Author: World Finance

Godwin Emefiele on corporate governance | Zenith Bank | Video

Posted on by World Finance

Africa’s banking market – it offers vast potential, while remaining relatively untapped. Zenith Bank CEO Godwin Emefiele discusses the bank’s long history of strong risk management and corporate governance practices, and its importance for attracting investors in light of Zenith’s listing on the London Stock Exchange.

World Finance: Godwin, what level is banking in Africa currently at?

Godwin Emefiele:The level of banking in Africa has evolved from just a rudimentary level, I would say, several years ago, to, I would say, among some of the more developed in the world today.

If you consider the fact that African banks today rank among the biggest banks in the world. Certainly African banks have come a long way. Both in terms of shareholders’ funds, in terms of profitability. Some of the banks in Nigeria and South Africa particularly have really come of age, and I think we need to commend that.

“The level of governance in the financial system is a major advantage for Africa today”

World Finance: Well people talk about the potential in Africa, but in reality, how easy is it to operate there?

Godwin Emefiele: If you consider the fact that several years ago, Africa was mainly dominated by military regimes? Then today Africa has come of age, because practically all the countries in Africa today are democratically elected governments. I would think the level of development in terms of politics has really come of age.

And when you have an environment where democracy has been properly instituted, then you can be sure that a level of governance that you have in the financial system will be strong. And I think that is a major advantage for Africa today.

World Finance: Focusing on corporate governance now, and how developed is Africa in this field?

Godwin Emefiele: The level of transparency in doing business has improved, particularly in the very recent past. For instance, in Nigeria the monetary authorities insist that banks must publish their accounts at the same time. The monetary authorities have begun to insist that even the boards of banks need to get involved in some of the detailed issues that are involved in running banks today.

And so today I think, the level of governance has improved.

“The level of transparency in doing business has improved, particularly in the very recent past”

World Finance: What’s Zenith’s approach to corporate governance, and what challenges have you faced, and as a result, overcome?

Godwin Emefiele: We’re really come off it because in 23 years when the bank was set up, the bank was set up with strong risk management policies and practices put in place, and strong governance also was put in place. So today, when people begin to talk about, “Oh, what is the level of governance?” we take it for granted. Because the bank itself was set up with strong risk management and governance practices put in place.

World Finance: But what were the challenges you faced in that field, and how did you overcome them?

Godwin Emefiele: Some of the challenges are that because a new regulation is coming, and certain things need to be done the way they’re supposed to be done. At the initial stage they tended to be alien to our environment, but of course, we were able to overcome them by insisting that we had the right people in the board, we had the right people taking on certain jobs in the bank. And with that, the challenges became something very, very easy for us to overcome.

World Finance: How are Zenith’s shares distributed?

Godwin Emefiele: In 2004, Zenith became a publicly quoted company on the Nigerian Stock Exchange, and of course earlier this year our shares were quoted on the London Stock Exchange. So as a public company, you find that the shares can be easily traded publicly on the Nigerian Stock Exchange, you can pick up Zenith’s shares on the exchange.

“Before we listed a GDR on the LSE there were companies in different parts of the world that could not access our shares”

World Finance: Well you just mentioned that Zenith has been listed on the London Stock Exchange, so what impact has this had on your company?

Godwin Emefiele: The impact has been tremendous, in the sense that, you find that before we listed a GDR on the London Stock Exchange, there were certain companies in London and different parts of the world that would have liked to access Zenith Bank’s shares, but there were certain restrictions placed on them, that they cannot come directly into the Nigerian Stock Exchange to procure those shares. They couldn’t come to buy those shares, but by being listed on the London Stock Exchange, it is easy for them to go onto the floor of the London Stock Exchange to buy Zenith Bank shares.

World Finance: So finally, what would you say are the major challenges that the African banking sector faces, and how do you see them being overcome?

Godwin Emefiele: Basically two challenges here; challenges in the sense that banks, particularly in Nigeria, have to provide power for themselves. But of course recently, with government divesting from power, and then giving the authority to private sector institutions to generate and distribute power, banks will now begin to focus more on their banking business, rather than providing power.

Second, I would say the Nigerian banking industry was dominated primarily by cash. But with the Central Bank of Nigeria bringing the cashless policy into place, we find that less emphasis is being placed in picking up cash, but more on doing electronic banking.

World Finance: Godwin, thank you

Godwin Emefiele: Thank you very much.

Paulo Pinto on investing online | DIF Broker | Video

Posted on by World Finance

The internet has brought international finance closer to home, giving investors easier access to the global economy. Paulo Pinto, CEO of the pan-European brokerage firm DIF Broker, discusses what it takes to succeed when it comes to online investing, and the challenges that DIF Broker takes on – negotiating complex laws and regulations across different jurisdictions – so its traders don’t have to.

World Finance: Paulo, how is international finance responding to online investing?

Paulo Pinto: Through technology. We don’t have people anymore dealing with things in finance, and basically it’s computers, it’s wireless internet, it’s connections, communications, and just connecting the dots in between all the markets in the world and bringing them into one platform and providing that to the client, like if you were dealing with your local market.

“It’s allowing people to invest worldwide with no difficulties, with no complications, feeling safe”

World Finance: Well this investment model, I’ve heard you say, is the future of investing, so can you tell me more about that?

Paulo Pinto: We indeed believe this is the 21st century for investment. It’s going into the future, it’s allowing people to invest worldwide with no difficulties, with no complications, understanding where they put their money, feeling safe that even if they don’t understand about Japanese or know anything about Japan, they will be able to have a model on Japan and put their money there, working there for them.

World Finance: What challenges is DIF Broker facing while trying to expand globally?

Paulo Pinto: We are a global broker, catering for global investors. We are not specialised in any particular market so we do not compete in a local market with a local broker. Our goal is to go to global investors and to teach the ones that want to have a broader view. For that, we leveraged ourselves using our partners in the US – DWA, Dorsey Wright – and we have created a new concept, because they are mastering the ETF model of investing and by bridging the two companies we are offering more than 80 models to investors. We came to the conclusion that the investors today, they don’t want a quarter inch drill, they want a quarter inch hole. They don’t want anymore to do it yourself, they want to have it done, and this is basically what we offer.

“We are a global broker, catering for global investors, offering more than 80 models to investors”

World Finance: Well DIF Broker allows it clients to invest in whichever markets they choose, and this means negotiating often different and complex laws and regulations among the different countries, so how do you approach this?

Paulo Pinto: It’s not a difficult process for us because we keep it simple, we don’t do as other brokers arbitrage in regulation. We open all our accounts in Europe, which means that we have to comply with the rules of compliance, and know your clients’ rules. Basically, we keep it simple, because we believe that this will cover everything that the investor wants and they will be much better with the investments made with the European broker.

