Olumide Oyetan on Africa’s potential | Stanbic IBTC | Video

Stanbic IBTC Asset Management, a member of the Standard Bank Group, is a leading provider of integrated financial services based in Nigeria. Discussing some of the opportunities for investment in the region is Olumide Oyetan, CEO of Stanbic IBTC Asset Management.

World Finance: First, introduce us to Stanbic IBTC: what do you offer your clients, and what makes your services unique?

Olumide Oyetan: Stanbic IBTC is an integrated financial services group, so what we try to do is to offer end-to-end financial services.

I work in the asset management business, so what we focus on is managing monies on behalf of retail clients and institutional clients. For the retail clients what we do is we try to manage them through the collection of mutual funds that we have – and we have about 7 mutual funds, we are the largest provider of mutual funds in Nigeria currently.

And then for the institutional clients, what we try to do is to understand what they are trying to achieve, and then we create a segregated portfolio, understand their risk tolerance, and try to ensure that we educate them on what we are doing.

With respect to what makes us unique, I think as a group, to my mind, we are the only group in Nigeria that offers end-to-end financial services currently in Nigeria. So for instance, from banking services, to wealth management businesses, to trustees, to custody of assets, we do it all. And so a client with us can have their whole financial or investment needs or requirement fully handled.

“The thing about frontier markets in Africa is that the sort of investors it attracts are people that know what they’re looking for”

World Finance: Now some countries in Africa are still considered fragile states: where do you see the safer opportunities to invest on the continent?

Olumide Oyetan: I think that generally – apart from say, South Africa, which has fairly mature and deep financial markets – most markets on the African continent are considered frontier.

I think the bigger stock exchanges are in South Africa, then Egypt, Nigeria… and of course because of what’s happened in Egypt in the last couple of years, so Nigeria’s about par. But I think the thing about frontier markets in Africa is that, first of all the sort of investors it attracts are people that know what they’re looking for. So they are sophisticated. They also understand that the markets are not as deep, so it takes time to build a sizeable investment, and once you do that, you have to wait for a long time.

Unlike in Europe or in the US where you can build sizeable positions within minutes and online almost instantaneously, there is a bit of a challenge doing that in Africa. I think with respect to investing, what people have to consider is that Africa has changed, and it’s offering very high returns, so for investors that are comfortable taking the risk, they usually make a lot: a disproportionate amount of returns over the long to the medium term. But you have to be in there for the medium to long term.

World Finance: Nigeria plans to reposition itself as a market leader in the cocoa industry, what has been done to achieve this and what does it mean for investors?

Olumide Oyetan: Cocoa used to be one of our major exports in the 60s and early 70s until we discovered crude oil in commercial quantity. What that has done is that it has relegated every other sector, especially the agricultural sector which constitutes about 40 percent of GDP. So what we’ve seen is that now the agricultural minister – who is seen as a reformist and a progressive thinker – is trying to fix the whole value chain for agriculture and has identified that within the northern parts of Africa, cocoa can still be produced and exported in commercial quantity.

I think the challenge that we’ve also noticed is that there are very few large scale farmers in the country and, you know, what the ministers tried to fix is access to credit, access to agriculture input such as fertilisers, and just to ensure that the yields are attractive and that the farmers are incentivised to actually produce this commodity, and they ensure that storage and route to market is also made accessible.

“I think the major challenge, has been infrastructure”

World Finance: So optimism for investors, but what do you see as the challenges to growth in Africa?

Olumide Oyetan: I think the challenge, the major challenge, has been infrastructure. What you find is that it’s difficult to move goods or services within countries or regions. I think breaking those barriers would make everybody better off, because trade actually makes people richer.

I think other challenges that you have in Africa is that we have a few countries that have newly elected democratic governments, and there is that danger of them slipping back just because some people do not like the outcomes of election. But what we have seen is that most of the pair countries are now coming and saying, no, people should have the right to choose, and when you then choose, hopefully the government is a lot more responsible.

I think other challenges you have in Africa is just recent quality of education, access to basic school education is actually important. The final challenge that comes to mind about Africa or doing business in Africa is just policy consistency. Sometimes from government what we now see – and if we take Nigeria as an example – is that we try to break down as many barriers for people when they come to invest with us. And you know, in the financial markets or where there is foreign direct investment, you do even give tax holidays for FDIs, and I think that’s why you are beginning to see a lot of interest and a lot of money come into Africa, in the form of foreign direct investment.

World Finance: And so what is Stanbic, and your own business line, doing to accommodate these challenges?

Olumide Oyetan: We see ourself as a gateway to the African markets, and what we try to do to resolve some of the challenges is to work with the governments or the regulators, policy-makers, and try to tell them what they can do to impact society or for the country as well.

So we see ourselves as… you know, our roots are in Africa and our prosperity is in Africa, so as much as possible we try to ensure that we are partnering with the critical stakeholders. So it could be trying to project manage a port, a railway facility, advising on a privatisation mandate, so things will that will make meaningful impact and we can only be as successful as our clients or as the society we are in.

World Finance: Olumide, thank you.

Olumide Oyetan: Thank you very much.

Emilio Ilac on success in Latin America | Puente | Video

Puente is an Argentinian investment banking firm that has been offering integral services within the financial and capital markets since 1915. With plans to expand into other areas of LatAm, Emilio Ilac, Managing Director of Institutional Clients at Puente talks about what makes Puente so successful in the region.

World Finance: Puente has a long history in Argentina, what can you tell us about the bank today?

Emilio Ilac: Puente is a leading investment bank in Argentina. We’ve been around since 1915, that makes it 98 years of experience in capital markets. Today we’re based in Argentina, Uruguay, Panama, and we just bought an operation in Peru, so that probably makes us one of the experts in Latin American markets since we’re a specialised investment bank. Our three core businesses are investment banking, wealth management, and sales and trading. Regarding investment banking, last year we’ve issued more than $1.1bn. Regarding sub-sovereign credits, that’s provincial and municipalities and corporate credits, top leading corporate credits. Regarding wealth management, we have $2bn approximately of assets under management, and regarding sales and trading, last year we’ve traded more than $5bn.

World Finance: So what are the key factors that make Puente an award winning bank?

Emilio Ilac: As I said before Nick, we have 98 years just in Argentina, so that probably assures all our clients that we’re a solid company. In today’s markets, I think that’s probably a great asset. Another key factor of Puente is that Puente is a detail orientated bank, so it’s always solving the necessities of their clients. Regarding access to capital markets, investing, any type of situation or problem that needs an efficient process in the middle, Puente is probably your solution.

“Puente helps you through the whole process, you don’t have to have knowledge in investment banking”

World Finance: Talking of solutions then, so why is it a good choice for investment banking?

Emilio Ilac: Well Puente helps probably in a different way than most of the other big investment banks, Puente helps you through the whole process since the beginning to the end, and you don’t have to have knowledge in investment banking or DCM, debt capital markets, to do any type of process with Puente. Puente last year issued more than $1.1bn in local markets for sub-sovereign credits, that’s all the provinces and municipalities, and are the corporate leaders in the country. So I would say today, Puente as an investment bank is the go-to investment bank to make new issuances in our country. We have approximately 90 percent of the market share in 2012 for sub-sovereign credits, the whole team of Puente we have over 20, 000 clients, can vow for our experience in that.

World Finance: How can an institution get finance through the capital markets?

Emilio Ilac: Well the first thing Puente does usually when a company needs access or an institution needs access to capital markets is it evaluates its needs. If it truly needs to go to the capital markets. Sometimes a company with a private placement is enough, sometimes when an IPO it’s enough, so Puente I would say from the beginning helps them to find exactly the specialised situation to solve that need they have.

“Puente has been around for 98 years, and I would say the two key underlining factors would be of course trust and professionalism”

World Finance: We talked about the solutions for investment banking, so why do your clients choose Puente for wealth management?

Emilio Ilac: Well Nick, as I told you before, Puente has been around for 98 years, and I would say the two key underlining factors would be of course trust and professionalism of our team. Puente is completely integrated into the markets, so our clients can basically do anything they want in investment. We have specialised teams that are focussed on each region in the world, and are focussed on each credit they go on and invest. So I would say Puente solves on a 100 percent basis, all the client’s needs regarding investments, and that’s why most of our clients, our over 20,000 clients, trust Puente on a daily basis.

