Deutsche Bank builds up the largest research facility in the Middle East

Deutsche Bank announced today that it is moving ahead with the establishment of a Middle East research platform, expected to be the largest facility of its kind in the region.

Spearheading Deutsche Bank's efforts will be Pascal Moura, Head of Research for Emerging Markets, who will be relocating to Dubai to oversee the two-year long establishment process.

The research facility will focus on 80 leading blue-chip regional stocks across all sectors as well as supporting Deutsche Bank Global Research.

Ricardo Honegger, Chief Country Officer for Deutsche Bank in the UAE, said Deutsche Bank's commitment to the region is unequivocal. "We are constructing the MENA Research platform to ensure the induction of the broadest base of analyst experience, across both mature and emerging markets, in an effort to ensure real value addition not only to our clients but also to the regional markets," he added.

Deutsche Bank's commitment to establish the research unit was made during a recent visit to the region by Dr. Josef Ackermann, Chairman of Deutsche Bank AG's Management Board and the Group's Executive Committee.

Pascal Moura said Deutsche Bank forecasts GDP growth in the region of 7-8 percent per annum for the foreseeable future and we expect a growing interest from asset managers across the globe. "We want to make sure that we offer to investors the quality and depth of coverage that we have in other regions in order to support them in their quest to generate Alpha," he added.

Moura joined Deutsche Bank in 2002. Prior to heading Deutsche Bank's research into emerging markets, Moura was Head of European Mid-Cap Research, and before that he was Head of Swiss Research for the Bank.
WAM

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Mashreq named best bank in UAE

Leading UAE bank Mashreq was named "Best Bank in the UAE" and GulfMerger, a financial and investment advisory firm, was named the "Best Merger & Acquisition House in Kuwait" at the Euromoney Awards for Excellence Middle East.

Mashreq won the award for the fourth time in the last 16 years.

Mashreq CEO Abdul Aziz Al Ghurair was given the "QFC Euromoney Award for Outstanding Contribution to Financial Services in the Middle East" for his work in promoting the UAE banking industry.

Simon Brady, Euromoney magazine CEO, said: "Euromoney was impressed by the growth evident in all aspects of Mashreq's business – it has one of the strongest consumer franchises in the UAE. Mashreq was selected as this year's best UAE bank, based on key criteria such as transaction volume, market share, customer service, competitive pricing and innovative technologies."

Al Ghurair said: "The award for Best Bank in the UAE is a tremendous achievement."

/Business 24/7/

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Dresdner Bank To Join The Dubai International Financial Centre

Dresdner Bank has expanded its presence in the Near and Middle East region with the formation of a subsidiary in Dubai. The new company "Dresdner Bank (DIFC) Limited" has received a license from the Dubai Financial Services Authority to establish its office the Dubai International Financial Centre.

Dresdner Bank is one of the top ten players in Europe's private banking industry, and in Germany ranks number two in this segment. In total, the bank manages assets worth about 130 billion Euros (USD 201 billion) for its affluent and wealthy private clients.

Dresdner Bank is not new to the region having maintained a representative office in Dubai for over 12 years. Building on this experience, the new company has been established to serve as a platform for further growth throughout the GCC region specifically to take advantage of one of the most attractive and fastest growing private wealth management markets in the world. Dresdner Bank (DIFC) Limited will be part of Dresdner Bank's Private Wealth Management Division.

Welcoming Dresdner Bank to the DIFC community, Nasser Al Shaali, CEO of the DIFC Authority said: "With the exceptional growth of private wealth in the Middle East, the demand for wealth management services has experienced a tremendous surge. Institutions like Dresdner Bank with vast expertise in this sector have access to a large number of new market opportunities. Their office in DIFC gives the company the strategic platform to establish new relationships with customers, gain competitive edge and increase their share of the regional market."

Andreas Georgi, who represents this Division on Dresdner Bank's Board of Managing Directors said "The formation of a subsidiary in Dubai is a further step within the international expansion strategy of Dresdner Bank?s Private Wealth Management"

Clients will be able to access the comprehensive offering within the Allianz Group, which now encompasses two Shariah-compliant mutual funds managed by Allianz Global Investors ("Allianz RCM Islamic Global Equity Opportunities" and "Allianz RCM Islamic Global Emerging Markets Equity") to meet the high demand of Shariah-compliant investments in the entire region.

The new company will be run by Nigel Putt, who has managed client relationships in the Near and Middle East for many years and who offers comprehensive experience in regional and international private wealth management. The Team will be supported by the addition of further relationship managers in the coming months.