World Finance: What are the greatest concerns for investors when it comes to online brokerage?

Paulo Pinto: We believe it’s the fear of taking responsibility. While the industry is talking about empowering the investor, the investor is afraid of taking responsibility, and that’s why we pretend to take things in a very simple way and present to the investors in a very simply way. We create these models, which people will understand, we provide them the risks, we alert them for the risks on investment, we alert them for the fact that we are aware of these risks on investment also, and we keep it simple.

“While the industry is talking about empowering the investor, the investor is afraid of taking responsibility”

World Finance: Now DIF Broker is focused on customer growth, so how are you going about this?

Paulo Pinto: We are more focused on customer retention than customer growth, and we understand that the clients’ Danish market where we are, the clients that we cater which are global investors, they are not compatible with the growth that people eventually will create on their minds for brokers. Client retention is a lot more important for us, because we have a lot of clients, we want to keep them happy, and we want to keep serving them, and we provide the service that a company that is customer orientated should provide to the clients.

World Finance: So what does it take to succeed in online brokerage?

Paulo Pinto: It’s to have the idea that we are useful in what we do, and to believe that what we do is really making a difference for the investors.

World Finance: Well finally, what is DIF Brokers’ plan for 2014?

Paulo Pinto: We would like to continue to be the best online broker for our clients, and if we can succeed in that we’ll be happy.

World Finance: Paulo, thank you.

Paulo Pinto: Thank you.

Godwin Emefiele on e-channels in Nigerian banking | Zenith Bank | Video

Posted on by World Finance

With its headquarters in Nigeria and subsidiaries in four other African states and the UK, Zenith Bank is a leader in African financial services. CEO Godwin Emefiele discusses the Central Bank of Nigeria’s recent changes, including its drive to improve the use of electronic channels in the banking sector; as well as Zenith’s own profile for innovation and community engagement.

World Finance: Godwin, Zenith is said to be the most respected bank in Nigeria; why is this?

Godwin Emefiele: Zenith is the most respected bank in Nigeria because it’s one of the biggest banks in Africa today. It’s the biggest in West Africa in terms of shareholders’ funds, and it ranks in one of the top six, top seven banks in Africa today.

Zenith Bank was the most productive bank in Nigeria in 2012, with profitability of over $600m. In terms of market capitalisation as well, it’s one of the biggest companies listed on the Nigerian Stock Exchange today.

“Zenith Bank was the most productive bank in Nigeria in 2012, with profitability of over $600m”

World Finance: Well you also have a very strong corporate social responsibility profile; why is this important?

Godwin Emefiele: Because we believe that we should give to any environment that has given us, afforded us, an opportunity to conduct banking services in that community. And what we do from time to time, is ensure we look at the community, we determine the needs of those communities, and based on the needs that we determine the community desires, we go ahead and improve some of those needs for them.

World Finance: Well, how is the banking industry in Nigeria developing?

Godwin Emefiele: The Nigerian banking industry is coming of age. If you consider the fact that we have strengthened corporate governance in Nigeria; risk management practices have become very strong. And before the financial crisis, you’ll find that if you rank a Nigerian bank you may think that they’re not well capitalised. But with the financial crisis we find that the Nigerian banks, indeed some African banks, are some of the best regulated institutions in the world today. Because if consider the fact that banks are expected to keep a minimum of 30 percent of their assets in liquid assets, or 12 percent in Nigeria in cash reserve ratios. Or that Nigerian banks also have to maintain minimum 15 percent in capital adequacy ratios, then you’ll see that the Nigerian banking industry has indeed come of age.

World Finance: Due to the increased levy paid to the assets management company of Nigeria and the poor state of infrastructure in the country, Nigerian banks have the highest cost base among their peers, so how are you addressing this?

“The Nigerian banking industry has come of age”

Godwin Emefiele: The level of infrastructure development is below average right now. For instance, you find that banks have to provide power for themselves; banks have to run around collecting cash from their customers to ensure their customers are properly served.

But of course the level of infrastructure development is improving now. With government divesting power and then allowing private sector institutions to come in. We’re expecting that power will improve, and the level of power generation will improve, and then Nigerian banks can begin to focus on their banking businesses, instead of focusing on power. And with that, costs will suddenly come down.

Also, in the Nigerian banking industry today, the Central Bank of Nigeria recently put in place a cashless policy, where we’re trying to say, let’s reduce the level of cash in the economy, let’s improve on the use of electronic channels in conducting banking businesses in Nigeria. This will certainly help to reduce the cost of doing business in Nigeria.

World Finance: The second part of this year has been quite challenging, with the revised bank tariffs on products and services, but Zenith has managed to maintain its growth. So what would you say your key to success is?

Godwin Emefiele: The Central Bank of Nigeria put in place a policy to say for instance, commission on turnover have to reduce from about five per thousand to about three per thousand in 2013, and hopefully by about 2016 it will become about zero.

No doubt this will have some impact on the revenue base of the banks, but of course what we are doing is to ensure that we continue to look to other areas where we can improve our revenues, ensuring also that we set up offices in areas where we can mop up cheap deposits with which we can do business. And that’s where, for instance, if you take a look at Zenith Bank’s third quarter results, you’ll find that out of most other banks, Zenith Bank’s net interest margins have continued to move up.

“A mobile banking licence ensures we can reach customers in the nooks and crannies of Nigeria”

World Finance: Zenith is known for its state of the art technologies, so what’s your latest innovation?

Godwin Emefiele: When we started the bank, we said we would not open any branch of the bank without ensuring we could provide good technology to support our services, we want to ensure that we provide excellent services to our customers.

That we have done for 23 years. And what we continue to do is embrace any opportunity to provide excellent services, and what we are doing at this time is to ensure that we embrace the electronic channels where we are using point of sale terminals to drive business for our customers.

Recently Zenith Bank was given a mobile banking licence, and we’re also using that to ensure that we’re able to reach some of our customers that are in some of the nooks and crannies of Nigeria.

World Finance: Finally, what’s next for Zenith?

Godwin Emefiele: We’re working hard to ensure that we remain one of the global players. Zenith Bank has to maintain the leading position in Africa, and we are very optimistic that we will achieve this.

World Finance: Godwin, thank you.

Godwin Emefiele: Thank you very much.

David Robson on oil and gas in Central Asia | Tethys Petroleum | Video

Posted on by World Finance

London and Toronto -listed Tethys Petroleum is the only independent oil company operating in three Central Asian republics, and following a major farm-out deal is looking towards new territories. Dr David Robson, Executive Chairman and President of Tethys Petroleum, discusses the company’s presence in Uzbekistan, the challenges it presents, and Tethys’ ambitions for the rest of the region.