World Finance: Emilio, thank you

Emilio Ilac: Thank you Nick

Professor Daniel Tsiddon on Israel | Bank Leumi | Video

Bank Leumi is the oldest banking corporation in Israel and has played a pivotal role in the economic development of the State of Israel. Discussing some of the challenges that they have faced is Professor Daniel Tsiddon, Deputy CEO and Head of the Capital Markets Division at Bank Leumi.

World Finance: Can you start off with the history of Bank Leumi and your current position in the Israeli banking sector

Prof. Daniel Tsiddon: Bank Leumi is the oldest bank in Israel, it’s more than 110 years old. Actually, it started before Israel in Palestine, and it was part of the vehicle for the Zionist movement to establish Israel. As of now, we’re one of the two largest banks in Israel and our share in the market, which is ranging depending on how you look at it between 25 and 30 percent of the Israeli market.

“We try to learn the needs of our customers, and to fit them”

World Finance: And how do you position yourself, what are the cornerstones of your business policy?

Prof. Daniel Tsiddon: As a universal bank, we try to fit the needs of all types of customers within the universe of Israel. That means that we have a big retail chain, we have middle market, and we have corporate to the level that corporates are sitting in Israel. Of course, we have a quite large capital market unit or division, because that has to bring everything together and shift resources across the different segments of the market. We try to learn the needs of our customers, and to fit them. And that’s not an easy job anymore because their needs and desires are changing quite quickly. We’re trying to update ourselves and to move ahead, and to understand what customer needs are, and to fit our product into that. Of course, a bank is a little bit of a fortress, it has very high walls and to make it fit to the customer, you have to work very hard. There are regulations, there are habits, it’s a big institution and when you try to move in a moving environment, it’s not an easy job.

World Finance: You say it’s a big institution but compared with international conglomerates, you’re quite a small operation, is that an advantage when it comes to keeping track of the changing needs of your customers?

Prof. Daniel Tsiddon: It’s an advantage and it’s a disadvantage. It’s a disadvantage because the costs are high, the costs of moving and changing are high. It’s an advantage because if you’re regional and universal, you learn the needs of your customer in a better way, and you can fit yourself with the customer, which you cannot make if you are a universal bank that tries to fit all types of all populations around the world. Being close to the client we can ask what is needed, we know what is needed, we know what to search around, we have better information and a better picture of the client’s risk and returns when we design the product than a big international bank.

“We use our knowledge about the customers to try to do better”

World Finance: Give me an example then of how you use that more detailed understanding of the customer to tailor your products to them.

Prof. Daniel Tsiddon: Let’s take mortgages for example. Mortgages sounds like one word, and they sound like they are always the same. Actually, they are very different. Mortgages in Israel are designed to fit the Israeli, they are designed to fit the intergenerational transfer from parents to children, which is very different. The growth of population which is different than the European one. So we use our knowledge about the customers to try to do better.

World Finance: Tell me about the Israeli banking sector, what challenges are you facing? Are they different from the rest of the world?

Prof. Daniel Tsiddon: If you compare ourselves, or if you compare the Israeli banking system to tier-two banks across the world, the challenges are very much the same. I think the challenges come from two major sources, one is the fact that following 2008, there is a big change in the regulatory system. Not only change, not only direction, but a lot of volatility in the regulatory requirements, and we have to try to fit them all- and that’s an extremely hard and costly challenge. The other one is that the customers are changing. It’s not that their needs are so much different, but the way they want to get it is extremely different, and the power shifted from the banking system to the customers- and we have to adjust, we have to learn to work in a different way. A lot of things that we considered efficient before were really trying to use the power we had on the customer, so we saved money by making you stand on line. You make the customer stand on line today, five minutes after he’s moving to another branch, he’s moving to another bank. So this change is dramatic and this challenge is the major challenge of retail and middle market, and everywhere you look in the banking sector across the world I think it’s a very similar.

World Finance: How is Bank Leumi delivering that change for your customers then, are you embracing new technologies, online banking…?

Prof. Daniel Tsiddon: It’s not only technology, I mean technology is a tool that you have to use which as I said it’s not easy, because the banks who built this fortress and the world is moved aside, and to move the fortress is not easy. So basically it’s a cultural change, you have to make people at the bank, the workers of the bank, understand to work in a different way. And to approach a customer in a different way, you have to reach a client and see what his problems are or what his desires are, try to find a solution. Of course, the banker at the front is the person that knows some of the solutions, he doesn’t know everything, so you have to find a way very quickly to climb up the ladder of authority and knowledge to derive the necessary information, or the necessary solution back to the client. This is a change in culture, a change in mode of operation, change in understanding the client, and change the IT system. It all must come together, it’s a big challenge. I’m not saying we are there, but we are heading there and we are moving, but it takes time.

World Finance: Professor Tsiddon, thank you very much

Prof. Daniel Tsiddon: Thank you

Bernd van Linder on Basel III | Saudi Hollandi Bank | Video

Saudi Hollandi Bank, the first operating bank in the Kingdom of Saudi Arabia, was founded in 1926 under the name ‘The Netherlands Trading Society’. Since then it has expanded dramatically, and as of March 2012 its paid-up capital has reached SAR 3,969 million. Discussing the evolving economy of Saudi Arabia and some key developments in the region is Dr Bernd van Linder, Managing Director of Saudi Hollandi Bank.

World Finance: How has the economic growth impacted the Saudi banking landscape?

Dr Bernd van Linder: The Kingdom of Saudi Arabia has seen some very strong economic growth over the last couple of years. Non-oil GDP growth has ranged from 5-7 percent, and is forecasted to grow at least at the pace of 7 percent in the coming years as well. This GDP growth is evenly spread across many sectors. We’ve seen growth driven by investments made by the government in all kinds of projects. As well as the private sector, we’ve seen corporates expanding their production capabilities, but we’ve also seen very good growth in the retail sector. The Saudi middle class is expanding, Saudi employment is expanding, and this has resulted in a demand for all kinds of products on the retail side. Last but not least, the government as well as the private sector, including Saudi Hollandi Bank, has a very strong focus on the development on the SME sector. Small-Medium Enterprises are seen as a main creator of jobs, as a main engine of economic growth, and as a great focus from all parties involved in further developing the sector.

“The competition between the 12 domestic banks has always been very fierce”

World Finance: With per capita income on the rise, will the retail sector dominate the competition between banks?

Dr Bernd van Linder: The competition between the 12 domestic banks has always been very fierce, especially on the retail side. With an increased per capita income as you said, with an expansion of the Saudi middle class, that competition will only increase. Ultimately competition will be decided on the basis of who is able to provide best customer service, across all the channels. My firm belief is that the bank that’s able to serve its customer best across all channels, branches, mobile banking, internet banking, is the one that will do best amidst this fierce competition.

World Finance: So, to what extent do Saudi corporations understand the benefits of issuing debt versus equity, and how can the uptake of these instruments be developed?

Dr Bernd van Linder: When you look at debt capital markets, there are three elements that need to be in place for these markets to grow; you need good issuers, you need interest and investors, and you need strong support of regulation and legislation. Over the last years we have seen a good increase in the number of blue chip Saudi corporates that have been issuing debt, ranging from Olayan the big conglomerate, to Tasnee one of the top petrochemical companies in the world, all of them have accessed the debt capital market in a Shariah compliant form. On the investor side, the growth of the insurance industry and the growth of specialised funds, mutual funds, has helped create a good investment base as well. The last element has been in place for a number of years in the Kingdom of Saudi Arabia, we have a very supportive regulator in the central bank, SAMA the Saudi Monetary Agency, as well as the capital markets authority, both of them are very supportive of further growth in the capital markets. So as of today, all of the elements are in place, investors, issuers, as well as strong support of regulation for further growth of the debt capital markets in the Kingdom of Saudi Arabia.

“The effect of Basel III should be minimal on the Saudi Banks”

World Finance: Now looking at the Basel III accords, how will they affect the ability of banks to offer new products and services?