Dresdner Bank's Private Wealth Management Division has been expanding recently. Last year, the bank increased the number of offices in Germany dedicated to this sector from 7 to 22 and enlarged its international footprint through the acquisition of two asset managers in Belgium. In addition, new offices have been opened in three locations in Great Britain. Kleinwort Benson, the British subsidiary, was recently awarded "Best Private Bank in UK" by Financial Times and Investors Chronicle. The establishment of Dresdner Bank (DIFC) Limited further complements the expansion of the division on a global basis.
/Mondo Visione/

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Consumers call on banks to stop hoarding rate cuts

UAE banks should be forced to pass on successive US interest rate cuts to their customers, according to the latest ArabianBusiness.com spot poll.

Discontent has been growing among homeowners in the Gulf state over banks' unwillingness to pass on the cuts, which should have sent mortgage rates tumbling.

The US Federal Reserve has slashed interest rates seven times since September, bringing down the cost of borrowing to just 2%.

The UAE pegs its currency to the ailing US dollar, which forces the Gulf state to mirror Fed monetary policy in order to maintain the relative attractiveness of the dirham.

However, banks have resisted lowering their rates to below a range of between 7.1-8.5%, infuriating customers who feel they are paying over the odds on their mortgages.

An overwhelming 76.4% of respondents to the poll said the successive interest rate cuts should be applied to mortgage and loan customers, since banks are “getting their money cheaper than ever”.

A further 13.3% said banks should pass the cuts to “an extent”, but agreed that if customers are told mortgage repayments vary according to underlying interest rates then banks should honour that.

The remaining 10.1% said banks should not have to pass the cuts on, and should “make hay while the sun shines” by using cheaper borrowing rates to improve their profit margins.

/Arabian Business/

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Noor Islamic targets low-income savers

The United Arab Emirates' Noor Islamic Bank is to target lower-income workers by launching Islamic banking products through the country's post office network.
The joint venture between Noor Islamic and the UAE post office is targeting the 50 per cent of the population who have no formal bank accounts, according to Hussain Al Qemzi, Noor Islamic's chief executive.

"Post office banks are common around the world," says Mr Qemzi. "It is time for an Islamic bank to try out this idea. We have signed a contract with the post offices [in the UAE] to create a post bank to cater to the poor."

Regular banking accounts for low-income individuals would comply with an order from the ministry of labour that requires companies to deposit salaries in banks.

For many low-income expatriate customers from countries such as India, Pakistan and the Philippines, who represent a significant chunk of the UAE's workforce, a post office account would offer significantly lower charges than those of regular banks.

It would also bring these workers into the formal economy and may cut into the hawala system on which many low-paid workers are forced to rely in order to transfer funds back to their families. The informal hawala system has been identified as a financing mechanism used by extremist networks.

The proposed activities of the joint venture will include debit cards, Islamic insurance, credit cards, microfinancing, salary payments, remittances and currency exchange, according to earlier statements. "We understand that providing banking services to the low-income segment may not be lucrative," the joint venture said earlier this year.

Noor Islamic, which began taking deposits from customers this year, is 25 per cent owned by the Dubai government, 25 per cent by Sheikh Mohammed bin Rashid Al Maktoum, Dubai's ruler, 5 per cent by the UAE federal government and 45 per cent by 17 UAE royals and businessmen, according to earlier reports. Some of the most prominent names in Dubai's business elite sit on the bank's board.

Many critics lament the fact that, in practice, Islamic banks are no different from conventional banks, in the sense that they in effect pay the same kinds of assured returns that are paid by regular banks.

Mr Qemzi says that he is looking for expansion into Asia, Africa and even Europe, regions which are home to large and growing communities of Muslims.

"We see plenty of areas which are empty. North Africa and Central Asia has no presence of Islamic banking. Indonesia and Pakistan has a very small presence of Islamic banking," he says.

Noor Islamic may choose to acquire either conventional banks which can be converted to Islamic institutions or existing Islamic banks for expansion. Mr Qemzi previously helped convert the National Bank of Sharjah into an Islamic institution.

"Either you go organic by getting [Islamic banking] licences [in other countries] or you acquire conventional banks and convert them [to Islamic banks]," he says. "You have to do this very carefully. You need to consider the cost of conversion and the regulation has to be in place."

One challenge for such consumer-based expansion is finding bankers who are equally versatile with the needs of the market and familiar with Islamic concepts. This is a common problem cited by top executives at Islamic banks. "We are in a situation where so much talent is chasing such few people," says Mr Qemzi.