World Finance: Why Central Asia, and what has been your approach to this region?

David Robson: Really what drove us there was the potential, the geological potential for oil and gas. There are very large geological basins but very underexplored in some areas, so the potential certainly is there, there’s still a lot to be found in Central Asia. Ally that to the emergence of the newly independent states in Central Asia, such as Kazakhstan, Uzbekistan, etc, means that there is a real desire to attract investment into these regions. Now, the reasons that there’s no one else in Tajikistan is because we got there first and picked up most of it. Uzbekistan is a country which people have shied away from because of the lack of enthusiasm, in the past certainly, for Western investment, and some of the political issues around that. Kazakhstan of course, when we started there, there wasn’t all of the companies that are there today, and once again it was a matter of getting in there early in a time when the legislation wasn’t as good as it is today, being prepared to take that risk, working with it and making sure in Kazakhstan that everything was done according to the rules.

“There’s still a lot of oil and gas to be found in Central Asia”

World Finance: You mentioned the potential for further developments, at what stage are these at?

David Robson: Exploring for oil and gas is a risky business. But if you apply the right technology and the right approach, you can minimise that risk, and we were very successful in finding the first new oil discovery in the area of Kazakhstan we’re working in, about 450km from the nearest other oil discovery, using really North Sea models for the development of oil and gas fields.

World Finance: You’re the only Western company currently operating within the oil and gas sector in Uzbekistan. What challenges have you faced?

David Robson: Uzbekistan has its own set of challenges. It certainly, of the countries we work in, some of the bureaucracy is quite slow there, and it takes a little time to get things done. Therefore it’s a country you can’t rush, you’ve got to be very patient, you’ve got ups and downs. We’re patient people, and I think as time goes on we will certainly develop more there. But it’s not going to happen instantly.

World Finance: What about the socioeconomic risks within this region?

David Robson: We’ve seen, certainly in countries like Kazakhstan and now Tajikistan, an improvement in the standard of living over the last 20 years for the population, which I think bodes very well for the future development. Part of our job is to make sure the country has sufficient energy, that it either becomes energy self-sufficient, or is able to export energy. And that’s one of our jobs, because that will improve the lot of the people in these different countries and also obviously we employ people, we employ local staff, they then employ people etc, etc. So our footprint is actually much, much broader. The other part of our job is to improve the environment for the people in Kazakhstan, or Uzbekistan, or Tajikistan, to make their lot better, becuase that will create more stability, and that in the end will help us do our job better.

World Finance: You have been involved in a few high profile farming deals, what is the significance?

David Robson: We brought Total and CNPC into our production sharing contract area in Tajikistan, and then the next step forward for us was to bring in partners to share the risk of these deep expensive wells, but also to bring additional technology, for exmaple through Total, to help us safely and efficiently drill these wells. And with CNPC, the ability to cost effectively develop such deposits and indeed to provide a good market for gas. A more recent deal we’ve done in Kazakhstan with a Chinese private equity firm based in Beijing is, I believe, one of the very first, if not the first deal, done in the oil and gas sector by such a private equity firm in Kazakhstan. That deal brings in a good financial partner, and their aim in the end is to make a good return and exit, and we will benefit from that exit, it’s an extremely good farming deal.

“Tethys, I firmly believe, will be a big player in the Central Asian oil and gas sector”

World Finance: And these deals, how will they impact future expansion?

David Robson: We’ve just acquired a new project in Georgia for example, and that is an unconventional oil project, it will be the first shale oil project I believe in the former Soviet Union. And there’s a lot of it: over three billion barrels, according to independent estimates. So it’s moving the company in a slightly different direction within its core area. And we will do more deals like that, and with our partners helping fund all that it gives us more free capital to look at investing in other areas, perhaps areas around which share similar geology, or a similar way of doing business. Tethys, I firmly believe, will be a big player in the Central Asian oil and gas sector, which is going to be one of the world’s biggest oil and sectors.

World Finance: David, thank you.

David Robson: And thank you very much, it’s been a real pleasure.

Maria Bianca Farina on insurance in Italy | Poste Vita | Video

Posted on by World Finance

Following the financial crisis, Italy is undergoing social and economic change, representing interesting opportunities, but also challenges for the insurance sector. Maria Bianca Farina, CEO of Poste Vita and Poste Assicura, discusses Poste Vita’s strategy, how it tailors its solutions to meet the needs of Italian families and companies, and the impact the Italian government’s cuts are having on the Italian insurance industry.

World Finance: Maria, the Italian insurance sector was hit quite hard by the financial crisis, yet Poste Vita flourished, what are the reasons behind this success, do you think?

Maria Bianca Farina: Our success relies on many factors, but above all on our capability to protect and support Italy’s householders, through the offer of innovative experienced and savings solutions, tailored to fulfil the real needs of Italian families and companies.

To give you an example, thanks to our competitive pricing model, customers have access to affordable, high quality insurance coverage, as well as low premium investment and pension plans.

“The challenge insurance companies face is to make individuals aware today of their forthcoming needs”

World Finance: What challenges will the Italian insurance sector face over the next few years, and how do you plan to address them?

Maria Bianca Farina: Some convergent factors, such as the population ageing, the economic crisis, and the need to cut back on public expenditure, make it ever more and more urgent for people’s need to have access to covers to protect and manage both their present and future lifestyle.

The challenge insurance companies face is to make individuals aware today of their forthcoming needs.

Insurance companies can offer an essential contribution to promote a comprehensive, combined and efficient action, focused on designing affordable solutions that take into account daily problems.

With regard to the corporate and SME segment, we are developing collective welfare solutions for personal protection and health that employers can offer as an additional benefit to their employees.

Last but not least, the Italian insurance sector will have to face the impact of digitalisation on consumer behaviour. Given that in the future, traditional distribution channels will continue to dominate the scene, in the coming five to 10 years, we need to invest, to ‘digitally arm’ our distributors, as well as enhance our customer experience.

World Finance: What role will Italy’s insurance sector play in the future of the country?

Maria Bianca Farina: The decrease of the traditional welfare model increases people’s need to rely on alternative solutions to protect and manage their present and future. In this macroeconomic scenario, insurance companies have the opportunity to meet the new needs that have arisen in different fields – welfare, health, social services, and income security during the working age and afterwards – by supporting the development of new markets, and producing clients with a secure net compared to government expenditure cutbacks.

A greater access to insurance products could contribute to the whole welfare and health system, allowing public money to be allocated differently, and managing private assets more effectively.

“The decrease of the traditional welfare model increases people’s need for alternative solutions”

World Finance: Who do you target for your services, and how does that address the needs of the Italian consumer?

Maria Bianca Farina: We concentrate marketing new products that can meet people’s everyday needs, such as income assistance and health.

