CB Ganesh has joined as the CEO of Ahli United Bank Ltd. Dubai – Ahli United Bank Group’s new foray in the UAE. He shares the new bank’s rationale and strategy in an interview with Mayank Singh.
You joined ahlibank when it was converting from a mortgage finance bank to a full-fledged commercial bank, and took it new heights along with your colleagues. How would you look at your experience with the bank and Oman?
I joined ahlibank in the first quarter of 2008 and it was my first experience in the GCC as I moved in from Hong Kong. At that time, ahlibank just got the license to convert from a single product mortgage bank to a full-fledged commercial bank. It was almost equivalent to setting up a new bank and came with its own set of challenges and excitement. Adding to that was the fact that within a few months, Lehman Brothers collapsed in the wake of the subprime crisis and as a banker, I was as worried as others. Looking back, I could say that two things helped ahlibank to negotiate the downturn. Firstly, Ahli United Bank (AUB) Group’s prudent risk management culture. AUB Group’s risk profile is that of being low to medium risk taker, which helped us to navigate the crisis with confidence. Secondly, the conservative policies of the Central Bank of Oman, which insulated Oman-based banks from the fallout of the crisis.
The efficiency and the quality of a bank are reflected in its NPA level. If you see ahlibank’s NPAs, they are still around one per cent, which is one of the best achievements of the bank, and we have maintained this for the last eight years, which reflects Ahli United Bank Group’s approach to risk management. Another thing that goes out of control while starting a new bank is the employee cost. Even today, ahlibank’s cost-to-income ratio is less than 35 per cent, which is one of the best in the Sultanate. AUB Group’s cost-to-income ratio is less than 30 per cent which is the lowest in the region. Another proof of our success is OER’s Best Banks in Oman survey, where we were ranked as the number one bank continuously for the last four years, from 2012 to 2015. I don’t think one needs any other credentials or testimony, as the OER survey is completely based on numbers (very objective) and secondly, it is based on four-year cumulative results, reflecting our consistency.
You are moving to Dubai as the CEO of Ahli United Bank Dubai. Tell us something about the bank and its plans?
Ahli United Bank (AUBL) is a 100 per cent subsidiary of AUB Group. AUBL will be a category 1 (CAT 1) licensed bank from Dubai Financial Services Authority (DFSA), and it will operate out of Dubai International Financial Centre (DIFC). Under the CAT 1 license, we are allowed to do all banking activities except retail banking and dealing in UAE Dirhams. So our initial focus will be on corporate banking, trade finance, treasury and private banking. Right now, we have an in-principle approval from DFSA and we are targetting to commence the business from March 2016, subject to DFSA final approval. AUBL will operate out of the 14th floor of Al Fattan Currency House tower 2.
What is Ahli United Bank’s strategy to grow its business?
Currently Ahli United Bank Group is present in seven economies which are Bahrain, Kuwait, Oman, Egypt, UK, Iraq and Libya. We have a leadership position in many of these geographies and have built a very strong private banking and corporate banking franchise in these markets. We want to leverage on these strong relationships by foraying into the UAE. A number of corporates in these geographies have business interests in the UAE, which we plan to tap into. As we have an existing relationship with them, it becomes easy for us to serve their requirement in Dubai through the local presence of AUBL. It’s a ‘follow your customer’ policy. Secondly, we have a large number of private banking clients from the MENA region, whom we will be serving through Dubai as an additional booking centre. Through our trade finance services, we will be servicing the trade flows between the UAE and those seven geographies where AUB Group is already operating. Let me explain this strategy with an example: We have a large number of corporate banking relationships in Oman developed over the years and there is increasing trade flows happening between Oman and UAE. Through AUBL and ahlibank, we will be able to service the entire banking requirements of the clients at the both ends of this trade transaction in Oman and the UAE. Thirdly, we have already built a good client base in the UAE, who are currently being serviced from AUB Group. These are UAE-based corporate clients, who will have a local relationship manager of AUBL to service them, further deepening the existing relationship. Last but not the least is the huge opportunity arising from the lifting of Iran sanctions. AUB Group is fully geared up for this upcoming opportunity. Our UAE operations through AUBL will work as an important channel to capture the Iran business on behalf of all the group entities and on behalf of all our existing and new clients. These four areas are going to be the strategic focus for us in AUBL.
Do you have a team in place to take care of your operations in Dubai?
We have drawn some of the key resources from the group and are in the process of recruiting others. So it is a combination of Ahli United Bank Group resources who come in with group DNA and culture, and others recruited from outside for their respective experience and expertise.
Are there any capital requirement obligations that you have to fulfill as a part of the license?
AUB Group already have almost one billion dollar exposure to the UAE market. AUBL will be adequately capitalised in line with its growth objectives.
Is the inability to do retail banking or deal in Dirhams going to be a challenge?
While we may not be in a position to offer Dirham-based products in Dubai, we can offer the same from any of our AUB Group entities outside UAE. We do not plan to focus on retail banking in UAE.
Ahli United Bank is commencing operations in a low oil price environment. Is this going to impose additional challenges?
We believe that AUB Group performs well under any external market challenges which arises from time to time, thanks to its prudent risk and liquidity management policies and its balanced business model, with its right selection of clients and portfolio mix.
Will you be looking to expand your existing product portfolio?
We will be offering a full range of both conventional and Islamic corporate banking products, including trade finance and treasury products. In the private banking arena, in addition to our existing suite of products, we may launch new products as every market has its own unique requirements.
You have a strategy in place, but there are other established banks which are doing the same in the UAE. What will be Ahli United Bank’s differentiation?
We are entering the market with a strong base of corporate and private banking relationships in seven geographies, who have existing businesses in the UAE. Even in the UAE market, we have built up more than one billion dollars of exposure with leading UAE corporates. We have strong private banking operation out of London, from where we serve our HNI clients of the MENA region. These are our existing customers, with whom we can further deepen our relationship. In a vast and diversified economy of the UAE, we see a huge opportunity, and there are enough qualified resources and capital in the AUB group to take care of these challenges. The entry into UAE market through AUBL is in line with our group vision and a logical extension of the group’s long term strategy.