Dr Bernd van Linder: The effect should be minimal on the Saudi Banks. When you look at a regulation that has been put in place by SAMA, the Saudi Monetary Agency, in principal it’s very similar to what Basel III is trying to achieve. So SAMA has always had a strong focus on high levels of capital, good quality capital, and good liquidity positions. When you look at the Saudi banks, all of them without exception have high capital ratios, very low leverage ratios, very strong liquidity positions, so in essence the Saudi banks are used to operating under a regulatory regime which is very similar to Basel III already.

World Finance: In the context of the international Islamic finance sector, how do you assess the role of Saudi banks when compared to your Asian counterparts?

Dr Bernd van Linder: Some of the world’s biggest Islamic institutions are headquartered in the Kingdom of Saudi Arabia, the biggest Islamic bank is a bank headquartered in Riyadh. In the Kingdom of Saudi Arabia, Islamic finance has developed as a result of customer demand. Our customers demand us to provide fully Shariah compliant solutions. Both on the retail as well as on the corporate side. As it is driven by customer demand, and as banks are ultimately in the business of meeting the demands of their customers, this development will only continue.

“All of the banks have invested in their product development capabilities”

World Finance: And finally, how are banks responding to growth in Islamic banking in terms of product development?

Dr Bernd van Linder: Islamic banking in The Kingdom of Saudi Arabia is driven by customer demands, so if customers demand certain products to be available in a Shariah compliant form, banks will make sure that they are available. All of the banks have invested in their product development capabilities, and their structuring capabilities, and what we have today is essentially a full range a complete range, of Shariah compliant products. Whatever product is available in a conventional product form is now available in a Shariah compliant form as well, all driven by customer demand.

World Finance: Bernd, thank you

Dr Bernd van Linder: Thank you Nick.

John Bahnken on wealth management | Bank of the West

Bank of the West Wealth Management provides wealth planning, investment management, personal banking, and trust services. The group is part of BNP Paribas, one of the six highest-rated banks in the world. Telling us more about wealth management is John Bahnken, Senior Executive Vice President at Bank of the West.

World Finance: Tell us about the dynamics of wealth management in the US

John Bahnken: So the wealth management business is I think quite different in the US to other parts of the world, certainly here in Europe and probably Asia as well. The primary reason for that is history, so if you think back to the early 1930s, Glass Steagall for 60 or 70 years did a very effective job at splitting the banking and investing businesses and it was really only until the late 90s when the industry began to come back together again. So the way clients are served in the US continues to be very segregated between investing and banking and the larger institutions today are beginning to bring the value proposition back together which is proving to be very very popular with people, but it’s created a very fragmented environment.

“It’s very much a universal style, this 360 view to clients”

World Finance: So how today do you approach wealth management with your clients?

John Bahnken: So at Bank of the West, Bank of the West Wealth Management, we are part of BNP Paribas. BNP Paribas basically began wealth management here in Europe so it’s very much a universal style, this 360 view to clients delivering integrated banking and investing, and when we launched our new model for serving clients at Bank of the West, we drew a lot of inspiration from BNP Paribas. But obviously we tailored it to the regulatory environment, the cultural environment, in the United States and so we deliver a 360 value proposition to clients helping them serve all of their financial needs.

World Finance: I’m interested in what you say about the 360 approach, a holistic understanding of people’s wealth management needs, tell us more about that

John Bahnken: Well yeah, that gets back to what I was saying where the industry has been separated, we tend not to think of our clients financial lives as being investments or banking, we tend to think of them much more- to use your word, and I think it’s a good one- holistically. So we don’t push products on clients, we work hard to make sure that we understand what clients need and then develop the solutions that they require. Sometimes they might be investment solutions, and other times they could be wealth strategies, estate planning strategies or things like that, so we tend to think we work very closely with clients to help them solve all of their financial needs.

“We’re actually quite small so we can traverse the organisation to the benefit of our clients very effectively”

World Finance: And in this way you’re very different from a standard private banking or brokerage operation?

John Bahnken: Yeah I think there are a few, some of the more progressive wealth managers in the United States are moving more in that direction but, candidly, in the large companies it’s much much harder to deliver the full 360 value proposition. They’re very fine competitors but it’s hard to work across some of those organisations, an advantage that we have at Bank of the West is that we’re actually quite small so we can traverse the organisation to the benefit of our clients very effectively.

World Finance: You’ve experienced an 80 percent growth in your client base since your re-envisioning in 2011 that you mentioned, what’s been driving that growth?

John Bahnken: Yeah, it’s actually now over 100 percent in just about 2 years time, so we’ve been pretty happy with that. I think the reason for that is that since the financial crisis in the United States, having trust and confidence in long term relationships with your providers are increasingly important. And the way we have been building our business at Bank of the West is based on building on existing customers, so we’re not trying to bring clients in from other competitors at the moment, we’re identifying clients who have been doing business with us for many years and making them aware of this broader value proposition that we can offer to them. And so client advocacy is very high, their trust in our institution is very high, and a very high percentage of the time we offer them the value proposition they step in and say sure, we’d like to do that. That’s the beginning of the relationship though, not the end. The beginning of that relationship is to identify the profile of the client to understand what the client need is and then work hard on solving that client’s problems. So not only have we doubled the size of the client base, but the depth of the relationship with clients has grown typically 70 or 80 percent in the first year, so we really substantially increase the overall size of the relationship. And that’s based on the trust and confidence that they have in us.

“Not only have we doubled the size of the client base, but the depth of the relationship with clients has grown typically 70 or 80 percent”

World Finance: And finally, how do your wealth management services fit into the overall banking picture?

John Bahnken: Well I think they fit in quite naturally, Bank of the West prides itself on being a relationship organisation and so we’re very much clients that start as retail clients and as their wealth grows and evolves, we welcome them into the affluent and higher net-worth segments of how we serve clients. But equally important, one of the things that’s different about the western part of the United States from other parts of the world is many people make their wealth as private business owners, and so we have the good fortune of being able to work with them as they’re building their business from a commercial perspective and then as they become older and monetise the value of their businesses we step in as their wealth manager. So it fits very naturally and logically into how we serve clients.

World Finance: John, thank you.

John Bahnken: Thank you very much.

Mohammed Al Saqqaf and Renimah Al Mattar | United Real Estate Company | Video

United Real Estate Company is a Kuwait-based real estate developer that spearheads a markedly different approach to development. Discussing some of their award-winning projects are Mohammed Al Saqqaf, CEO, and Renimah Al Mattar, Executive Vice President of United Real Estate Company.

World Finance: Mohammed, United Real Estate’s approach to property development contrasts from others in the MENA region, so what sets you apart?

Mohammed Al Saqqaf: Well actually I think what sets any company apart from it’s competitors is the quality of the people, the quality of the management. Anybody in a leadership position has the option either to be surrounded by executors or contributors. Personally, I prefer the latter. So this is important in order to get all the bright ideas out, and you therefore examine all the opportunities that you have in any development. Furthermore, one last thing, in our process we always integrate all of the disciplines of the development cycle from the get go, and this way, we have the buy in of all of our teams into what we are developing.

“As a developer, we make sure that we are very conscious about what we contribute to the built environment”

World Finance: Renimah, do you feel you’ve had to sacrifice design or revenue or in the process of increasing sustainability?

Renimah Al Mattar: Absolutely not. I think what we’ve realised is the challenge is trying to make sure that people understand what sustainability is all about. So as a developer, we make sure that we are very conscious about what we contribute to the built environment. But some of the things that we know that are demand-drivers, which then equates into revenue, is making sure that you have a market for your developments. So we make sure that we look at things like energy utilisation, energy conservation which is more important, looking at building materials, looking at what we’re using and making sure they have a low impact on the environment, and we believe that all of those things actually contribute to a better development, so they don’t impede on your design aesthetically at all.

World Finance: Mohammed, tell us about Salalah Gardens Mall in Oman, what made this an award-winning project?

