Saudi privatisations prove a magnet for foreign banks:
"For some banks beating a path to Saudi Arabia for the nation’s privatisation bonanza, the bounty is more than just a quick payday. They are hoping for salvation in a region that has served up more than its fair share of challenges.
Saudi Arabia became irresistible for global banks after it last year announced plans to sell off swaths of prized assets, including what is likely to be the world’s biggest initial public offering with the sale of part of oil company Saudi Aramco.
A modern-day gold rush ensued as top dealmakers jetted into Riyadh to vie for Saudi Aramco’s business and the many projects that were to follow from the Saudi Vision 2030 plan to reshape the nation’s finances to deal with lower oil prices. "
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Friday, 13 October 2017
Qatar escalates UAE trade dispute, asks WTO to adjudicate
Qatar escalates UAE trade dispute, asks WTO to adjudicate:
"Qatar has asked the World Trade Organization to set up a dispute panel to adjudicate on its row with the United Arab Emirates, Qatar said in a document published by the WTO on Thursday, escalating a trade complaint it lodged with the WTO in July.
The initial complaint, which also included Bahrain and Saudi Arabia, triggered a 60-day window to settle the issue in talks without entering years of litigation.
But on Aug 10, Qatar received a communication from the chairman of the WTO’s dispute settlement body stating that the UAE would not engage in consultations with Qatar, the Qatari submission to the WTO said."
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"Qatar has asked the World Trade Organization to set up a dispute panel to adjudicate on its row with the United Arab Emirates, Qatar said in a document published by the WTO on Thursday, escalating a trade complaint it lodged with the WTO in July.
The initial complaint, which also included Bahrain and Saudi Arabia, triggered a 60-day window to settle the issue in talks without entering years of litigation.
But on Aug 10, Qatar received a communication from the chairman of the WTO’s dispute settlement body stating that the UAE would not engage in consultations with Qatar, the Qatari submission to the WTO said."
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Saudi Aramco considers shelving international IPO
Saudi Aramco considers shelving international IPO:
"Saudi Aramco is considering shelving plans for an international listing in favour of a private share sale to the world’s biggest sovereign wealth funds and institutional investors.
Talks about a private sale to foreign governments including China and other investors have gathered pace in recent weeks, according to five people familiar with the initial public offering preparations, amid growing concerns about the feasibility of an international listing.
The Saudi state oil company has struggled to select a suitable international venue for its shares, as New York and London have vied for what has been billed as the largest ever flotation."
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"Saudi Aramco is considering shelving plans for an international listing in favour of a private share sale to the world’s biggest sovereign wealth funds and institutional investors.
Talks about a private sale to foreign governments including China and other investors have gathered pace in recent weeks, according to five people familiar with the initial public offering preparations, amid growing concerns about the feasibility of an international listing.
The Saudi state oil company has struggled to select a suitable international venue for its shares, as New York and London have vied for what has been billed as the largest ever flotation."
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Gulf banks ‘ripe for consolidation’ following FAB deal
Gulf banks ‘ripe for consolidation’ following FAB deal:
"When Abu Dhabi’s two biggest banks announced their $29bn “merger of equals” last year, the implications were more significant than just for the fortunes of the optimistically named FAB, or First Abu Dhabi Bank. The bigger question was whether the merger of National Bank of Abu Dhabi and First Gulf Bank would spark a wave of consolidation for the more than 100 banks in the Gulf Cooperation Council (GCC) region. Opinions are divided as to whether FAB will be a catalyst for regional consolidation or a false dawn like the 2007 merger of Emirates and National Bank of Dubai. “People saw Emirates NBD as the trigger for one of the biggest bank consolidations in Emea [Europe, the Middle East and Africa],” says one Dubai-based investment banker, who did not want to be named. “That was a very big mistake.” "
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"When Abu Dhabi’s two biggest banks announced their $29bn “merger of equals” last year, the implications were more significant than just for the fortunes of the optimistically named FAB, or First Abu Dhabi Bank. The bigger question was whether the merger of National Bank of Abu Dhabi and First Gulf Bank would spark a wave of consolidation for the more than 100 banks in the Gulf Cooperation Council (GCC) region. Opinions are divided as to whether FAB will be a catalyst for regional consolidation or a false dawn like the 2007 merger of Emirates and National Bank of Dubai. “People saw Emirates NBD as the trigger for one of the biggest bank consolidations in Emea [Europe, the Middle East and Africa],” says one Dubai-based investment banker, who did not want to be named. “That was a very big mistake.” "
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State stakes in Gulf banks bring business advantages — and risks
State stakes in Gulf banks bring business advantages — and risks:
"In Europe and the US, state ownership of banks has been a painful experience. When they have been forced into each others’ arms by crises and bailouts, shame and blame are often inescapable, as are conflicts over whether rescued banks should be engines of government policy and social good or pursue maximum profits.