/The Financial Times/

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Al-Salam Bank (Sudan) to list its shares in the Dubai Financial Market start June

Al-Salam Bank- Sudan declared that it will list its shares in the Dubai Financial Market, and they will be put into circulation on Thursday, June 5th 2008, after the bank received the approval of the Emirates Securities and Commodities Authority for the inclusion of its shares in the Emirati financial markets.

Al Salam Bank�s shares will be listed in the said market during a great ceremony to be held in the Dubai Financial Market, in the presence of the members of the board of directors and the director general of Al-Salam Bank, Issa Kazem Chairman of the Dubai Financial Market, in addition to many members of the Executive Administration of Al-Salam Bank and the Dubai Financial Market.

Hussein Mohammed Al-Meeza, Vice Chairman declared: "The listing of the shares of Al-Salam Bank- Sudan, in the Dubai Financial Market, with the scope of the bank�s strategy aiming at enhancing its position and its strength among the Arab financials, and consolidating its regional and international presence, as the bank�s directors seek to facilitate the circulation process for the shareholders in the UAE and the other states of the region, but also to grant them the freedom of selection for circulation in many financial markets, according to their priorities and interests." Al Meeza added: "Al-Salam Bank- Sudan is one among the most important banks in Sudanese market, and it recently made huge steps, as its headquarter was moved to the capital Downtown (Khartoum). Accordingly, a comprehensive study was prepared in order to open many branches for the bank during the current year in many locations in Sudan. Furthermore, many automatic banking machines will be commissioned in key places in the Sudanese capital and other main cities." He explained: "Al-Salam Bank (Sudan) will keep on offering the best bank services which will keep pace with the economic developments in Sudan, so that it contributes to enhance the pillars of the Sudanese economic growth." Al-Salam Bank (Sudan) is considered among the most important banks, with respect to the capital in the Khartoum market of financial papers, and among the most eminent banks operating in the Sudanese market, throughout its innovative and excellent bank services. The bank constitution came as a fruit of an Emirati- Gulf- Sudanese cooperation; as its operations started up on May 25th 2006, with a capital of 100 million dollars.

The results of the bank for the year 2007 show record results, despite its recent presence in the Sudanese bank market, as the bank managed to achieve the aimed balance between the investment returns and the investment risks and it contributed to achieve high growth rates against the minimum possible of risks. Within the scope of the evaluation of the bank performance, it managed to achieve brilliant results in the central Sudanese bank, for the preventive control for the last quarter of the year 2007, according to CAEL indicators, since it obtained a strong classification, which is regarded as one of the greatest achievements of the bank.

The big bank investments during the year 2007 resulted in good returns, achieving a profit of 30 Million Dollars against 25 million during the year 2006, including the share of depositors from profits which reached 7.4 Million Dollars against 7 Million for the year 2006. In addition, it achieved a net profit for shareholders, which reached 12.3 dollars after the deduction of zakat and taxes. As for the property rights, they reached 149 Million Dollars with a growth rate of 8% for the year 2006.

The ordinary general assembly, held in Khartoum on 23/3/2008, declared the distribution of the monetary profits among shareholders, at a rate of 10%.

/WAM/

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Dubai to become one of the world's financial capitals

Dubai is picking up the mantle of the financial capital of the world, as global banking sectors London and New York continue to fade on the back of the global credit crises.

The new mantra in New York and London is "Dubai, Mumbai, Shanghai or goodbye", as job losses mount in both cities while opportunities in the east continue to rise.

Lehman Brothers on Tuesday became the latest investment bank moving one of its most senior positions to the UAE. Philip Lynch, the bank's co-head of equities for Europe and the Middle East, will be relocating to Dubai after serving more than two decades in London.

The US investment bank, which has axed over 6,000 staff in the last nine months, said the move was aimed at serving the growing needs of clients in the Gulf region and the wider Middle East.

Lynch will find himself in good company. Barclays last month dispatched Roger Jenkins, one of London's highest-paid bankers, to the emirate as chairman of investment banking and investment management.

Earlier in May Citigroup, which has so far cut 1,500 jobs because of the global credit crisis, announced it would send Alberto Verme, co-head of global investment banking from London to Dubai.

He follows Makram Azar, head of the media, consumer and retail investment banking team in Europe and the Middle East, to take the role of global head of sovereign wealth funds.

The bank has also switched Perry Hoffmeister, co-head of investment banking for Europe and the Middle East, to run its investment management arm across the same regions.