Mohammed Al Saqqaf: Well, I have to give credit to those who had the vision to develop such a project in Salalah. It is a first-time development in this region, in that particular region in Salalah, and what sets this project aside is the fact that it’s a shopping mall with a hospitality component in it as well. We have managed to lease it out very quickly and bringing in home-grown, if you will, businesses into the mall and that has created the foot traffic that we needed and impacted the community in a very positive way.

“Our project is sort of the iconic project within that master development”

World Finance: And Renimah, you also won an award for the Abdali Mall project in Jordan, why do you think this was recognised in this way?

Renimah Al Mattar: Well I think the Abdali Mall project is first and foremost in a new area in Amman called Abdali, and that’s meant to be the new downtown of Amman and if you look at our project, it’s sort of the iconic project within that master development. So, we looked at everything differently, starting with the design approach, so we’ve integrated local materials like stone, but the design is very contemporary. And we’re able to sort of offer a new retail experience that we think is going to also become a very interesting public space, because the design features like the open air features, the water features, are going to be things that people are drawn to.

World Finance: You’re currently in the development stages of the Junoot eco-resort, where is it and what can people expect upon completion?

Renimah Al Mattar: The Junoot project is located in an area known as Shuwaimiya, which is currently a three hour drive from Salalah, and we’re currently exploring the number of ways that you can actually get to the site, so that actually becomes part of the experience. And the master development will include a number of components, one will be chalets that will be able to be sold to the end users, and that includes expats, so you don’t have to be a gulf national. And one of the hotel components that we’ve just announced will be operated by Aman resorts, and that will be the first Aman resort in the Gulf region. A couple of different approaches that we took in terms of the design and development approach have been to integrate construction methodologies from institutions like the Cal-Earth Institute of Earth Art and Architecture, and we’ve received considerable recognition from different groups for the design approach that these chalets have taken, and we hope to see that throughout the rest of the development approach.

“As a development company, we are always on the look out for new investments and new opportunities”

World Finance: And Mohammed, finally, what opportunities are you hoping to take advantage of in the future?

Mohammad Al Saqqaf: Well obviously as a development company, we are always on the look out for new investments and new opportunities. However, we are a MENA focussed developer, so these opportunities are, if you will, confined in that region that we concentrate on. Out of the current geographies that we’re in, we’re looking at several opportunities in the Sultanate of Oman, and Jordan. Obviously there are some other geographies that we haven’t penetrated yet, but out of what is available again in the MENA region, we feel that Saudi Arabia is a country and a region that we should be able to go into and create some solid investment returns.

World Finance: Mohammed, Renimah, thank you.

Mohammed and Renimah: You’re welcome, thank you.

Magdalene Apenteng | Ghana Ministry of Finance | Video

Earlier this year we reported on Ghana’s PPP project pipeline, after the World Bank pledged $30m to help the country develop its infrastructure. Public Investment Division Director Magdalene Apenteng talks to World Finance to give an update on their progress.

World Finance: First, remind us why infrastructure investment is so important for Ghana?

Magdalene Apenteng: Ghana is a lower-middle income country, having achieved that very recently. It has a population of about 25 million, and a population growth rate of about 2.5 percent, and as of last year 2012 its GDP growth was 7.1 percent. This is quite phenomenal, looking at the entire world where the growth rates were below 2 percent. What this means is that there’s a lot of activity taking place, and infrastructure is one of the key things that a country needs, to propel growth and also to alleviate poverty. Assess the full cost, and with the intent of moving forward to become a full-fledged middle income country, we want to develop our infrastructure, make sure we have adequate services, and make sure there’s a lack of congestion, and also improve maintenance in all the facilities that we have.

“Between Accra and Takoradi there are about 4 million inhabitants”

World Finance: Let’s talk about some of your projects; one of the primary projects is the Accra-Takoradi road, what’s the aim here?

Magdalene Apenteng: The Accra-Takoradi road is one of the projects that we have identified for developing infrastructure. Accra is the capital of Ghana, and Takoradi is the hub of the oil centre, having discovered oil in 2007, and therefore the linkage between the two roads is of prime importance and significance. Between Accra and Takoradi there are about 4 million inhabitants, and once you open up this road, you’re going to provide enough services and activities, especially for production, for inhabitants of this area. Secondly, the Accra-Takoradi road is part of the original corridor that links Togo on the East with La Cote D’Ivoire on the West, so it’s part of the trans-West African highway. Again, the Takoradi Port is also a very significant place, a very significant role, in this. When we open up this corridor, then other products in terms of exports can get to the port for it to be exported, quite easily. Again we have- Takoradi being the hub for the oil centre, for ease of business, you have people moving from the capital to Takoradi quite easily. These are some of the few reasons why we would like to open up and dualise the road.

World Finance: So, tell us about the timeline, there are obviously many milestones, where are we at the moment?

Magdalene Apenteng: The project is being prepared effectively. We started off with identifying a consultant to undertake pre-feasibility studies on the road. We have identified, shortlisted, some few consultants, and they are supposed to have submitted their requests for proposals, and these will be reviewed by the end of this month, and a consultant will actually be selected to undertake the pre-feasibility studies. This will be done in a period of about 5-6months, after which will determine whether we go straight to procure and structure the project, in terms of getting a private partner to look at the design, the finance, and the construction of the road, perhaps including maintenance and operations of the road as well. If it is necessary that we do a full feasibility, then we will go ahead and actually do a full feasibility to actually ascertain the kind of structuring that we want to take place, after which procurement and negotiations of contract off the road project will take place.

“We have about 62 percent of our exports going through that port”

World Finance: As well as connecting Accra to Takoradi, you’re developing the port as well, tell us about that

Magdalene Apenteng: Yes, we have expansion and rehabilitation of the Takoradi port. The Takoradi port actually takes about 35 percent of all sea-freight that comes into the country, with the remaining 65 percent being taken by the Tema port which is the biggest of the ports in Ghana. The port in Takoradi is under utilised as you can see, however, we have about 62 percent of our exports going through that port, that is, for cocoa, for manganese, for bauxite and other products going through the Takoradi port. With the oil discovery there is a very good need to develop the facilities at the port, to take over for oil and gas processing, and therefore we need to have some terminals that would service the oil and gas. Again, we also need to have transit sheds for transmission of goods from the port to our neighbouring countries and even to the interior of the country. Again, we also want to look at, to construct, terminals for bulk ore, that is manganese, bauxite etcetera.

World Finance: We’ve talked about your transport projects, you also have a healthcare project in the Korle Bu Teaching Hospital, tell us about that.

Magdalene Apenteng: Well the Korle Bu Teaching Hosptial Diagnostics Centre, is expected to provide service, efficient and reliable services as well as affordable services to the hospital. Korle Bu Teaching Hospital is the third largest hospital in Africa, it has a 2000 bed capacity, and has an out patient department of about 1400 patients per day, and also admits about 135 persons a day. What it means is that for these 16 clinical departments, we need effective services in terms of diagnostics for these departments. Therefore this centre is expected to service these departments effectively.

“The Korle Bu Teaching Hosptial Diagnostics Centre is expected to provide efficient, reliable, and affordable services”

World Finance: And you’re currently accepting bids on this project?

Magdalene Apenteng: Yes, we have already done the pre-feasibility, and approved the pre-feasibility. However, there are some issues that came up which have to get looked at, and therefore the consultant has been requested to update their pre-feasibility and the report is supposed to come in by the end of May. After which we’ll go ahead and do the procurement and negotiate a contract with the respected private partner that will actually win the bid.

World Finance: Magdalene, thank you

Magdalene Apenteng: Thank you very much Nick.

Ammar Shata on Saudi real estate | Al Khabeer Capital

The government of Saudi Arabia has enacted the third of five regulations announced to shake up the country’s underdeveloped real estate sector. Ammar Shata, Executive Director and CEO of Al Khabeer Capital, and World Finance Man of the Year for 2012, joins World Finance to discuss.

World Finance: First, what is the Saudi government hoping to achieve with these reforms?

