Those with a stake in the UAE’s financial services are growing increasingly confident that the market will continue on its good run of form, spearheaded by the country’s leading banks, whose aim it is to show that they can foster the industry onto greater things. In a time when corporate governance controls are testing the resolve of major banks in mature economies, UAE-based Abu Dhabi Commercial Bank (ADCB) is proof that its banking sector is entering a new era of responsibility.
The impressive performance of the UAE’s banking sector is there for all to see, though some have called into question the ability and willingness of the country’s banks to match rising corporate governance standards. “We are not regulated in terms of corporate governance”, says Rami Raslan, Vice President and Senior Corporate Secretary of ADCB. “Banks were exempted from the culpability of the code scope, and are waiting to be regulated by the central bank in that regard.” However, the example set by ADCB shows that there is a desire to match the progress made in governance by international banks on the global stage, and an understanding that, without sound corporate governance controls, the banking sector will struggle to sustain the impressive performance of years past.
The impressive performance of the UAE’s banking sector is there for all to see
Ahead of the game
Even in the years prior to the final implementation of the Securities and Commodities Authority’s (SCA) Corporate Governance Code, ADCB was formulating a strict corporate governance code of its own. “We worked with external specialists, including IFC, to help us comply with best practice standards and devise an action plan”, recalls Raslan. “Now we have a capable corporate governance framework in place and comply with the local regulation and, to a very far extent, International standards.”
As the winner of World Finance’s Best Corporate Governance in the UAE, 2015 Award, ADCB has demonstrated to others in the market that good governance brings material gains. “If a company is well governed, it will usually outperform its competitors”, says Raslan. And by looking to international standards and adopting them as its own, ADCB has attracted a considerable amount of international attention and investment.
The steps taken by ADCB prove that the UAE’s financial sector is beginning to come to terms with the importance of independent risk management, transparency, full compliance and a host of important governance concerns. And by looking to corporate governance success stories elsewhere in the world, the example of ADCB shows that there is a willingness to enact the necessary governance changes and improve the financial services sector’s reputation on the world stage.
“We have kept on self-regulating and kept an eye on what’s happening out there in terms of corporate governance codes. I appreciate that the culture is different, the market is different, not everything is applicable here, and we apply to the extent possible, but we maintain really high standards in that regard.”
As one of the UAE’s leading financial institutions, ADCB has been a fixture of the country’s financial services landscape for over 30 years now, and, in that time, managed to build an impressive reputation as a profitable and responsible enterprise.
Headquartered in Abu Dhabi, the bank is today a diversified full-service one, working in consumer banking, wholesale banking, and treasury and investment groups. As of December 31, 2013, the bank had a branch network of 50 in the UAE and over 560,000 retail and corporate customers to its name. With assets totalling AED 183.1bn ($49.8bn) and a net profit of AED 36.2m ($9.8m) in that same year, ADCB’s business is on a steep upwards curve as it looks to realise its ambition of becoming the number one bank of choice in the UAE. “In addition to its financial assets, there are certain intangible qualities that a bank has to have if it really wants to deliver sustainable returns for shareholders and play a valuable role in the lives of its customers [see Fig. 1]”, according to ADCB’s 2013 annual report. “At ADCB, we believe that few qualities are as important – especially when combined – as ambition and discipline. The way we understand it, ambition is the desire for achievement and the willingness to strive for its attainment.”
In short, the success of ADCB is rooted in its commitment to sustainability, which the bank sees as going beyond conventional business conduct and working continuously to support all stakeholders. Both integrity and innovation are vital parts of the bank’s corporate vision to become the number-one bank of choice in the UAE.
Internationalising the UAE
In a bid to support the bank’s vision, ADCB is taking major strides to bring sustainability management into the mix, chiefly by promoting accountability to and engagement with stakeholders. By ensuring the bank’s strategy is in keeping with its vision, agenda and operating principles, ADCB is a major part of a national push to ensure the Emirate becomes a shining example on the international business stage.
Whether for customers, employees, shareholders or the country at large, the bank strives to meet and even exceed stakeholder expectations, using sustainability as a catalyst for innovation and growth. In doing so, the bank also keeps to a number of guiding principles: responsibility, accountability, transparency and fairness, which each inform its approach to good corporate governance.
“I think our distinguishing factor is that ADCB focuses on governance because we want to and not because we have to, and this is what has kept us growing all the time”, says Raslan. “I see that people don’t correlate governance to money, but you can see that we’re totally transparent with our stakeholders and shareholders, which results in stakeholders trusting us. We see the business and commercial value of strong governance practices.”
A clear support framework
The corporate governance code at ADCB in itself is proof that the bank is committed to upholding high standards of corporate governance, and shows an in-depth understanding of how a framework of this kind can provide a basis for sustainable development, greater trust and financial success.
“From day one, we had great support from the board, who have backed us ever since. As we made our way further down the line of building a corporate governance framework, the benefits have been greater than we’d envisioned”, says Raslan. “Our meetings are transparent, the decision-making framework is transparent, and everyone knows who does what and when.”
Not only does the board meet regularly to communicate the bank’s goals, the information passed to them goes through rigorous checks to ensure it’s both relevant and easily digestible. And by ensuring that this level of transparency is in place at the top level, the rest of the organisation can more easily follow suit and, likewise, make responsible and transparent decisions. In essence, keeping to such high standards of corporate governance means that ADCB can more effectively foster a culture of openness and demonstrate to stakeholders that it can be trusted.
ADCB’s success is closely in keeping with a willingness to keep abreast of the latest developments in corporate governance and to introduce the parts that best serve the UAE market. And ADCB is proof that running a business responsibly with high governance standards brings value.