The relocation of roles from London and New York to Dubai, and to a lesser extent Mumbai and Shanghai, reflects the reshaping of global opportunities for investment banks.

With a surge in oil revenue, rapidly rising infrastructure needs, and the emergence of sovereign wealth funds at the head of M&A activity, the Middle East and Asia have become crucial for global investment banks looking to remain profitable.

Vikram Pandit, Citigroup's chief executive, is on record as saying the Middle East is the bank's priority in its focus on growth opportunities overseas.

Countries in the GCC will spend $1.5 trillion on infrastructure in the five years, according to figures published by Société Générale Asset Management, based on research by HSBC Global Research, Middle East Business Intelligence and Thomson Datastream.

Cerulli Associates, a US and Singapore-based research firm, estimated total managed assets in the six GCC countries and Egypt to be more than $1.6 trillion at the end of last year.

/Arabian Business/

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Emirates NBD extends banking hours

Emirates NBD, the Dubai-based banking group announced its extended banking hours at more branches. Following the introduction of extended hours at Emirates Bank branches, National Bank of Dubai branches at Mall of Emirates, Deira City Centre, Dubai Festival City will now operate from 10 a.m. to 10 p.m., and NBD branches at Emirates Towers, Al Mizhar, and Muhaisnah will be operational from 8 a.m. to 8 p.m. throughout the week.

All NBD branches offer Money Exchange Services; Money Transfer Services, Customized Banking Services and Facilities, ATM Machines, Automated Instant Cash Deposit Machines and Automated Cheque Deposit Machines during the extended shift.

Emirates NBD General Manager- Retail Banking, Suvo Sarkar commented on the extended banking hours saying, 'Emirates NBD considers its customers convenience a top priority. For that reason we have many branches now opening right through the day until 8 p.m., or 10 p.m to give customers the luxury of banking even after office hours. We are confident that these extended banking hours are in tune with our customers? hectic lifestyles and will make banking easier for them. We constantly aim to be a step ahead of our customers' requirements and we continue to modify, develop and enhance our services to encompass their needs and enhance their daily routines.' Mohammed Al Falasi , Emirates NBD Head of Alternative channels commented, 'We listened to our customers feedback, and we realized that many of our customers are facing difficulties in attending to their banking needs during traditional banking hours due to work and family commitments. In response to that we decided to offer them extended banking hours at selected branches. Emirates NBD continues its plans of further expanding its network of branches across the UAE , in order to ensure that customers are never too far from their money and our services.'
/WAM/

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Amlak Finance renewed its application to become a bank

Dubai-based Islamic mortgage company Amlak Finance said it renewed its application to become a bank, for which it first applied more than two years ago.
In a statement on the Dubai bourse website on Thursday, the Emaar Properties affiliate did not give more details. Becoming a bank would allow Amlak to take deposits that it could then lend on as mortgages.

The Central Bank of the UAE is thought to be reluctant to issue any more banking licences as there is currently 51 banks, up from 48 a year ago. However, the fact that the three newest banks have all been Islamic could be something that is giving Amak the courage to keep applying as the UAE hopes to become the Islamic finance hub of the Middle East, ahead of Bahrain which also saw a number of Islamic bank launches in 2007. Among the new entrants in the UAE were Al Hilal, Noor Islamic Bank and Crescent Bank.

Shares of Amlak were up 0.63 per cent at AED 4.80 on Thursday.

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UAE Central Bank keeps tabs on lending

The Central BankCentral BankCentral Bank of the United Arab Emirates is monitoring lending activity by all banks operating in the UAE to prevent a fresh bad debt crisis that could be caused by a surge in mortgage and other personal loans.
Although the country's 23 national banks and 28 foreign units are lavishing funds in personal and mortgage loans to take advantage of a surge in domestic demand, a repetition of the damaging bad and doubtful debt that jolted the banking sector in the mid-1980s is unlikely because of Central BankCentral BankCentral Bank of the United Arab Emirates's tight policy.

"The situation is different now. During the 1980s, the official lending policy was lax and there were no ceiling for credits," said Firas Al Madi, sales and marketing manager for Northern Emirates - retail banking group - at the government-controlled National Bank of Abu Dhabi (NBAD)National Bank of Abu Dhabi (NBAD).

"I know there has been a surge in lending activity recently, including mortgage loans. However, there are strict rules for lending because the Central BankCentral BankCentral Bank of the United Arab Emirates has set a ceiling for all types of loans. I can tell you that the Central BankCentral BankCentral Bank of the United Arab Emirates is monitoring the situation and we in the banks are doing the same... so, the emergence of a new bad debt problem similar to that in mid-1980s is totally out of question."