Ammar Shata: They are hoping to achieve reforms in terms of competitive advantage. If you want to compete in this kind of world, you have to be sure that you have the right reforms. We’re still yet at the beginning of what we need in terms of social reforms, political reforms, and even human rights reforms, and for that reason I think it’s a good start. If you heard the news recently, we’ve changed the weekend from Thursday and Friday, to Friday and Saturday, women’s rights is improving in terms of allowing them to be part of the political system, and obviously the mortgage finance which was announced earlier in the beginning of the year.

“What we need is an improvement in terms of social needs”

World Finance: And there’s still some work to do?

Ammar Shata: Definitely. We’re a bit slow, we need to move a bit faster, the world is not standing still. What we need is an improvement in terms of social needs, in terms of people sharing in the political system, in terms of human rights, and definitely women’s rights. We see improvement, but definitely, I do not believe any nation can sustain this economic progress and improvement without having its people sharing in the decision making.

World Finance: So what can investors expect from the Saudi real estate sector in both the medium and long term?

Ammar Shata: Well it’s usually between the supply and demand of real estate, there’s about 3-4 years gap. We’re in the beginning of a serious demand for housing, because 65 percent of the Saudi society is below the age of 20, and that means that there is a lot of need for housing in the coming 10 to 15 years. The worry is about euphoria so you want to be sure that in the coming 3-4 years, you are part of the supplying side of the chain of properties into the market that is needed by the society. And this is why Al Khabeer is focussing on asset under management that is real estate basically development, and income generating, because we see this part of the expertise for the Saudi market is an important topic.

“Islamic finance is about fairness, you have to put fiduciary duty into perspective”

World Finance: Now tell us a bit about your background, World Finance has named you Man of the Year in 2012, but you actually got into economics by accident?

Ammar Shata: Yes it’s true. What happened was my advisor at University of Southern California, while I was studying Electrical Engineering, forced me to take an economics course. It was a graduate course, and I did so well I was actually number one in the class, and I amazingly found out I’m pretty good at this topic and I’m enjoying it, so this changed my career to start my Masters degree in Economic and Financial Planning, and here we go, I’m here.

World Finance: And here we are, you’ve created Al Khabeer to offer shariah-compliant investment vehicles- how important are Islamic finance principles to you personally?

Ammar Shata: There’s two dimensions to it, for me, developing the community is an important issue, and Islamic finance is part of that requirement. Islamic finance is about fairness, and for me financing you have to be fair, transparent, and you have to put fiduciary duty into perspective. For that reason, Islamic finance is an important element to Al Khabeer to its people and to its shareholders, and we think it will definitely help in developing the community, which is the final and most important aim for all of us.

World Finance: And now the firm manages assets worth $500m, what would you say is your greatest achievement so far?

Ammar Shata: I think it’s three elements, the first one is the fact that we’re growing at a difficult time. We’re growing at 40 percent per year for the last three years, at a period when a lot of companies are going bankrupt. It’s also an environment where a lot of people have recognised that it’s the best environment to work for- we won for the third year consecutively the best environment to work for in Saudi Arabia, and lately we have been ranked one of the top in the middle east in terms of people management and taking care of our people. And obviously the third one is to lead into the Islamic finance, and that’s Alhamdulillah, we will be successful.

“Hire the right people, and to allow them to perform”

World Finance: And finally, being our incumbent Man of the Year, tell us the best piece of advice you have ever received?

Ammar Shata: It’s to hire the right people, and to allow them to perform. If you don’t have that, you really can’t be calling yourself a good CEO.

World Finance: Ammar, thank you

Ammar Shata: Thank you.

George Stylianou on emerging economies | Forextime

Forextime is an online forex broker that offers trading services on an international scale. Discussing the continuing growth of the forex industry is George Stylianou, Chief Marketing Officer at Forextime.

World Finance: First, introduce us to Forextime and the services you offer your clients

George Stylianou: Forextime is a newly formed forex broker, regulated in the EU. We take a very fresh and dynamic approach to the way we do our business. There are two key things that make us truly unique, and the first one is, well, time- it’s the essence of how we run our business, hence the name Forextime. We use time as the bench mark to optimise the way we do our business both internally and externally. For example, clients can register in less than a minute, and we have a new service called video compliance, whereby we can expedite the approval process so the client can get it up and running really really quickly. We also have MyFXTM so once users have access, they have a birds-eye view of the status of their account, and they can also personalise and optimise the way they trade forex. The second thing that makes us truly unique is the way we deal with localised products and services. One example is our Amanah accounts, this is more popularly known as Islamic accounts in the industry, where they are simply swap free accounts- but we’ve gone an extra step further, we’ve got this account type blessed by the appropriate Imams from the two most popular religious sects. The second is PAMM accounts, now Europe has been looking for a regulated version of PAMM, so far it’s been available outside of Europe but not really regulated, well we have this available for our clients to use. So that’s what we offer our clients that makes us really fresh and new and different in the market place.

“What really makes us different is our experience and expertise in the market place”

World Finance: Now, being a relatively new firm in what is a crowded brokerage space, how do you differentiate yourself from the competition?

George Stylianou: What really makes us different is our experience and expertise in the market place. Andrey Dashin is the founder of our company and he also has a really good track record. He has founded the Alpari group, which is a very successful forex broker. In addition, in amongst the upper ranks of our company management, we have over 50 years of experience, so this really gives us the ability to know what the market needs, and to deliver it when needed. It’s also helped us to achieve maturity much quicker, and allowed us to contend with much more mature brokers.

World Finance: How big has the online fx market grown and what are its future growth prospects?

George Stylianou: Well the forex market has grown tremendously over the last couple of years, and I believe it will grow even more. Forex is becoming more and more accessible to a wider range of demographics since the increased use of mobile and tablet, PC and web-based trading platforms, this opens up a world of opportunities for a lot of forex brokers. With a relatively low minimum deposit anybody could give forex a go and by the time this interview is over it could be thousands of more people that could be interested in trading forex.

World Finance: Emerging economies are real growth areas for forex so why do you think this is and how are you targeting traders in these markets?

George Stylianou: Yes, emerging economies are growing two to three times faster than developed economies, and what this does is it creates a wider pool of people that have more disposable income and this net effect is that more people have more interest in forex because they want to diversify their portfolio’s and assets. We have seen significant interest in central Africa, middle-east, and Asia, and the solution we have for this region is our regulated version of PAMM, which is targeted towards experienced and inexperienced traders.

“The forex market is growing and becoming accessible to a wider range of people due to their increased use of mobile and tablet”

World Finance: And finally, how do you see forex trading developing and changing in the future?

George Stylianou: Well the forex market is growing and becoming accessible to a wider range of people due to their increased use of mobile and tablet, and because the industry is very dynamic and changing, the companies that are able to shift their business model and adapt to these changes are the ones that will prosper in the future. I also believe that social media is the future of forex trading. Forex brokers should find ways to deeper integrate their products and services within these social networks, and this is a key area of focus for us. Because we are a newly formed and dynamic brand, we most certainly have the ability to adapt to all these different situations and deliver to the clients what they want and when they want it.

World Finance: George, thank you.

George Stylianou: Thank you Nick.

Huw Jenkins on Latin America | BTG Pactual | Video

With 30 years of experience, BTG Pactual is a leading investment bank, asset manager and wealth manager with a dominant franchise in Latin America. Discussing the ways in which it has expanded in recent years is Huw Jenkins, a managing partner at BTG Pactual.

World Finance: Firstly, introduce us to BTG Pactual tell us what has made you so successful in Latin America, and what you offer your clients

Huw Jenkins: We are a Latin American bank, so we have 2500 employees, we’re based in South America’s largest economy Brazil, which is our home market, and we now have offices in Chile, Colombia, and Peru. Of that 2500 employees we’ve got 200 partners who are deeply embedded in the business community, and in each of the territories in which we operate. And then we combine that with the global reach of having distribution offices in London, New York and Hong Kong, and so in terms of being able to offer access to capital markets, we have all the capability that a global investment bank might have. So we think we offer the best of both worlds to our clients, the intimacy, fast decision making, and understanding of the scene within the South American economies, and at the same time, the global reach of a world-class distribution network. So, we were described recently in a well-known international publication as a pocket battleship, so rather than being the classic emerging market securities company, where it’s an agency-brokerage model, we actually have significant balance sheet to commit to our clients as well, so we have the ability to underwrite and to lend in probably the similar if not greater scale than the risk limits that global banks have in Latin America. So we combine, knowledge of the local scene, global distribution, and balance sheet strength.