For example, Postapersona Sempre Presente, our new long term care cover, and Postaprotezione Casa Special, which includes all major house covers, plus the bill protection warranty, which covers all costs related to the household in case of job loss, disability, or long term illness.

We also intend to strengthen our position in the management of the new welfare, by making supplementary pension plans more easily accessible to companies for their employees through our new collective pension scheme that we will be launching very soon.

World Finance: So, what’s your strategy for the next few years, bearing in mind Italy’s current economic climate?

Maria Bianca Farina: Although we keep on improving our product range, our real commitment focuses on reinforcing sale assistance offered to post offices, developing new client services, leveraging on existing resources and competencies within the group, as well as continuing to improve and modernise information technology systems.

“Greater access to insurance products could contribute to the whole welfare and health system”

World Finance: Finally, the topic of boardroom composition is an interesting one; what does it take to succeed as a woman in this market?

Maria Bianca Farina: In fact, the world of insurance and finance is still predominantly male-dominated. But luckily, we are witnessing some changes. In the last decades, more and more women have become part of the financial services sector, and they brought in more feminine traits such as caution, reduced inclination to risk, and greater attention to taking action.

Today, a woman still has to make a much greater effort compared to a man to achieve the same goals. Nevertheless, her unique and irreplaceable features are what to put a stake on. Moreover, I believe that a woman doesn’t need to act like a man to break the glass ceiling. As far myself, I never changed my personal approach in a working environment, always preferring to be true to myself and my ideas.

World Finance: Maria, thank you.

Maria Bianca Farina: Thank you to you.

Christos Christodoulou, Frixos Savvides, and Mehran Eftekhar, on Cyprus insurance | Trust International | Video

Posted on by World Finance

Cryprus’ insurance industry is relatively small, but EU membership is helping the country to attract international insurance management and reinsurance operations. Christos Christodoulou, Frixos Savvides, and Mehran Eftekhar from Trust International Insurance, discuss the challenges in Cyprus’ insurance industry caused by Solvency II and other EU regulations, but also the opportunities for consolidation as banks are forced to divest their insurance arms.

World Finance: Christos – you’re the fastest growing insurance company in Cyprus. Tell me what the secret is behind this success?

Christos Christodoulou: In 2009 we decided to enter the Cypriot market. The new board has said, from the beginning of its operations, that we will become a leading insurance company through innovation and customer service excellence. Because the Cypriot market was a very crowded and mature market; we needed to separate ourselves from the competition.

Therefore the board saw this opportunity to innovate. So we produced a new approach to general insurance, and we have established good systems, to provide to customers excellent support.

“The whole structure of the insurance business in Cyprus is changing”

World Finance: Tell us how the industry has developed from its British heritage to international influences.

Christos Christodoulou: In 1960, insurance was offered mainly from the UK, that maintained branches in Cyprus. It was not done until 1969 that the first insurance company was established on the island.

Currently we have 30 insurance companies operating on a small island with a population of less than one million. The Cypriot people are accepting insurance, and they are insurance-literate.

The market in Cyprus is relatively small, but due to EU membership, we expect it to grow.

World Finance: Frixo – what challenges does the Cypriot insurance market face?

Frixos Savvides: We have gone through a lot in these past few months. Definitely the whole structure of the insurance business in Cyprus is changing. And either it has to change by force, or it has to change voluntarily.

Traditionally, Cyprus insurance market was predominantly led by the two major banks through their subsidiaries. Now the two major banks: one of them is gone, Popular Bank has gone, and Bank of Cyprus is going through an unbelievable restructuring and redevelopment of the capital, and a load of other activities; and naturally as a process imposed by the European Union, the banks have to get rid of their insurance arms. And they have to be on the same level of competition as everybody else.

Thus, the major change which is going to be very painful to the banks, but also it will give the opportunity to young companies like us, to buy out or merge with other companies in order to absorb these unbelievably valuable businesses which will become available.

“Banks have to get rid of their insurance arms, presenting an opportunity to buy or merge with these companies”

World Finance: Mehran, how do you see cross-border business developing?

Mehran Eftekhar: In order to do cross-border, you need passporting. Passporting really means that your regulator, in the country that you’re operating in, will allow you to do business in other European Union countries, or actually any other country in addition to the EU. And for the regulator there to also accept you as a company that can transact business in that country, and therefore it will be very difficult.

World Finance: You already mentioned regulations – what are they key regulations, and what kind of impact have they had on the country?

Mehran Eftekhar: The main regulation is European Union directives on the insurance industry. We have also international financial reporting standards, that Cyprus applies through its local institute of accounting and other bodies.

We also have the local laws which they have to abide by, and now Solvency II.

“Trust International Insurance is a step ahead, because we are mostly ready for Solvency II”

World Finance: In terms of Solvency II, Christos, perhaps you can give us some detail about the technicalities?

Christos Christodoulou: As from the first of January 2014, the whole way of evaluating solvency in an insurance company will be changing. Depending on the speed things will change, it will affect the market, because due to the financial crisis we are going through the financial position of the different companies from the island has been affected. Solvency II makes things tougher; it corrects things, but it makes them tougher. So the timing of applying the Solvency II, and the speed with which it will be implemented, will change the insurance industry. Some of the players will not be able to take this rate.

This is again where Trust International Insurance is a step ahead, because we are not affected, and we are mostly ready for Solvency II. We are ready to implement all its provisions, and our assets are solid. Therefore we look to a future with a lot of prosperity, and we hope it will be turned to our favour.

World Finance: Christos, Mehran, Frixos, thank you very much for your time.

Christos Christodoulou, Fixos Savvides, Mehran Eftekhar: Thank you, thank you very much.

Mohan De Alwis on Sri Lanka’s infrastructure developments | Sri Lanka Insurance | Video

Posted on by World Finance

Mohan De Alwis explained earlier how Sri Lanka’s Insurance Industry Act will provide investors easier access to the Sri Lanka’s economic growth; now he explains the other investments that are going into the country’s ports and roads, to help businesses work better and support Sri Lanka’s seven percent growth forecast.

World Finance: You spoke last time about the ongoing infrastructure projects; tell us more.

Mohan De Alwis: Some of the better-known projects that we have are Hambantota, the port at Hambantota is being developed; there’s an airport that is being developed at Hambantota; at the same time there are a number of other ports, and among them the Colombo port extension is the more important project that we have. And there have been many power projects that have gone through. There have been hydropower projects that have been going through.

The road network project, which is the Katunayake Expressway. There are some highways that are coming up; the highway from Kottawa to the southern area, which is at the moment, the first phase is on. The Katunayake Expressway will be open very shortly.

So there are huge infrastructure projects that are going on at the same time.