In the Gulf, state-owned banks have a much more harmonious relationship with governments. “Having the biggest banks in the Gulf Co-operation Council [GCC] mostly owned by their respective governments and/or ruling families certainly grants them a major competitive advantage,” says Elena Ponceca, an Abu-Dhabi based analyst at Al Ramz Capital.
“Not only do they have the firm support of the governments but they also stand at enviable vantage points when it comes to securing government business due to the strength of the relationships,” she adds. Examples of state support include government notes issued for UAE banks during the 2008 crisis."
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"In Europe and the US, state ownership of banks has been a painful experience. When they have been forced into each others’ arms by crises and bailouts, shame and blame are often inescapable, as are conflicts over whether rescued banks should be engines of government policy and social good or pursue maximum profits.
In the Gulf, state-owned banks have a much more harmonious relationship with governments. “Having the biggest banks in the Gulf Co-operation Council [GCC] mostly owned by their respective governments and/or ruling families certainly grants them a major competitive advantage,” says Elena Ponceca, an Abu-Dhabi based analyst at Al Ramz Capital.
“Not only do they have the firm support of the governments but they also stand at enviable vantage points when it comes to securing government business due to the strength of the relationships,” she adds. Examples of state support include government notes issued for UAE banks during the 2008 crisis."
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Qatar crisis sends tremors through banking in the Gulf
Qatar crisis sends tremors through banking in the Gulf:
"While north Africa and the Levant have been beset by revolt and civil war in Syria and Libya in recent years, the Gulf states have remained a haven of relative stability. However, the political isolation of gas-rich Qatar this year has brought uncertainty to oil-wealthy Gulf Cooperation Council nations already suffering economic damage from the crude price collapse three years ago. In June, Saudi Arabia and the United Arab Emirates led Bahrain and Egypt in closing airports and seaports to Qatar, claiming it fostered terrorism. Doha denies this but is now isolated from the leading GCC powers. Travel and trade restrictions leave Qatar facing significant costs, with credit rating agency Moody’s saying the its future depends on the outcome of the crisis. “The severity of the diplomatic dispute between Gulf countries is unprecedented, which magnifies the uncertainty over the ultimate economic, fiscal and social impact on the GCC as a whole,” says Steffen Dyck, a senior credit officer at Moody’s."
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"While north Africa and the Levant have been beset by revolt and civil war in Syria and Libya in recent years, the Gulf states have remained a haven of relative stability. However, the political isolation of gas-rich Qatar this year has brought uncertainty to oil-wealthy Gulf Cooperation Council nations already suffering economic damage from the crude price collapse three years ago. In June, Saudi Arabia and the United Arab Emirates led Bahrain and Egypt in closing airports and seaports to Qatar, claiming it fostered terrorism. Doha denies this but is now isolated from the leading GCC powers. Travel and trade restrictions leave Qatar facing significant costs, with credit rating agency Moody’s saying the its future depends on the outcome of the crisis. “The severity of the diplomatic dispute between Gulf countries is unprecedented, which magnifies the uncertainty over the ultimate economic, fiscal and social impact on the GCC as a whole,” says Steffen Dyck, a senior credit officer at Moody’s."
