Why so many banks continue to exist in the UAE | The National:
"For some time, and as mentioned in previous articles of mine, I have wondered how there could be more than 50 banks in the UAE, about half of which are full operating banks, given a population of circa 8 million – and more than half of whom are blue collar workers not in need of banking services. Basic economic theory would suggest that competition would lead to mergers or banks withdrawing from the market until the supply of banking services dropped to a level commensurate with the level of demand for banking services.
When a theory does not match the facts, a good place to start looking for insights into what is going on is to check each of the assumptions of the theory. The main assumption in questioning the large number of banks relative to the population is that free-market capitalism would whittle down the number of banks through competition to a number more consistent with the size and demographics of the population.
My primary suspicion as to why the UAE has not had a great number of bank mergers or withdrawals from the market was that government business more than made up for the relatively small population. As I keep a close eye on how the banks are faring in the current economic contraction, which leads to a reduction in government business, I am reminded that in previous contractions, such as 2008-09 or 1998-99, there did not seem to be any pressure on banks to behave in a competitive manner, at least not wholly so."
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Monday 9 May 2016
UAE banks need to reevaluate business strategies in the face of new challenges | GulfNews.com
UAE banks need to reevaluate business strategies in the face of new challenges | GulfNews.com:
"In the wake of market volatility and tightening global liquidity, banks will need to reevaluate the way they approach changes and challenges in their customer and business strategies and focus on digital and talent strategies in 2016 to stay ahead in the long run — according to KPMG’s UAE Banking Perspectives report.
The banking sector — both globally and in the UAE — is currently facing a number of strong headwinds. Globally, institutions are focusing on enhancing regulatory capital. Digital and broader technology advances are challenging the customary ways of doing business. New market participants -non-bank financial institutions — are encroaching on traditional hunting grounds.
In addition to the challenges faced by their global counterparts, the UAE’s banking sector is facing region specific challenges such as tightening liquidity, margin compression and potential rise in loan impairments."
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"In the wake of market volatility and tightening global liquidity, banks will need to reevaluate the way they approach changes and challenges in their customer and business strategies and focus on digital and talent strategies in 2016 to stay ahead in the long run — according to KPMG’s UAE Banking Perspectives report.
The banking sector — both globally and in the UAE — is currently facing a number of strong headwinds. Globally, institutions are focusing on enhancing regulatory capital. Digital and broader technology advances are challenging the customary ways of doing business. New market participants -non-bank financial institutions — are encroaching on traditional hunting grounds.
In addition to the challenges faced by their global counterparts, the UAE’s banking sector is facing region specific challenges such as tightening liquidity, margin compression and potential rise in loan impairments."
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UAE deficit to widen to 7.2% in 2016, IMF says | GulfNews.com
UAE deficit to widen to 7.2% in 2016, IMF says | GulfNews.com:
"The UAE’s 2016 fiscal deficit is seen widening to about 7.2 per cent of gross domestic product (GDP) before improving over the medium term, aided by improving oil prices, World Expo 2020 investments and more favourable external conditions, the International Monetary Fund (IMF) has said.
“The growth outlook is expected to moderate in 2016 amid low oil prices, with non-hydrocarbon growth projected at 2.4 per cent due to sizeable fiscal consolidation, softer economic sentiment and somewhat tighter monetary and financial conditions,” Zeine Zeidane, IMF adviser in the Middle East and Central Asia Department, said in a statement.
While average inflation is seen declining to 3.2 per cent in 2016 from 4.1 per cent in 2015, according to the fund, private sector growth is expected to bear the brunt of a slowing economy and larger fiscal financing needs."
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"The UAE’s 2016 fiscal deficit is seen widening to about 7.2 per cent of gross domestic product (GDP) before improving over the medium term, aided by improving oil prices, World Expo 2020 investments and more favourable external conditions, the International Monetary Fund (IMF) has said.
“The growth outlook is expected to moderate in 2016 amid low oil prices, with non-hydrocarbon growth projected at 2.4 per cent due to sizeable fiscal consolidation, softer economic sentiment and somewhat tighter monetary and financial conditions,” Zeine Zeidane, IMF adviser in the Middle East and Central Asia Department, said in a statement.
While average inflation is seen declining to 3.2 per cent in 2016 from 4.1 per cent in 2015, according to the fund, private sector growth is expected to bear the brunt of a slowing economy and larger fiscal financing needs."