“The growth rate in Sri Lanka has been phenomenal, but it requires infrastructure”

World Finance: And how is Sri Lanka Insurance working to support these projects?

Mohan De Alwis: We get involved as the insurer to the nation, with all these projects. We cover the insurance requirements of the construction, as well as the machinery, and workmen’s compensation areas.

World Finance: And how will this help businesses and improve the economy?

Mohan De Alwis: Any economy requires the infrastructure to be developed. In the past four years, the post-war era in Sri Lanka, after the third year war ended in 2009, there’s been many infrastructure projects. The growth rate in Sri Lanka has been phenomenal. We’ve had growth rates of 8.3 percent, 6.5 percent, and now this year we are targeting somewhere around seven percent growth. Now, all of this requires infrastructure. And with infrastructure projects coming through, other business ventures would be in a position to come in.

“Sri Lanka is tipped to be one of the best-growing countries”

World Finance: So what do you foresee for Sri Lanka within the next five years?

Mohan De Alwis: There will be lots of opportunities for foreign investors, and it’ll be a country that will boom, in my opinion. With these kind of growth rates, Sri Lanka is tipped to be one of the best-growing countries, and better countries to invest.

World Finance: Mohan, thank you.

Mohan De Alwis: Thank you very much.

Mohan De Alwis on insurance in Sri Lanka | Sri Lanka Insurance | Video

Posted on by World Finance

Sri Lanka’s insurance market is about to undergo wide-reaching changes. Mohan De Alwis, MD and CEO of Sri Lanka Insurance Corporation, talks about the impact that Sri Lanka’s new Insurance Industry Act will have on business, and how as Sri Lanka’s national insurer, SLIC offers more varied products for the Sri Lanka’s mass market.

World Finance: So tell us about the history of Sri Lanka Insurance Corporation – you have gone through some changes yourself?

Mohan De Alwis: Sri Lanka Insurance Corporation was brought in as a government organisation in 1962, January 1st 1962. And since then it has been coming through and facing a few changes.

In 1988, the industry was liberalised. There were lots of competitors that came into the market.

In 2002 the company went through a change when it was privatised; and back again in 2009, the ownership reverted back to the government.

“The Insurance Industry Act requires that life and general industries be separated, and separate companies be incorporated”

World Finance: How is the industry about to change, and how will this affect your clients?

Mohan De Alwis: The insurance industry is having the Insurance Industry Act. Which requires that both life and general industries be separated, and separate companies be incorporated.

A composite company like SLIC will have to go through this change. We would look at separating these two companies, forming two companies, and this has to be done by February 2015.

The second requirement that comes with the Insurance Industry Act in Sri Lanka is that by February 2016, these companies need to be listed in the Colombo Stock Exchange.

World Finance: What types of products and services do you offer your clients?

Mohan De Alwis: It’s a mixed bag of products. We’ve got endowment life policies, and you can couple that with the critical illness covers, surgical and hospitalisation, family protection, and that can be mixed together.

Then we have children’s products, investment products, and retirement products. That’s on the life side.

On the general industry, general insurance we have fire, engineering, personal accident, marine, bankers’ indemnity, workmen’s compensation, a whole host of products that we have.

“By February 2016, these companies need to be listed in the Colombo Stock Exchange”

World Finance: How does this offering differ from that of your competitors?

Mohan De Alwis: Being the national insurer, we always look at the mass market. I’ll give you an example: with regard to the migrant employees, Sri Lanka has a huge migrant employee population, which is incidentally the highest income earner, in terms of foreign exchange. So we’ve come up with a product for personal accident while they’re away.

Another factor that is very salient with us is that we’ve been able to pay the highest bonus for our life policy holders. Now, that is possible because we’ve got the highest life fund in Sri Lanka; at the moment it’s running at LKR 16bn.

World Finance: How important is staff training in delivering top quality products and services?

Mohan De Alwis: The insurance industry is a knowledge industry, and it requires qualified staff and also they need to be updated in the latest changes in the industry. There are very scarce insurance related professionals. Insurance professionals per se also are not freely available. Then you’ve got the actuaries, who are very scarce in Sri Lanka, so you need to train a good workforce, and sometimes train them even overseas.

“We’re looking forward to the listing, which will bring in many strategic partners”

World Finance: Tell us about some of the challenges you help your customers to overcome.

Mohan De Alwis: You need to understand the need of the customer, because there’s no common answer to all insurance problems, or insurance requirements. So what we do is, we have a good sitting with the client, understand their needs. The important thing is to do a good risk assessment and a survey, and make sure that we understand each other. And then we tailor the product to suit the client’s needs.

World Finance: And how do you give back to the community? What CSR projects do you have in place?

We take pride in preserving the culture and religion of our country. And also we do get involved in developing sports. Because we believe sports is important factor to develop people.

World Finance: And what does the future hold for Sri Lanka Insurance Corporation?

Mohan De Alwis: We have come a long way since 1962. We are a $1bn asset-based company now. We’re also a leader in insurance, and we are also already diversified into many other areas, such as hospitals, gas in energy sector, and now the latest is in the hotel sector.

We’re also putting up a hotel which is 475 rooms, and this is going to be operating in Sri Lanka with international operators. And so, we’re looking forward to the listing, which will bring in many strategic partners.

World Finance: Mohan, thank you very much for your time.

Mohan De Alwis: Thanks a lot.

Farhad Irani on banking in the UAE | Mashreq Bank | Video

Posted on by World Finance

As one of the UAE’s top financial institutions, Mashreq Bank is leading the way in terms of innovation. Farhad Irani, Executive Vice President and Head of Retail Banking Group, discusses the developments in smart banking in the region, and what the new code of conduct from the UAE Banks Federation means for the financial services industries.

World Finance: What are the major challenges facing banks in the UAE?

Farhad Irani: We see the population target market and the opportunities emerging and growing in the next 8-10 years. However, with this dramatic growth come challenges. Fundamentally, we’ve got changing consumer behaviours. Customers are moving significantly and fast towards digital channels. 75 percent of the existing set of mobile phones in the UAE are smartphones, and the penetration of smartphones to the population is about 1.3-1.5. Banks have to move with the times in developing interfaces that are more digitally inclined.

The UAE is a very interesting market; it has a target banking population of about 4.5 million that’s growing very fast, as I mentioned, perhaps 6.5-7.5 million in the next couple of years. But you have 51 banks, and about 30 of them are operating the retail banking space. So one can imagine the amount of competition. Finally, a very positive step forward for the UAE is the emergence of the credit bureau. But, as in any environment, when the bureau is initially launched, there is a certain amount of disruption. Disruption in the segments that are slightly over-leveraged.