Speaking to Emirates Business at Cityscape Abu Dhabi, Al Madi said banks in the UAE had largely boosted their reserves in line with Central BankCentral BankCentral Bank of the United Arab Emirates instructions, while many of them have set up special units for all types of lending, including mortgage, personal loans, consumer loans, commercial credits, car financing and other facilities.

"Banks are largely benefiting from the surge in credits but there are certain limits and ceilings set by the Central BankCentral BankCentral Bank of the United Arab Emirates. I can tell you despite the large increase in personal loans, most banks are lending responsibly in accordance with their financial capacity and available reserves," he said. Central BankCentral BankCentral Bank of the United Arab Emirates
sources acknowledged there has been an upsurge in domestic credits by UAE banks over the past two years but added that this is normal given the sharp growth in the economy and local projects.

"The Central BankCentral BankCentral Bank of the United Arab Emirates is in full control of the lending activity by banks although we do not interfere in their daily operations," a Central BankCentral BankCentral Bank of the United Arab Emirates source said. "We have certain rules on lending for their security and safety and we expect them to abide by them. Actually all banks are complying with these rules whether concerning the loan ceiling or size of reserves."

According to the Central BankCentral BankCentral Bank of the United Arab Emirates's latest bulletin, the combined capital and reserves of the country's 51 banks shot up by nearly Dh45 billion from Dh96bn at the end of 2006 to an all time high of Dh141.1bn at the end of last March.

The Central BankCentral BankCentral Bank of the United Arab Emirates believes the large reserve base would consolidate the banking sector's financial position and immunise it against a new bank crisis. Low reserves and the absence of strict lending rules threw the UAE banking sector into its worst crisis in mid-1980s after many debtors failed to pay back to the banks because of a sharp business downturn that followed the oil boom.

The crisis, which was triggered by a rush to extend loans by banks during the oil boom, inflicted heavy losses on most of them and forced some to merge. It also prompted the Central BankCentral BankCentral Bank of the United Arab Emirates to tighten its control over the banking sector.
Central BankCentral BankCentral Bank of the United Arab Emirates figures showed strong domestic demand and a sharp upturn in real estate projects boosted banks' mortgage loans to a record Dh58.8bn at the end of 2007, up by nearly Dh19bn from the end of 2006.

Personal consumer loans also soared to a record Dh48.4 billion at the end of March this year while personal commercial loans swelled by nearly Dh23bn to reach Dh110bn at the end of 2007 from Dh87bn at the end of 2006.
/Zawya/

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ANZ Opens Dubai Office to Tap Mideast Trade, Expatriate Clients

Australia & New Zealand Banking Group Ltd., Australia's third-biggest bank, opened an office in Dubai to tap rising trade with the Middle East and demand from expatriates living in the region.

Allen Tuite moves from his role as group representative for Malaysia and Thailand to head the new Dubai office, ANZ said in a statement to the Australian Stock Exchange today.

The office will focus on selling mortgages to the Middle East's 45,000 expatriate Australians and New Zealanders as well as providing export and trade financing services, the statement said.

/Bloomberg/

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Citi launches Shariah-compliant products in UAE

Citigroup said on Monday it will be launching a series of Shariah-compliant banking products in the UAE first in order to help companies better manage their working capital needs.

The major bank said that the new banking products, which will initially be launched in the UAE before other markets, were designed for a growing number of its corporate customers who were looking for competitive Shariah-compliant alternatives to conventional products.

"The Citigroup treasury and trade Shariah-compliant services are in line with Citi's strategy to offer our clients Shariah-compliant working capital products in the UAE to be later introduced to various other markets," said Samad Sirohey, chief executive officer of Citi Islamic Investment Bank and head of Global Islamic Banking.

Citi, which also recently launched escrow services based on a Murabaha structure, said it products would include cash management products for current and saving accounts as well as trade products, which related to import finance and trade services.

The launch of the Shariah-compliant products by Citi in the region comes soon after the news that Alberto Verme, co-head of the global investment banking team, is relocating to Dubai from Citi's headquarters in Canary Wharf, London.

The Gulf shares close relations with Citigroup, with Saudi Arabia's Prince Alwaleed bin Talal currently its largest shareholder, and both the Abu Dhabi Investment Authority and Kuwait Investment Authority recent investors.