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Dubai Seen Weathering Mideast Slump as IMF Predicts Rapid Growth - Bloomberg
Dubai Seen Weathering Mideast Slump as IMF Predicts Rapid Growth - Bloomberg:
"Dubai, the emirate that teetered on the brink of default during the global recession, is weathering the economic slowdown afflicting its oil-rich Gulf neighbors, according to the International Monetary Fund.
While economic expansion in the Middle East’s financial and transport hub is set to moderate to 3.3 percent this year, domestic investments -- boosted by preparations for hosting the international trade fair Expo 2020 -- will drive a “rapid acceleration” to more than 5 percent by 2020, said Zeine Zeidane, the fund’s mission chief to the United Arab Emirates.
That contrasts with the outlook for oil-reliant neighbors who have slashed spending in response to the crude-price decline. Abu Dhabi, the richest of the U.A.E.’s seven sheikdoms, may be tightening its belt too fast: The IMF expects its economic growth to slow to 1.5 percent this year from 4.3 percent in 2015."
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"Dubai, the emirate that teetered on the brink of default during the global recession, is weathering the economic slowdown afflicting its oil-rich Gulf neighbors, according to the International Monetary Fund.
While economic expansion in the Middle East’s financial and transport hub is set to moderate to 3.3 percent this year, domestic investments -- boosted by preparations for hosting the international trade fair Expo 2020 -- will drive a “rapid acceleration” to more than 5 percent by 2020, said Zeine Zeidane, the fund’s mission chief to the United Arab Emirates.
That contrasts with the outlook for oil-reliant neighbors who have slashed spending in response to the crude-price decline. Abu Dhabi, the richest of the U.A.E.’s seven sheikdoms, may be tightening its belt too fast: The IMF expects its economic growth to slow to 1.5 percent this year from 4.3 percent in 2015."
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Dubai Financial Centre's CEO Unfazed by Rise of Regional Rivals - Bloomberg
Dubai Financial Centre's CEO Unfazed by Rise of Regional Rivals - Bloomberg:
"The head of Dubai’s International Financial Centre said he’s unfazed by the development of rival banking hubs in the Middle East, including Saudi Arabia’s King Abdullah Financial District and the Abu Dhabi Global Market.
The financial industry still has opportunities to grow across the Middle East, North Africa and South Asia region, also known as MENASA, Dubai International Financial Centre CEO Arif Amiri said Monday at the City Week conference in London. The DIFC, as Dubai’s banking hub is known, had a record year in 2015 even amid a drop in commodity prices and slowdown in economic growth in the region, he said.
“There’s a $7.8 trillion economy within the MENASA region and I don’t think there is enough representation in terms of financial centers,” he said. “There’s a lot of potential there for everybody to nurture and grow, it’s an opportunity rather than a threat.”
"
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"The head of Dubai’s International Financial Centre said he’s unfazed by the development of rival banking hubs in the Middle East, including Saudi Arabia’s King Abdullah Financial District and the Abu Dhabi Global Market.
The financial industry still has opportunities to grow across the Middle East, North Africa and South Asia region, also known as MENASA, Dubai International Financial Centre CEO Arif Amiri said Monday at the City Week conference in London. The DIFC, as Dubai’s banking hub is known, had a record year in 2015 even amid a drop in commodity prices and slowdown in economic growth in the region, he said.
“There’s a $7.8 trillion economy within the MENASA region and I don’t think there is enough representation in terms of financial centers,” he said. “There’s a lot of potential there for everybody to nurture and grow, it’s an opportunity rather than a threat.”
"
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MIDEAST STOCKS-Gulf bourses diverge; Saudi real estate shares hit by land tax | Reuters
MIDEAST STOCKS-Gulf bourses diverge; Saudi real estate shares hit by land tax | Reuters:
"Shares in the Middle East were mixed on Monday as some stocks advanced on positive news while Saudi Arabia's real estate companies retreated after a land tax was announced.
Riyadh's index edged up 0.3 percent in modest volume. As part of the country's economic reform campaign, the Housing Ministry said on Sunday that it was imposing an annual tax on undeveloped urban land; the levy will be equivalent to 2.5 percent of the value of the land.
The announcement had been expected, and details of how the tax will be applied - crucial to assessing its impact - have not yet been revealed. But real estate-related companies with large land banks were hit by the news, with Taiba Holding and Jabal Omar Development dropping 2.3 and 1.6 percent respectively."