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Foreign banks plan Saudi expansion amid economic reform
Foreign banks plan Saudi expansion amid economic reform:
"Goldman Sachs, JPMorgan, UBS and Citigroup are all planning to substantially increase their headcount in Saudi Arabia, executives said, as foreign banks expect lucrative opportunities from the country’s privatisation boom and its increasingly liberalised financial markets. Wassim Younan, Goldman Sachs’ regional boss, said his bank could double its Saudi headcount in the next 12 months, while UBS plans to double its Riyadh workforce over the coming years. JPMorgan will increase headcount in Saudi Arabia by about 50 per cent, to 100 people, within the next three years, making the bank’s Riyadh office the same size as its regional headquarters in Dubai."
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"Goldman Sachs, JPMorgan, UBS and Citigroup are all planning to substantially increase their headcount in Saudi Arabia, executives said, as foreign banks expect lucrative opportunities from the country’s privatisation boom and its increasingly liberalised financial markets. Wassim Younan, Goldman Sachs’ regional boss, said his bank could double its Saudi headcount in the next 12 months, while UBS plans to double its Riyadh workforce over the coming years. JPMorgan will increase headcount in Saudi Arabia by about 50 per cent, to 100 people, within the next three years, making the bank’s Riyadh office the same size as its regional headquarters in Dubai."
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Legal wrangles dent #Dubai’s image as region’s financial centre #UAE
Legal wrangles dent Dubai’s image as region’s financial centre:
"Differences between Dubai’s offshore international courts and its domestic-looking onshore courts are transforming the legal landscape in the emirate and undermining its position as a global financial centre. The friction came to a head last year when the government created a Joint Judicial Committee (JJC) to decide on potential conflicts of jurisdiction between the onshore Dubai courts and the increasingly busy courts in the offshore Dubai International Finance Centre (DIFC). The JJC’s ability to stay proceedings at the DIFC Courts, renowned for their investor-friendly environment, sent shockwaves through the legal community based in the Gulf’s commercial hub."
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"Differences between Dubai’s offshore international courts and its domestic-looking onshore courts are transforming the legal landscape in the emirate and undermining its position as a global financial centre. The friction came to a head last year when the government created a Joint Judicial Committee (JJC) to decide on potential conflicts of jurisdiction between the onshore Dubai courts and the increasingly busy courts in the offshore Dubai International Finance Centre (DIFC). The JJC’s ability to stay proceedings at the DIFC Courts, renowned for their investor-friendly environment, sent shockwaves through the legal community based in the Gulf’s commercial hub."
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FCA admits to meeting Aramco before proposing new listing rules
FCA admits to meeting Aramco before proposing new listing rules:
"The head of the City watchdog has admitted that he met with Saudi Aramco in early 2017, before the regulator published proposals that have been criticised for watering down governance rules in order to attract what will be the world’s biggest initial public offering when the oil company lists some of its shares. It is the first public admission from the Financial Conduct Authority that it met with the oil giant before coming out with its proposals in July. The acknowledgement came as two parliamentary select committees wrote to the FCA to demand answers about the level of government influence over the proposals, as London vies with cities such as New York to win the Aramco flotation. “We can confirm that we held conversations with Saudi Aramco and their advisers in light of their interest in a possible UK listing in the early part of this year. We emphasised during those conversations that we were reviewing the Listing Regime,” Andrew Bailey, the head of the FCA, wrote in a letter published on Friday to the Treasury and Business, Energy & Industrial Strategy committees."
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"The head of the City watchdog has admitted that he met with Saudi Aramco in early 2017, before the regulator published proposals that have been criticised for watering down governance rules in order to attract what will be the world’s biggest initial public offering when the oil company lists some of its shares. It is the first public admission from the Financial Conduct Authority that it met with the oil giant before coming out with its proposals in July. The acknowledgement came as two parliamentary select committees wrote to the FCA to demand answers about the level of government influence over the proposals, as London vies with cities such as New York to win the Aramco flotation. “We can confirm that we held conversations with Saudi Aramco and their advisers in light of their interest in a possible UK listing in the early part of this year. We emphasised during those conversations that we were reviewing the Listing Regime,” Andrew Bailey, the head of the FCA, wrote in a letter published on Friday to the Treasury and Business, Energy & Industrial Strategy committees."
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