“The real challenge is finding good teams that fit our culture”

World Finance:What are some of the challenges that BTG has had to overcome in the LatAm markets?

Huw Jenkins: Finding a way to enter some of the markets that we chose to enter in the last couple of years, we’ve had to think about whether it makes sense to go with an established local platform, or whether it makes sense to do an organic build. So one of the things we felt very strongly, was that the experience we’d had in Brazil of it becoming a destination for international capital, and Brazilian companies wanting to reach out to the rest of the region, meant that we really needed to focus on building a regional network so that we had capability within all the various market places. And that involved different strategies for different territories, so we made some acquisitions, we did some start-up operations, we’ve opened some additional offices. So I think the real challenge is finding good teams, whether it’s through acquisition or whether it’s through recruitment, that fits our culture and can deliver our kind of service to our clients.

World Finance: BTG was listed on the Brazilian stock exchange in 2012, what do you think the reason for your success has been?

Huw Jenkins: Primarily, our culture, and our position as the leading independent Latin American investment services company. So I think people were very attracted to the idea that as Latin America continued to develop, there would be a process of financial deepening, so there’s a tailwind for us in terms of being in the right part of the world with the right product offering as a securities company. And then on the other hand, we have a unique culture because although we’ve gone public, we’ve chosen to maintain our partnership structure, so 75 percent of the company is still owned by the partnership, we have no intention of ever allowing the partnership to sell its shares on the public market so we aren’t in the business of making one generation rich at the expense of others, we want to keep a culture of owner-managers within the company. And that results for investors in the company in showing best in class really, cost-income ration and revenue per capita, in terms of our efficiency measures.

“We really look to acquire companies that have great customer relationships”

World Finance: You undertook several important mergers last year in Latin America, can you tell us about these and and what effect they’ve had on BTG Pactual

Huw Jenkins: We acquired, or merged with, a business in Chile called Celfin, which was the leading independent investment services platform in Chile, which brought about another 500 employees into the group and really gave us a very strong position in terms of primary and secondary markets in Chile. And we also acquired Bolsa y Renta in Colombia, which is a great group of guys, who are very entrepreneurial, who basically established or re-established this company over the course of the last 5 years. And what we try and do when we make acquisitions, as I was saying earlier we’re a pocket battleship, we do have a significant balance sheet that we can deploy, but what we really look to do is to acquire companies that have great customer relationships, and actually very little in the way of trading or balance sheets, so that we can actually bring value-added to them by connecting their customer relationships with our balance sheet strength.

World Finance: Tell us about some of the highlights of your financial results last year.

Huw Jenkins: Last year was our first year as a public company and we had a very good set of results. We were especially pleased because we were able to deploy the capital that we raised from the IPO very effectively during the course of the year, so our return on average equity was close on 30 percent. We grew our revenues by over 100 percent, to north of $3bn and we had about a 48 percent net margin, so round about a 40 percent cost to income ratio, which we were delighted with. If you look at the recurrent income that the bank generates from either fees on asset management, or commissions on brokerage activity, we covered our expense base two and a half times before bonus, so a very very healthy financial model. And I think importantly for investors, we were able to demonstrate that we were growing our franchise businesses the recurrent income, that comes from investment management mandates or from non-risk businesses such as brokerage or investment-bank advisory, to be a more significant part of our business, which resulted in a really very strong stable earnings base for the firm.

“We want to focus on developing our own people, remaining focussed on the clients, being a meritocratic organisation”

World Finance: Finally, tell us about some of your developments and targets for the next few years

Huw Jenkins: What we really want to do over the next several years is really focus on execution, so making sure that we deliver our partnership culture throughout an enlarged organisation, and that really means focussing on developing our own people, remaining focussed on the clients, being a meritocratic organisation. So with a bit of luck, it will just be more of the same.

World Finance: Huw, thank you

Huw Jenkins: Thank you.

Charles Borg on Malta | Bank of Valletta | Video

We have just seen the meltdown of the banking sector in Cyprus and many think that Malta might be next in line. Bank of Valletta‘s Charles Borg joins World Finance to discuss the challenges facing Malta’s economy.

World Finance: How has the Cypriot crisis affected Malta and Bank of Valletta?

The financial jurisdiction of Cyprus and Malta are both totally different, built on different foundations, and fundamentals

Charles Borg: The similarities between Malta and Cyprus reside only in terms of, we’re both islands in the Mediterranean, we’ve both under British colony for a long number of years, and the both of us have 10 months of sun out of 12. But the similarities stop over there. The financial jurisdiction of Cyprus and Malta are both totally different, built on different foundations, and fundamentals. Basically, Malta’s financial sector is strong, it’s robust, it’s liquid, and very well capitalised.

The core domestic banking in Malta is about 2.5 times GDP, as opposed to Cyprus which is 5 times GDP, and our core banking system, the core banks, obviously are profitable, the Maltese government’s debt GDP ratio is strong and stable, and therefore the similarities are not there. In fact, this was confirmed by a number of houses, such as Fitch, such as Bloomberg, such as the IMF very recently, confirming that the two jurisdictions are totally totally different.

World Finance: Malta has developed into an international financial hub, as Malta’s largest bank, how has Bank of Valletta contributed to safe-guarding financial stability on the island?

Charles Borg: I believe that financial stability resides on three core fundamentals. The first and very important fundamental is a very strong regulatory and supervisory regime, and Malta has a very strong regulatory regime, which is based on the EU legislation and the UK FSA legislation. The second and very important is that the banks and institutions need to be very well capitalised, and capitalisation of the banks is among the highest in Europe. In fact, when we speak of Bank of Valletta’s capitalisation, the European banking authority the EBA issued its report in April, stating that Bank of Valletta’s one of the highest capitalised banks in Europe.

And the third and very important, is the liquidity of the banks. In order to safe guard the day to day operation and the short term of operations. And financial stability resides on these three main core areas.

World Finance: Some observers have voiced concern at the bank’s in Malta and their perceived over-exposure in the property market, what’s your exposure at BOV?

Property is an asset that’s very important for Malta

Charles Borg: Property is an asset that’s very important for Malta. And this question is constantly asked to us and to our regulators, in fact, even the IMF visit that we had last week, this is an issue that they raised. And property has always been important, this is an integral part of a loan book. However, one has to understand the meaning of property.

We do invest, and we have let a lot of clients in the property market, however we have taken a conscious decision some years back to restrict ourselves to the top end of the property market. And this has continued to command the price, and there is still the demand for it. Our exposure to the property market has gone down significantly, and we are in the region of 8 percent at the moment, of all our loan books, so we have reduced our exposure significantly. In the area of construction, we have a 5 percent exposure, we have reduced this significantly, and this is primarily aimed towards the large EU funded projects. And basically, therefore, the risks are mitigated significantly in the area of construction and real asset.

World Finance: How do you see your bank’s role in shaping Malta’s economy, and by extension, what’s the future of Malta’s economy in the Euro zone, which is still relatively unstable?

Charles Borg: I think this is a very critical critical question. Bank of Valletta being half the Maltese economy, our contribution is about 45-50 percent on both sides of our value sheet. By our valuation, by our size in Malta, we are critically important. We are important in terms of the fund-raising activity, because we raise all our funding from the retail deposits, and obviously the utilisation of those funds into the Maltese economy. We are being intrinsically tied to the Maltese economy, obviously we are interested to grow the Maltese economy in a sustainable manner.

We will ensure that the old economy continues to function properly, when I say the old economy, I mean tourism for instance, I mean the manufacturing sectors, I mean retail and wholesale sectors, and the manufacturing. But at the same time, we need to continue to identify the new areas of our economy. Like for instance, we are doing extremely well in the IT sector, in the iGaming, in the financial services sector, and so on and so forth. And areas which we haven’t tapped into significantly like the aviation and maritime sectors. So when we say Bank of Valletta is a shaper of the Maltese economy, it means basically that we identify these new areas, and that we incentivise them to grow by helping them to identify these opportunities. At the same time, making sure that the old sectors continue to function properly.