World Finance: The UAE Banks Federation has adopted a code of conduct for its members. How do you see this impacting banking?

Farhad Irani: It’s a commitment to the customer, in that banks will operate in a fair, transparent manner, and that redress will be swift and just.

World Finance: Well Mashreq has achieved uninterrupted, profitable growth for the last half decade, so what would you say your key to success is?

Farhad Irani: 50 percent of its success comes due to its leadership. The other attributes to our success is, I think, we’re the right size. Because we are privately owned, we have all of 4000 people, we operate in 13 markets, we are the right size, and we able, nimble, agile, and we can deliver change pretty quickly.

World Finance: What unique services do you offer and how are they tailor made towards the customer?

Banks have to move with the times in developing interfaces that are more digitally inclined

Farhad Irani: Coming to a bank is not exactly the most exciting objective of one’s day. But what if this experience in the bank branch were akin to the experience one has when you walk into an Apple store? Touch, feel, the excitement, the game-ification. It’s these attributes that we brought into our branch. Bank loyalty is fleeting, especially in this day and age where competition abounds and it’s so easy to open another account online. At Mashreq we aim to hold on to our customers through thick and thin, through generations of customers if you will. And we’ve invested specifically in universal reward programs that allow the customer to get something back.

World Finance: Mashreq leads the way in terms of smart banking. Why is this important in the UAE?

Farhad Irani: The UAE has a bankable population that is wealthy, that is upwordly mobile, very educated, and just about everyone holds a smartphone and an ipad and a tablet. These consumers are worldly-wise, haven’t been raised in the UAE but come in from the west, from Europe, from Asia, from Australia, and they have to juggle many balls. They’ve got to manage their finances onshore and, at the same time, handle their finances back home.

Smart banking in Mashreq is usually termed as EQ: engage, experience, and evolve

At the same time, on the ground, Mashreq has 48 branches, and we have about just over half a million customers. If we keep increasing our branches to cater with growth, the economies of scale get disrupted. So a win-win situation emerges: what if we were able to cater to emerging and futuristic consumer needs by investing in the digital stream?

Smart banking in Mashreq is usually termed as EQ: engage, experience, and evolve. Our investments in technology are manyfold, but the most notable of them relate to what we’ve done with our branches. Three of them already, 10 of them before the first quarter of next year is out. In these smart branches, customers engage with digital wallscreens, where they explore services that the financial institution has to offer by hand gestures. When they walk into the branch, they have access to smart tablets. There’s no paper on the telecounter, the transaction is punched in through tablet, the transaction goes straight to the telecounter where the consumer goes and consumes the transaction.

If the consumer seeks advice, he walks up to a relationship manager. Microsoft aids smart tables instead of normal word furniture and the relationship manager actually takes the customer through many simulations. That simulation can be fitted into the customers needs in terms of affordability, return, yield, etc.

World Finance: And finally, you’re now looking to develop your services domestically and overseas, so what’s in the pipeline?

Farhad Irani: Dubai was created on the back of trade, Mashreq was created on the back of trade. You have a whole bunch of countries within the region that have growing trade ties with the UAE. This is what Mashreq leverages. We have a presence in over 13 countries at this point in time. Moreover, the prowess that we have in retail banking in the UAE, being the leading retail banking presenter of financial services in this market, we aim to leverage that capability, that skill set, that management team into other neighbouring countries that throw up big retail opportunities.

World Finance: Thank you.

Farhad Irani: It’s been a pleasure. Thank you.

Ho Ngoc Yen Phuong on oil in Vietnam | PV Drilling | Video

Posted on by World Finance

Over the past few decades, Vietnam has emerged as an important oil and natural gas producer in South East Asia. Ho Ngoc Yen Phuong, Vice President and CFO of Petrovietnam Drilling and Well Services Corporation, talks about Petrovietnam’s plans to invest $1.5bn per year in exploration and production activities, and how Vietnam’s new refineries will allow the country to become an exporter of oil products, instead of crude oil.

Kweku Awotwi on renewable energy in Ghana | Volta River Authority | Video

Posted on by World Finance

For the past 50 years, the Volta River Authority has been powering electrical energy supplies throughout Ghana. Having recently started to increase production on an international scale, its CEO Kweku Awotwi talks about where Ghana’s energy industry is headed, what Ghana’s growing renewables sector means for the country’s GDP, and how Volta River Authority is dealing with its investment deficit.

Lee Jim Leng, Lee Wai Sing, Cheah King Fui | Hong Leong Investment Bank | Video

Posted on by World Finance

Malaysia’s capital markets are booming: last year assets under management grew nearly 20 percent to over $150bn. Hong Leong Investment Bank has capitalised on this growth to expand into the region; its CEO Lee Jem Leng, CRO Lee Wai Sing, and Head of Treasury Cheah King Fui, discuss the challenges and opportunities in Malaysia, and the trends in the capital markets moving forward.

World Finance: Tell us more about this expansion.

Lee Jim Leng: OK, in terms of expansion, we have basically achieved what we consider ourselves in Malaysia the mature stage, where among our competitors our earnings have grown to a stage where we are fairly comparable to our competitors. So the next phase of growth that we are looking for in terms of expansion will be the regional markets, and the first being of course Singapore which is a place closer to home. And the next will be we’ll hope to work on with our sister company in Hong Kong, where we are hoping to use our same level expertise to build on our homegrown brand, and create the same level of business that we hope to achieve out of these markets.

“Our clients are looking to expand beyond the Malaysian shore, and we are there to expand along with them.”

World Finance: What challenges have you faced and how have you dealt with them?

Lee Wai Sing: Well, for the last couple of years I think the most challenging part is the increase in regulations. We have definitely a lot of guidelines to adhere to, for example there is Basel 3, and there is ICAP. So with that the cost of capital has increased, so for us to maintain the older rate, to do the particular transaction is getting more and more difficult because the margin has been compressed, and with that, as an investment bank where most of our assets are traded, you’re not the first to meet the net stable funding ratios and the Basel 3 liquidity requirements. It’s a bit hard because most of our deposits are mainly corporate sites, and for wholesale interbank deposits are not taken into account as stable deposits, or stable liabilities for that matter. And of course, on managing the volatility of the market, whether it’s credit or interest rate, is difficult for us as well because we do not really have a stable policy of default, which is published specifically for Malaysia, so for the assets class that we trade it in it’s very difficult to calculate the credit risk capital charge for the particular assets, unless we are doing a standardised approach, so that will make our cost of capital a lot higher. And with that of course, market competition would definitely decrease the margins that we are going to make, and I think moving forward is definitely going to be more challenging.

World Finance: Looking to the future, how is the industry going to change?