Citi, which is ranked as the world's leading bookrunner of global Islamic finance transactions, set up its global Islamic banking operations in 1981 in London.

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Physical cheques to be replaced by an image cheque

The physical cheques will go from the banking system in the UAE on November 1, 2008, and the current automated cheque clearing system (ACCS) will be replaced by an image cheque clearing system (ICCS), according to a Central Bank circular.
After the success of the parallel running of ICCS along with the automated system between October 21, 2007 to January 31, 2008 within a group of banks, the Central Bank has decided to proceed with live operation of the system from July 1, 2008.

New system

The circular explains how the new system will function. Cheques deposited by bank customers will be scanned by branches of all banks and sent to their headquarters or regional offices (for foreign banks).

Each headquarter or regional office will then send all imaged cheques to the Central Bank. Banks that do not have a central system should authorise their branches to send imaged cheques directly to the ICCS.

Payment by banks will be made against their account holder's cheque images, provided sufficient funds are available and no discrepancies are noticed. Original cheques once imaged will be sorted within the premises of the bank concerned, and sent to the issuing banks within five days, directly from the presenting banks.

At the issuing banks, original cheques received will be verified for forgery and discrepancies and the issuing bank will have 30 days to claim against the presenting bank concerned.

The issuing bank must make its claim for good value of the cheque at the Central Bank, and the original cheque should be attached for the processing at the Central Bank.

The Central Bank has further clarified that the decision of the apex bank will be binding on both the issuing bank and presenting bank.

However, both parties will have the right to go for legal recourse if they desire so.

The high-value original cheques will have to be retrieved and submitted with the Central Bank or courts as and when they are demanded, within a period stated by the Central Bank.

The Central Bank will store cheque images through ICCS for a period of not less than 20 years and will be certified to the courts, if required.

/The Business Weekly/

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Tamweel closes syndicated bank facility

Tamweel has closed a $235 million syndicated bank facility, which was subscribed to by both regional and international financial institutions, including some from the Far East.

“In this period of marked global financial instability, the international financial services community is more eager than ever to tap opportunities in high-growth emerging markets, especially the UAE,” says Vishnu Deuskar, Head of Global Markets at ABN Amro’s UAE operations.

ABN Amro and Noor Islamic Bank served as lead arrangers and joint book-runners for the transaction, priced in both dollars and dirhams and reaching maturity in three years.

This financing facility comes close to Tamweel’s closure of a $300 million exchangeable sukuk issue, whose order book was oversubscribed within hours of announcing in January. “The pricing, tenor and coverage of this facility are all extremely competitive, especially considering today’s challenging global economic environment,” notes Gaurav Agarwal, Chief Financial and Support Services Officer at the mortgage company.

The funds will come in handy for Tamweel’s overseas expansions, expected to contribute 30 per cent of total revenues by 2011. in February, it formalized plans to launch operations in Egypt by receiving a license from the Egyptian Mortgage Financial Authority. The launch of full-scale operations is set for the second quarter.

Tamweel already has a joint venture agreement with the Al Oula Development Co in Saudi Arabia.

Tamweel has recorded net profits of Dh176.34 million in the first three months of 2008, which represents a 246 per cent increase on the Dh50.47 million recorded last year. Islamic financing and investing assets rose to Dh6.63 billion from Dh3.01 billion a year before.

Also in the first quarter, Tamweel booked Dh2.54 billion in financed properties, while the accumulated financing assets has totaled Dh11.52 billion.

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Citigroup Inc. relocates investment banking to Dubai

Citigroup Inc. may be based in New York, but it's gaining more of a Middle East influence.

The financial conglomerate on Thursday added to its close history with the region by sending Alberto Verme, co-head of its investment bank, to Dubai. Verme will be the first major U.S. investment-banking chief stationed in Dubai and the latest in a series of ties made between Citigroup and the region's growing financial community and clout.

Citigroup said Verme's assignment "underscores Citi's commitment to the Middle East, one of the world's fastest-growing and most important regions, and is consistent with Citi's efforts to deploy its best leaders against its most important and promising growth opportunities."

In November, a cash-strapped Citigroup solicited a $7.5 billion investment from Abu Dhabi Investment Authority. That move, along with other sovereign-fund investments in U.S. financial institutions, stirred controversy about foreign intentions and the safety of U.S. banks.

But what has been new for some banks is familiar territory to Citigroup. Saudi Prince Al-Walid bin Talal owns more than 5% of Citigroup through investments he began building in the 1990s. Citigroup has a 50-year presence in the region, which it groups internally with Africa and Europe.