World Finance: A final question on the Euro zone’s onerous banking regulation, what affect is this having on growth?

We need to identify opportunities, we need to continue to grow our capital and strengthen our capability in different areas

Charles Borg: Regulation is important, we strongly believe that it is critically important so that it will put banks on a sustainable level. We are already ahead of the curve, I would say, in the sense that our capitalisation is already at a level which is Basel III compliant, our liquidity is already CRD4 compliant, so we are all ready, but we need to be ahead of the curve.

As a systemically important bank in Malta, Bank of Valletta needs to be ahead of what is acceptable as a benchmark. Therefore, constantly we need to identify opportunities, we need to continue to grow our capital and strengthen our capability in different areas, by profit retention, by new equity issues, by hybrid instruments, and we need to find the right combination of both. At the same time, making sure that the system, the financial system, is liquid enough in order to be able to assist the Malta economy, have and find the right funding for their operations.

World Finance: Charles, thank you for joining us.

Charles Borg: Nick, thank you for having me.

Persella Ioannides on ‘glocalisation’ | Meritkapital | Video

The flow of funds into Cyprus has created opportunities for investors and asset managers alike but not without risk, as evidenced by March’s European intervention. Persella Ioannides from Meritkapital joins World Finance to discuss brokerage services and the European market.

World Finance: First introduce us to your business lines and services

Persella Ioannides: Our main business lines are custody, brokerage, so electronic trading, asset management, and recently we received our trading license. We cater mainly to Russian clients, so as such our competition is also big Russian investment firms that are themselves domiciled in Cyprus. Some examples are Renaissance Capital, Otkritie Brokerage Service, this is quite a substantial benefit for us because we face that competition and we thus benchmark versus their services, and because they have quite a substantial shared capital base they are investing very much in their infrastructure and their services. As you know it’s an industry that is developing very fast technically, so also we ourselves are also developing with them by benchmarking to their standards.

World Finance: You are based in Cyprus as you mentioned, how were you affected by the EU and IMF’s bailout recently this year?

We were unaffected by the Cyrpus-EU bailout terms because our client’s funds were protected

Persella Ioannides: We took a management decision when we started the company to use non-Cyprus based custodians, and as such we were unaffected by the Cyrpus-EU bailout terms because our client’s funds were protected and were not affected. Moreover, our operations were continued in full and were not affected by the capital controls that were imposed on the banking sector in Cyprus, because our clients’ funds were abroad. This is also the case for other financial services firms such as FX companies or our Russian counterparts in Cyprus because they themselves also use global custodians, and thus, their operations were not affected.

World Finance: You’ve spoken before about ‘glocalisation’ tell us what you mean by this?

Persella Ioannides: ‘Glocalisation’ is a term that is known globally, and it’s basically combining a global perspective and global standards with a local requirements. If you take the instance of Meritkapital, the way we establish a foothold in a very monopolistic western capital markets industry is to provide a service offering that combines investment advice, electronic trading, which are front office services with a prime brokerage service line, which includes settlement and clearing, custody as you know, financing margin trading. So if you take examples of western companies such as Macdonalds or Starbucks, they tend to have a very standardized menu, but they combine it with their local product offering. So in that effect, Meritkapital also tries to provide a derivative product that is front office, and prime brokerage service line, which proved very successful because this is a local and regional requirement for us.

World Finance: Looking at the global markets, which trade calls look good to you in the medium term.

In my opinion we’re actually living in a very boom and bust economic environment which is triggered by the actions of the global central banks

Persella Ioannides: As you very correctly said, the equity markets and the commodity markets are experiencing quite a boost and in my opinion we’re actually living in a very boom and bust economic environment which is triggered by the actions of the global central banks through their liquidity triggering and their respective monetary easing operations. So following the sub-prime and the subsequent euro-debt crisis, like the global central banks tried to boost the global economic activity, but perhaps a lot of that economic activity is artificial which can be evidenced by the sharp rise in the equity and commodity markets.

We tend to follow a very conservative approach, so our investments are mainly in fixed income instruments, but we utilise fixed income instruments that have a twist to take advantage of the ensuing macro-economic environment. So for example, convertible bonds that have an equity underlying, maybe utilised in this environment where equity markets are performing well. Or floating rate bonds, if the central banks reverse their monetary policy operations where as you know, floating rate bonds will benefit from interest rates rising. Generally right now we keep duration in check, for the reasons that you just said.

World Finance: Finally, what are your thoughts on the ECB’s monetary policy and what advice would you give to Mr. Draghi?

Persella Ioannides: The advice that I would give Mr. Draghi is basically to take a more forceful and decisive decisions in his monetary policy operations, and that is true for most European policy makers because we all know that the Greek debt crisis basically reached the stage that it did because they were delaying in their monetary policy decisions. They need to be more forceful, because as we all know, Europe is very fragmented both culturally and politically, so there needs to be a unified approach to decision and decision-making.

World Finance: Persella, thank you.

Persella Ioannides: Thank you very much for having me

Hani Baothman on investment funds | Sidra Capital | Video

Sidra Capital has been established as a Shariah-compliant investment bank since 2009. Hani Baothman, CEO of Sidra Capital talks to World Finance about some of their investment offerings.

World Finance: Tell us about some of the investment opportunities that you offer your clients

Hani Baothman: Sidra Capital is a Saudi investment company that is geared towards providing investment opportunities to Saudi investors. We’re mainly divided into two divisions, asset management and investment banking. In the investment banking, we provide corporate advice to Saudi families, we’ve been involved in restructuring some of the biggest Saudi family groups lately in Saudi Arabia. We’ve also worked with big clients like the Ministry of Finance, in which we worked together in setting up a mortgage finance company. That has the involvement of CMHC which is a semi-crown entity in Canada.

“We wanted to do something that was beneficial to the community”

World Finance: And how have your core philosophies informed your investment approach?

Hani Baothman: Sidra’s shareholders and management believe that in the beginning we wanted to do something that was beneficial to the community. This is why we stayed away, as per our belief, from investments that do not benefit the people back home, such as equities, because there are other players who can do this better than us, and we don’t see direct impact on people’s lives with such investment products. So this is why we ended up doing mainly private equity related transactions, whether it’s in advisory or in the asset management side.

World Finance: Tell us about your Stirling UK Real Estate Fund

Hani Baothman: SURF was a fund that was established with our partner in London Gatehouse. We had the idea of setting up an income-generating real estate fund with UK assets. The problem we faced in the beginning was that most of the funds that we looked at were not fully 100 percent Shariah-compliant. This is why I decided to set up our own fund, it’s £100,000,000 fund, it looks for assets that are leased to blue-chip companies, a minimum lease period of 13 years, a minimum yield of 7.5 percent, and we have successfully managed to place this fund in Saudi and investors like it.

“We managed to structure the first fully 100 percent Shariah-compliant fund”

World Finance: So what differentiates your Sterling fund from other real estate funds on the market?

Hani Baothman: There are three main points, the first one is that as an asset manager we seeded the fund with a minimum of 30 percent of the fund, so as they say, we put money where our mouth is- this is number one. Number two is that we managed to structure the first fully 100 percent Shariah-compliant fund. Number three, most of the investors in this fund are dollar based investors, we don’t have any UK or Sterling based investors, that gives us the liberty to play the exchange game should the Stirling appreciate and the investors decide to exit, they may play the currency game, in addition to the real estate returns that the fund generates.

World Finance: Now, World Finance recently recognised your Ancile Global Structured Trade Investment Fund, why do you think this is?

Hani Baothman: It’s a new fund which we did with a Geneva-based asset manager, INOKS in London. In the beginning we wanted to get into commodity finance, but the problem we faced was that most of it was like structured product, we didn’t see anyone who is doing deal commodity finance. We went with them to Africa, we saw the farmers they’re financing, the impact such programs are having on people’s lives, smart returns such investments make and we decided to go back with them and create the first Shariah-compliant trade finance fund, which we did in Sidra Ancile Fund. Now this fund again as I said, is fully Shariah-compliant, it really considers the sustainable development part, we don’t provide farmers with bad chemicals, although we’re an investment manager, we do care about investment related activities that our fund gets involved in.