Cheah King Fui: Our clients are continuously looking at new ways of raising funding, as well as financing, and we are there to help our clients. We are the first to raise SPAC financing in Malaysia, in fact we did the first and the second SPAC in Malaysia, and our clients are also continuously looking to expand beyond the Malaysian shore. They’re expanding regionally as well as globally, and we are also there to expand along with our clients, and along with it to help them come up with innovative financing as well as fundraising. In terms of investors, they are also expanding beyond the Malaysian shores. That’s where we will come in to help them as well.

World Finance: There have also been opportunities during this process. How have you been able to capitalise on those?

Lee Jim Leng: We see that the market has recently been active with a lot of mergers among the big bracket banks, especially CMB, they just bought into RBS. MayBank, another dominant investment bank, have bought into Kim Eng. In the middle of all these mergers, we see a lot of competitors being disrupted by integrating the so called operations and cultures among the two entities. We saw a lot of opportunities where we can catch up with our competition and stay close with our clients, and during this process we’ve been able to successfully garner market share, and in this process also we’ve been able to actually bring some first-to-market initiatives. For example, we listed the first pac on the Bursa Malaysia, we also were the first to do a Tier 2 bond for an insurance company, which has not been done in the Malaysian market. So that helped us when our competitors are busy, for us to make some traction into the market and gain market share. So being opportunistic in this instance has actually borne us some first to market deals and in the process, also we listed one of the most innovative REIT and we actually one an award for that by Alpha Assets.

“In each of the markets that we operate in, we hope to be judged as one of the top few investment banks the industry.”

World Finance: So what are Hong Leong’s future aspirations, and how will you achieve them?

Lee Jim Leng: In as far as Hong Leong is concerned, we hope to build along with our commercial bank. As you’re probably aware, we are part of a bigger financial group that manages across a whole spectrum of financial services, as Hong Leong builds its footprint among the regions. As you’re probably aware, Hong Leong Bank has set up operations in Cambodia, we have a fully fledged licence in Vietnam, and we also have an associate, Bank of Chengdu in China. So as they grow, we hope to also be able to grow along with the financial group and expand into a relevant investment bank in the region. As far as investment bank’s aspirations, of course, in each of the markets that we operate in, we hope to be judged as one of the top few in the industry. As for what we have done in Malaysia, we are fairly happy with what we have achieved, and of course winning this award is one of those. But in terms of the market share, league table positions, we are very happy with what we have done and achieved for the last four years since we started in Malaysia, and so for the regional markets we hope to be able to replicate that, and we hope to be able to do just as well, and be able to make a significant presence and also to be an innovative financial services institution in each of these markets that we operate.

World Finance: Thank you.

All: Thank you Eleni.

Rob van Kuijk, Robert-Jan van Hoorn and Cliff Go on growth in Asia | Finles Capital Management | Video

Posted on by World Finance

The Netherlands is a leading financial centre, with hedge funds and alternative asset managers, ranging from start-up size to $10bn. Rob van Kuijk, Robert-Jan van Hoorn and Cliff Go from the Singapore Office of Netherlands-based Finles Capital Management discuss the huge opportunities of population and consumer growth in Asia, and how the Finles Lotus Fund is designed to capitalise on this.

World Finance: Rob, maybe you can start by telling me a little bi about Finles, and the unique services and products you offer.

Rob van Kuijk: We were founded as a company in the mid-70s, doing financial services. Over time we evolved to become only doing hedge fund services. Since recently – basically the last two years – we are giving consultancy services, which you see with more fund of hedge fund providers. They’re moving into this space of consultancy and advisory. We did the same, and today we’re delivering predominantly tailor-made services, in-house products for banks, pension funds, insurance companies, wealth managers; things like that.

“People do need to invest in Asia. That’s where the growth is”

World Finance: Robert, how do you go about your investment process?

Robert-Jan van Hoorn: The investment process is both focused on the investment side, as well as on the operational side. If you look at our due diligence process, we check numerous factors and items. So, the focus is on added value and underlying investment managers. There has to be skin in the game by the underlying investment manager, so they have to have an investment in their own funds.

We are conducting checks on the service providers of the funds, so there has to be a separate auditor, there has to be a separate administrator. So, it’s a lot of work – normally full due diligence takes around three to six months, so, you can imagine that this is a serious issue.

World Finance: And how do you approach managing risk?

Robert-Jan van Hoorn: We are absolute-return type of investors, so, the actual risk management framework depends on several things. So, for example, for our Finles Lotus Fund, that one has a higher risk toleration than, for example, our Finles Fountain Fund, which is a 100 percent fund of hedge funds, which invests globally.

But, for example, for the Finles Lotus Fund, it’s a hybrid product. So 75 percent is invested in long-only funds, 25 percent is invested in hedge funds, so with that 25 percent we are trying to manage our left-field risk. So during market stress this 25 percent needs to kick in, needs to make up the performance for the long-only funds in the portfolio.

If we look to the 75 percent which is invested in long-only funds, what we’re trying do over there is, we target absolute-return type of long only funds. So during market stress, if these fund managers have a top-down view of the market which is not that positive, then they can raise their cash balances, for example.

“75 percent is invested in long-only funds, so it’s predominantly trying to capture the betas in the Asian market”

World Finance: Rob, your Finles Lotus Fund will receive an award for Best Emerging Markets Hedge Funds, so can you tell me about the features of this fund?

Rob van Kuijk: Well, the Lotus Fund is not exactly a hedge fund in the way people think of the phrase hedge fund. It is predominantly long-only, so it’s predominantly trying to capture the betas in the Asian market. And by being long-only as Robert-Jan just said, 75 percent of the portfolio is pure equity-related.

It’s not only in fund of long-only funds, but it’s also for tactical trading in ETFs and things like that. But 25 percent of the fund is predominantly meant to cover the risk, because the Asian markets are always having sharp downsides.

With this fund, I think the most specific interesting thing for clients is that you’re talking about a multi-strategy fund in Asia, but it has daily liquidity. And that is something really unique that you hardly ever see.

World Finance: Cliff, over to you now; what opportunities and challenges do you see in Asia compared to the rest of the world?

Cliff Go: I think the challenges that you see in Asia is because of the rapid growth that we’ve seen over the last decade. The distribution of wealth, the have and the have-nots, cause a lot of tension. That has to be well managed, and obviously that’s a challenge. I think in countries like China, for example, where we have seen this growth, we see now that we have to see whether they can unlock value from social and government enterprises into much more of a commercial enterprise, without actually compromising the middle-class and the people who really work to achieve what the country can achieve.

Everybody knows that Asia is where the growth really is. Vast demographics, fast consumer growth, fast population growth, leads to opportunities. I think what we have seen in the past is very much that a lot of these countries are very export-oriented. I think much more going forward, is that we have to identify opportunities that relate to the consumer domestic consumption. And I think if we, together with our capabilities within Lotus, can identify those opportunities, it’s going to be an extremely opportune and exciting time to be part of.