Critics may wonder why Dubai, part of the United Arab Emirates, a nation of only four million, and not China or India? Although the country's coffers swell with oil wealth, nearly 20% of the population lives below the poverty line.

The answer may lie in focus. China and India are building economies still largely based on manufacturing. Dubai and Abu Dhabi are aggressively building financial infrastructure as evidenced by their willingness to invest in U.S. banks and European stock exchanges.

The company said Verme will continue to share global responsibility for investment banking with Ray McGuire, who remains based in New York. /CNN/

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Central Bank announces new interest rate cut

The UAE Central Bank announced that it has lowered the interest rate on its re-purchase of Certificate of Deposit (REPO) from 2.25% to 2% with effect from Thursday.

A Central Bank press release said the move is in line with the new level of interest rate on the US Dollar Federal Funds (short-term Dollar interest rate as determined by the US Federal Reserve Bank).

The US interest rate cut, which announced Wednesday, was the fifth since last summer when it was 5.25 %.

The REPO operation, conducted by the Central Bank with banks operating in the country, is a mechanism through which the interest rate of the Dirham is changed. WAM

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Mashreqbank Q1 profit hit by credit crunch

Mashreqbank MASB.DU, the UAE's second-largest lender by market value, posted its smallest profit growth in a year in the first quarter as the global credit crunch hit investment income and costs rose.

Net income in the three months to March 31 climbed 4.5 percent to 465.3 million dirhams ($126.7 million), compared with 445 million dirhams in the year-earlier period, the United Arab Emirates bank said in a statement.

Investment income fell 28 percent to 175 million dirhams, while costs rose 32 percent as the bank spent more on staff, infrastructure and technology, it said, without giving details.

The fall in investment income was "mainly due to the widening of credit spreads, and poor liquidity in the global and regional markets," it said.

Profit surged 20 percent in the fourth quarter, 61 percent in the second and fell in third, according to Reuters data.

Net interest income and income from products that comply with Islamic law surged 67 percent to 412 million dirhams during the quarter, and net fees, commissions and other income rose 12.8 percent, the bank said.

Mashreqbank shares are up 14.5 percent this year, the second-best performer of the 11 biggest publicly listed lenders. /Reuters/

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Dubai Islamic Bank Q1 profit jumps on property loans

Dubai Islamic Bank DISB.DU, the Gulf's third-largest bank that complies with Islamic law, said first-quarter profit rose 31 percent after lending more, especially to the United Arab Emirates' booming realty sector.

Net income in the three months to March 31 rose to 556 million dirhams ($151.4 million), compared with 424 million dirhams in the year-earlier period, the Dubai-government affiliate said in a statement, without making clear whether that was after depositors' share.

Financing and investment activities jumped 29 percent to 43.2 billion dirhams, and total assets 24 percent to 85.1 billion dirhams, the bank said.

"During the same period, for example, the bank financed new projects in the contracting sector worth 12 billion dirhams, demonstrating DIB's leading position in the vital real estate sector," Mohammed al-Shaibani, Dubai Islamic's chairman, said in the statement.

Cairo-based investment bank EFG-Hermes and Dubai-based Shuaa Capital had expected Dubai Islamic to make a profit of 521 million dirhams and 565 million dirhams, respectively. [ID:nL2999531]

Demand for financial services that comply with Islamic law, including a ban on the receipt of interest, is growing as the world's 1.3 billion Muslims seek to adhere more with their religious beliefs, and record oil prices fuel economic growth in the Gulf.

Among other tenets, Islam equates interest with usury, and instead encourages banks to share in the profit or loss of investors. Interest paid to depositors, for instance, is instead called profit.

Globally, Islamic banks controlled assets worth about $750 billion at the end of 2006, a figure which may rise to more than $1 trillion by 2010 as the industry expands, said U.S. management consultants McKinsey & Co. [ID:nL09301790]

Last month, investors offered $13.1 billion, or almost 86 times more than was sought, towards the initial public offering of Ajman Bank, the UAE's seventh-largest Islamic lender.

It was the most heavily oversubscribed IPO in the UAE, the second-largest Arab economy, since the government of Dubai offered shares in a public and private sale of Dubai Financial Market Co DFM.DU in 2006.

UAE bank assets that comply with Islamic law account for about 15 percent of total industry assets, Ajman Bank Chief Executive Yousif Khalaf said in February.

