?
I recall when I was on the Arab Bankers of North America’s Commercial Real Estate Capital Markets committee, our discussion revolved around the same thing. I’d have to say valuation, whether you’re using a net operating income metric or ebitda (earnings before interest, taxes, depreciation, and amortization). Sound valuation and sustainability are paramount factors, coupled, of course, with credible partners. You don’t necessarily have to partner with large institutions. The last fall-out in the financial markets attests to my assertion.
How do Western markets differ from MENA markets?
The most significant difference would be recourse and contractual governance laws. We’ve seen challenges even with recent Islamic financing restructurings because of the financial fall-out.
How does the lack of transparency in the Middle East affect Western investment there?
I have to say after experiencing several crashes from Latin American, Asia, and several OECD recessions, that I’m not sure there really is a difference. It’s a function of the stabilization of a broader economic consideration versus the interests of a few.
What should Arab investors be looking for in North American markets?
There are several intellectual bandwidth opportunities that are readily transferable such as information technology, professional engineering, healthcare, and process engineering that we already collaborate on. Now is a good time for MENA investors to check out the North American markets because the financial markets and pricings are stabilizing – at least until the next batch of commercial mortgage-backed securities loans come due in two to four years.