“25 percent is to cover the risk, because the Asian markets are always having sharp downsides”

World Finance: Rob, finally, what differentiates the Lotus fund from other managers in your sector?

Rob van Kuijk: Well, the key thing as I said before, is daily liquidity. Clients can buy and sell on a daily basis, which is extraordinary for a fund of this structure.

Secondly, what’s very important is, people do need to invest in Asia. That’s where the growth is. The biggest part of this world is emerging, and emerging rapidly. If you look at the middle class, the growing middle class in Asia? It’s unbelievable. You’re talking about so many people emerging. So if you want to make returns over the long term, you need to invest long-only in Asia. That is absolutely a must for every portfolio.

What is interesting in this product is, you also have the downside protection. And I think that combination is very interesting for people.

World Finance: Gentlemen, thank you.

Rob van Kuijk, Robert-Jan van Hoorn, Cliff Go: Thank you.

Steve Troop on banking in Qatar | Barwa Bank | Video

Posted on by World Finance

The ‘Global Financial Centre Index’ has ranked Qatar as the top financial centre in the Middle East, with its GDP growth expected to reach 6.5 percent for the full year 2013. Barwa Bank CEO Steve Troop talks about the ways the Qatar banking industry is changing to meet the National Vision 2030, the challenges facing Sharia compliant banks, and the affect declining interest rates are having on banks in the region.

World Finance: So tell us how the banking industry in Qatar has changed in recent years and the role of Barwa in the national vision.

Steve Troop: The industry in Qatar is growing rapidly, it’s very competitive, it’s increasingly sophisticated, it’s increasingly international and internationalist in its approach and its attitudes. It’s very well capitalised, it’s profitable. The structural developments are of course part of the national vision, 2030; I think a lot of people tend to think of those developments as associated principally with the World Cup in 2022. Roads, schools, hospitals, the airport, a new port, electrification, electricity generation, desalination, that sort of thing. And of course, core to the national vision is this idea of an economy in transition, a move away form hydrocarbon dependence towards a more diversified economy, a knowledge based economy. So building Qatar as a regional services centre, as a conference centre, as a tourist destination, and as a base for light industry in service companies. The bank’s role in all of this is obviously to assist and support the major infrastructural commitments, but also to help finance some of the SME developments around these new industries.

“I think Qatar is in a remarkably fortunate position: it has both the plan and the wherewithal to execute that plan.”

World Finance: Qatar has one of the fastest growing economies but significant funds are needed to deliver the planned infrastructure projects, so what tough decisions does this mean for the country?

Steve Troop: I think Qatar is in a remarkably fortunate position in as much as it has both the plan and the wherewithal to execute that plan. The country has very very significant surpluses, principally through the export and sales of hydrocarbons. I think there are some issues that we need to tackle around the maturity of projects. Some of these are very, very long-tail commitments. Deposit bases tend to be an awful lot shorter of course, so that has structural challenges from a banking perspective. But other than that, I think we’re in great shape to take them forward.

World Finance: What makes Qatar an attractive destination for global business investment and enterprise?

Steve Troop: I think it’s a very business friendly place. It has superb communications, both physical in terms of connectivity, telecommunications, a relaxed and relatively liberal environment in the context of the Middle East. It has an established legal system, very very low or very little taxation indeed, principally for companies operating there. And indeed, very significant opportunities to participate in what’s going on in terms of a rapidly growing economy.

World Finance: What are the major challenges facing a Sharia compliant bank such as Barwan, how do you overcome these?

Steve Troop: The first one would be the challenge around short term liquidity management; the options available to Islamic banks in terms of short term deployment are considerably narrower than those available to conventional banks. The situation’s improving, of course; we’re starting to see shorter term instruments available to us for deployment, though it remains challenging. I suppose the second issue would be the question of consistency of the application of Sharia compliance and what constitutes Sharia compliance. There are no internationally recognised standards for Sharia compliance rule, we’re reliant upon the views of our scholars and our Sharia boards, and from time to time that does create confusion and disagreement as to what exactly is a Sharia compliance structure.

“Islamic banks are recognising the need to become increasingly sophisticated, and increasingly customer focused in their approach”

World Finance: How is the demand for Sharia compliant services developing and how do you see it evolving in the future?

Steve Troop: Certainly if one looks at Qatar, and Qatar is no exception but if one looks at the banking aggregates in Qatar, the Islamic aggregates are growing at a considerably faster rate than the conventional ones. In Qatar we’re up to about 25 percent of total aggregates now, almost a quarter of total aggregates are now Islamic, both assets and liabilities. There is clearly demand at both individual and personal level. Purchasing decisions are more personal, particularly in the SME area, business owners, owner-managers, do elect for Sharia compliant structures, and there are of course corporations, particularly government sponsored corporations that do prefer Sharia compliant structures. So it’s growing very rapidly indeed.

World Finance: How are Islamic banks developing when compared with conventional banks in the region, and what impact are the deflating interest rates having?

Steve Troop: The pressure on rates of course is universal, and that affects both conventional banks and Islamic banks. Islamic banks are recognising the need to become increasingly sophisticated, and increasingly customer focused in terms of the way they approach their businesses. Certainly from our perspective, our view is that Sharia compliance is central to what we do, but we also have to have a compelling customer proposition. Sharia compliance of itself is not enough to guarantee success. So a Sharia compliant bank, but also a good bank that meets customers’ needs and expectations in terms of service, sophistication, product range.

“We are selective, we are not a universal bank and have no ambition to be one.”

World Finance: Barwa Bank recorded strong growth to the first half of the year. What do you credit to this success and how do you plan to sustain this?

Steve Troop: I think we put our success down to a number of different things. I think we’ve been very focused. I think when you are a new entrant to what is already a congested and very competitive market place, you’ve got to have a differentiated strategy, and we’ve sought to be as differentiated as possible. We are selective, we are not a universal bank and have no ambition to be one. We’re not in mass market retail for example, there’s already plenty of capacity in that space. So we pick out areas where we feel we can compete, and compete as hard as we possibly can. Our retail banking proposition is very upscale, almost boutiquey, targeted very much at the mass affluent. We are a corporate bank that probably punches a little bit over our weight for the size that we are, and we’ve made a lot of progress over the last year or so in the Islamic capital markets, particularly through things like Sukuk issuance and that sort of thing. We feel there is a particular scope and opportunity for a dynamic approach to the development of Islamic capital markets, which we think are going to be very, very big and substantial in the years ahead.

World Finance: Steve, thank you.

Steve Troop: Thank you Nick.