“One of the things that we find is a truly Shariah application in our fund is the sustainable development”

World Finance: Finally, do you think that being Shariah-compliant gives you an advantage over other funds?

Hani Baothman: Some investors and asset managers limit the Shariah part of the fund to the structure and legality of the fund, which actually we do, this is part of our Shariah mandate, but we take it a step further. We look into sustainable development, Shariah actually guides you towards not harming the land, not harming the environment, taking care of the environment you work in, and this is one of the things that we find is a truly truly Shariah application in our fund, which is the sustainable development part of it.

World Finance: Hani, thank you.

Hani Baothman: Thanks Nick, thank you.

Anna Zamurakina on Southeast Asia | FBS | Video

Unlike the debt burden among developed nations in the West, Southeast Asia with its resilient growth represents a truly bright outlook. Anna Zamurakina from forex broker FBS discusses the economic potential of the region.

World Finance: The emerging nations of Southeast Asia show resilient economic growth, while developed Western economies are having a hard time trying to avoid recession. What’s the secret of Asian economic success in the recent years?

Anna Zamurakina: The economies of Indonesia, Malaysia, and Thailand are steadily growing. In 2012, each of them expanded by more than 12 percent. In our view, the Southeast nations are much more economically healthy than those in Europe, even than the US. The main reason is that Asian governments don’t have to conduct severe austerity measures, they have made a wise decision to rely on domestic consumption and not on exports. They seem relatively immune to external shocks, such as the European debt crisis, and they are able to enjoy their rapid economic growth. And when the economy is safe and sound, and people have money to invest, they come to forex; a perfect choice for an individual trader, either a beginner or a professional one.

“Forex is extremely dynamic and offers spectacular trade opportunities”

World Finance: So then, why should retail investors choose forex over other asset classes?

Anna Zamurakina: Much has already been said of the advantages of forex. To cut a long story short, it is certainly the easiest way to start your activity at financial market. Open 5 days a week, it is extremely dynamic and, so, offers spectacular trade opportunities. All you need to do is to choose a reliable broker, and FBS is surely the best choice. Such a rapid development of FBS, it’s reliability, and high-level services, has been awarded for the third time this year by a world’s leading financial magazine, World Finance. Despite our evident success, there is no time to rest on our laurels, we proceed with our Asian and world expansion, within our language support option, improve our services and offers, conduct local charitable actions, and more.

World Finance: You have significantly enhanced your IB program recently, tell us more about that

Anna Zamurakina: Well we have done a great job and now we are proud to announce that we have the best IB program on today’s forex market. Above all, FBS provides its partners with the highest IB commission on forex, 2.2 pips. Moreover, we offer a unique multi-level IB bonus program, efficient and constantly updated tools for client requirement, regular contests and promotions and more. Our IB program is easy to use, transparent, and it is a real chance to make thousands of dollars every month.

“In dynamic markets companies must constantly introduce new services and products”

World Finance: Finally, what are you working on now, and what’s your strategic vision for the next 12 months?

Anna Zamurakina: In dynamic markets companies must constantly introduce new services and products to keep up with changing consumer wants and needs. So in the near future a new trading platform, MetaTrader5, will become available to all FBS traders. MetaTrader5 is fully consistent with the concept all-in-one, it includes everything that you need to work at financial market. Secondly, FBS Palm account, ZuluTrade, and monitoring of traders’ account, will be introduced shortly. FBS Palm account is an ability to participate in the world’s largest exchange market, and it is the acquisition of profits without any experience and special knowledge. Capital management will be done by experienced traders. And finally, we have launched our new analytical resource FX Bazooka recently. FX Bazooka is an advanced information resource for traders. Through FX Bazooka you will gain access to currency forecasts and recommendations from the world’s most professional traders and analysts. So I think it is clear now that your best choice for forex is FBS.

World Finance: Anna, thank you.

Anna Zamurakina: Thank you

Matt Eagan on the economy | Loomis Sayles and Co | Video

Loomis, Sayles and Company has successfully negotiated the volatile bonds market of recent years and now manages over $191bn of assets. Talking about their approach is Vice President and Portfolio Manager at Loomis Sayles, Matt Eagan.

World Finance: Introduce us to Loomis, Sayles and Company, what do you offer your clients?

Matt Eagan: Loomis is a global asset management company, we’ve been around since 1926, we’re currently on the fixed income side managing over $180bn worth of assets under management. We have a full range of capabilities on the fixed income side, everything from core products that are tightly managed verses a benchmark, to go-anywhere styles on the multi-sector stage, to alternatives including hedge fund capabilities.

“We have a macro-process integrated into everything that we do”

World Finance: What do you think has made you successful?

Matt Eagan: There are really four main factors that counts for our success. First, our macro process, we have a macro-process integrated into everything that we do. By doing this we are able to identify trends, spot them early and take advantage of them. Second is fundamental research; we have a very large staff of research analysts on the fixed income side and on the equities side. Third is our quantitative capabilities; we talk about quantitative, this is not just something that monitors risks from afar, we actually have it integrated into our process. This enables us to not shy away from risk but to take on good risk where we think we’re being compensated for it, understand that risk and manage it properly. And finally is our ability to consider alternatives and we have capabilities to look at the market, both from a long perspective and a short perspective, and it allows us to really optimise opportunities and risks for our clients in all portfolios.

World Finance: What kind of impact is the Federal Reserve having on portfolio management?

Matt Eagan: Well the Fed has had a very heavy hand in the market, and obviously their policies have had the affect of driving interest rates down to really distorted levels. We see the winds changing on that front, right now we think we’re transitioning to a period where rates are going to rise on a secular basis. So now, the good news is that rates are rising, but the challenge will be how to preserve principal as we get to that higher level of yields.

“The key area of diversification is away from interest rate sensitivity”

World Finance: You talk about this transition period, in what ways have you had to diversify to find value?

Matt Eagan: Well the key area of diversification is away from interest rate sensitivity, so that means de-emphasising government bonds and high-quality markets, so US treasuries and the like, and moving into other sectors like corporate bonds whether it be investment grade, high-yield where we have the flexibility, convertible bonds, emerging markets. Loomis Sayles is very research focussed and in many cases a lot of our portfolios will build one bond at a time, and focussing on where the value is. So those are some of the places that we may go. We’ll also invest internationally, we have global capabilities and are very comfortable investing in overseas markets, both in the developed area and in the emerging market area.

World Finance: How do you tackle challenges in other markets, such as Europe, and is it still possible to find other opportunities despite the challenges?

Matt Eagan: There are opportunities globally, and Loomis Sayles is a global firm, and what we do is bring our research capabilities to a market like that and look through the rubble to find where there is pockets of value in that market. For us there were opportunities in the peripheral sovereign market, that we participated in, as well as the investment grade corporate and high-yield area where some, a few, gems there. The market is a little bit more pricier than it was now, but we still think there’s good value in some of those areas.

“We use research to look through the rubble to find where there are pockets of value in that market”

World Finance: So finally, what’s your outlook for global growth?

Matt Eagan: So I think global growth will continue to muddle along here supported by very aggressive policies from central banks around the world. The growth will be lead by the major economies, fortunately the US we think is at the vanguard, in the developed world, for positive growth, being lead now by our housing sector we think is picking up steam, which is good news. There are still challenges in the US, the biggest one being our fiscal drag that we’re likely to have, so there’s pluses and minuses, but overall we should see about 2-3 percent growth rates in the US. And China is, the second largest economy, is struggling to maintain very rapid growth, but is growing still about 6-7 percent per annum, which is quite attractive. So the two largest economic engines are starting to gain some momentum and positive growth, which is good for the world. We look at the rest of the developed world, Europe is struggling to grow, and will continue to struggle based on some of the austerity that they have in place and just not enough aggressive policies from both the central bank and the regulators there. So overall, muddling through, positive growth from the main engines of the world, which should be supportive of risky assets.

World Finance: Matt, thank you.

Matt Eagan: Thank you very much.