Still, shares of Dubai Islamic have been among the poorer performances of publicly listed sharia-compliant lenders in the Gulf, down about 0.5 percent this year, compared with gains for rivals such as Abu Dhabi Islamic Bank and Qatar Islamic Bank. Saudi Arabia's Al-Rajhi Bank is down 29 percent. /Reuters/

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Standard Chartered opens new trading floor at DIFC

The Standard Chartered Bank yesterday opened its new trading room at the Dubai International Financial Centre, strengthening its regional headquarters and becoming the biggest trading floor in the Middle East.

In a statement, the bank said the facility has 200 trading seats and will support its expanding global financial markets business. "This DIFC trading floor is geared to be a centre of excellence for the Middle East and Africa region," it added.

It stressed that the key product areas include risk management advisory, structuring, interest rates derivatives, foreign exchange, e-commerce, credit trading and capital markets capabilities. The latter cover fixed income, syndications, asset-backed securities, credit derivatives and convertible bonds.

DIFC Governor Dr Oman bin Sulaiman inaugurated the facility which, he said, has set new benchmarks for the industry in the region. "Facilities such as this will help to generate even more growth in the region's financial markets," he added.

The regional CEO of Standard Chartered, Shayne Nelson, said the bank co-ordinates its various regional activities from the UAE and has expanded its global operations for physical commodities, oil and energy.

The Standard Chartered office at DIFC also the centre for the bank's global market risk management and supports its businesses in the UK. It is the only bank within the DIFC to have its own office building.

"Our continued investment at the DIFC is testament to our commitment to the entire region," Nelso said. /MENAFN/

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51 banks operate in the Emirates

The number of commercial banks operating in the UAE has increased to 51 and the figure is set to rise as the country pushes ahead with plans to tear down barriers to foreign investment in banking and other sectors.

Central Bank figures issued on Friday showed 23 national and 28 foreign banks were operating in the UAE at the end of March while there were two investment banks, 16 finance companies, 80 representative offices, 16 investment companies and 13 banking consultant firms.

The list, part of a Central Bank report on the history of the UAE’s banking sector, also included 16 monetary and financial brokers and 105 money changers. By the end of March, the Central Bank had granted licences to 299 banks and financial institutions, which have 1,143 branches, the report said.

“The Central Bank is concerned with organising the financial institutions, especially banks, and in upgrading their management, capability to use available resources and financial soundness,” the report noted.

Banks operating in the UAE have steadily increased over the past few years as the country is gradually relaxing laws on foreign investment and removing a ban on licences for new foreign banks enforced in late 1980s.

The policy is part of reforms carried out by the UAE to attract foreign capital and in line with World Trade Organisation rules that require all members to open up their economic, financial and monetary sectors.

In 2006, the UAE had 46 banks, including 21 national and 25 foreign units. At the end of 2007, they increased to 22 national and 27 foreign units before peaking at 23 local and 28 foreign banking institutions in March.

The UAE is classified as an overbanked country given the large number of operating banks and their branches compared to its relatively low population of an estimated 4.5 million at the end of March.

With the total banking branches standing at 768 at the end of March, the UAE had a ratio of one bank for every 5,800 people, one of the highest in the world.

“Practically, I don’t think the UAE is overbanked given its massive economy and business opportunities,” an Abu Dhabi-based banker said. “You can see this from the rapid increase in deposits and credits as well as the high profits achieved by most banks every year.

“As the economy continues to expand and huge projects are in the pipeline, I believe there is room for more banks and other financial institutions in this country… I know this poses a challenge to national banks but they have become mature enough and competition always motivates us to improve and develop,” he said.

A breakdown showed the National Bank of Abu Dhabi had the largest number of branches in the UAE, standing at 73 at the end of March. It was followed by Emirates Bank International (60), Mashreq (54), National Bank of Dubai (50), Union National Bank (47), and Abu Dhabi Islamic Bank and Dubai Islamic Bank (44 each).

As for foreign banks, HSBC Bank Middle East topped the list with 20 branches. Standard Chartered had 13 while United Bank Limited and Citibank had 10 each.

The Central Bank report gave no figures on the banks’ balance sheet for March but at the end of 2007, the UAE had one of the Middle East’s largest banking sectors in terms of assets, which totalled about Dh1.23 trillion.

Deposits stood at Dh720 billion while loans and advances peaked at Dh722bn. Despite a sharp rise in their assets over the past three years, the UAE banks maintained a relatively high capital adequacy ratio, which stood at 14.43 per cent at the end of 2007. Their net profits hit a record Dh24.44bn last year and are expected to swell further this year. Source

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