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"Shares in the Middle East were mixed on Monday as some stocks advanced on positive news while Saudi Arabia's real estate companies retreated after a land tax was announced.
Riyadh's index edged up 0.3 percent in modest volume. As part of the country's economic reform campaign, the Housing Ministry said on Sunday that it was imposing an annual tax on undeveloped urban land; the levy will be equivalent to 2.5 percent of the value of the land.
The announcement had been expected, and details of how the tax will be applied - crucial to assessing its impact - have not yet been revealed. But real estate-related companies with large land banks were hit by the news, with Taiba Holding and Jabal Omar Development dropping 2.3 and 1.6 percent respectively."
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Mohamed Bin Issa Al Jaber seeks to revive $10bn Barclays claim - FT.com
Mohamed Bin Issa Al Jaber seeks to revive $10bn Barclays claim - FT.com:
"Sheikh Mohamed Bin Issa Al Jaber, Britain’s 15th-richest person, has asked a New York appeals court to revive the $10bn damages claim he brought against Barclays over the collapse of a Saudi-backed property deal in 2001.
MBI International and Jadawel International, property groups owned by Sheikh Mohamed, allege the UK bank acted “corruptly” in not pursuing the Saudi government for lease payments on two military compounds built by Jadawel. "
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"Sheikh Mohamed Bin Issa Al Jaber, Britain’s 15th-richest person, has asked a New York appeals court to revive the $10bn damages claim he brought against Barclays over the collapse of a Saudi-backed property deal in 2001.
MBI International and Jadawel International, property groups owned by Sheikh Mohamed, allege the UK bank acted “corruptly” in not pursuing the Saudi government for lease payments on two military compounds built by Jadawel. "
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Saudi Status Quo Expected With New Oil Minister - Bloomberg
Saudi Status Quo Expected With New Oil Minister - Bloomberg:
"Jason Schenker, president at Prestige Economics, discusses Saudi Arabia replacing Oil Minister Ali-al-Naimi and what the change may mean for Saudi oil policy and the global market. He speaks on "Bloomberg ‹GO›." (Source: Bloomberg)"
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"Jason Schenker, president at Prestige Economics, discusses Saudi Arabia replacing Oil Minister Ali-al-Naimi and what the change may mean for Saudi oil policy and the global market. He speaks on "Bloomberg ‹GO›." (Source: Bloomberg)"
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A New Set of Challenges Face New Saudi Oil Minister - Bloomberg
A New Set of Challenges Face New Saudi Oil Minister - Bloomberg:
"Saudi Arabia's newly appointed oil minister Khalid Al-Falih vows to maintain the nation's oil policy, keeping output at record levels. Bloomberg's Alaa Shahine offers background on the new oil minister on "Bloomberg Surveillance." (Source: Bloomberg)"
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"Saudi Arabia's newly appointed oil minister Khalid Al-Falih vows to maintain the nation's oil policy, keeping output at record levels. Bloomberg's Alaa Shahine offers background on the new oil minister on "Bloomberg Surveillance." (Source: Bloomberg)"
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MIDEAST STOCKS-Gulf mixed; Air Arabia rises after earnings beat | Reuters
MIDEAST STOCKS-Gulf mixed; Air Arabia rises after earnings beat | Reuters:
"Shares in the Gulf were mixed in early trade on Monday as some investors cashed out of stocks that had recently risen, while Dubai-listed Air Arabia rose after a quarterly earnings beat.
Riyadh's index was flat in the first 40 minutes of trade. The food and agriculture index lagged other sectors, with heavyweight Savola Group dropping 1.0 percent.
But petrochemical shares were firm as Brent oil prices stabilised over $45 a barrel in early Asian trade; Saudi Basic Industries edged up 0.6 percent."
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"Shares in the Gulf were mixed in early trade on Monday as some investors cashed out of stocks that had recently risen, while Dubai-listed Air Arabia rose after a quarterly earnings beat.
Riyadh's index was flat in the first 40 minutes of trade. The food and agriculture index lagged other sectors, with heavyweight Savola Group dropping 1.0 percent.
But petrochemical shares were firm as Brent oil prices stabilised over $45 a barrel in early Asian trade; Saudi Basic Industries edged up 0.6 percent."
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