The Bank of New York Mellon recently opened a new branch in the Dubai International Financial Centre (DIFC) to serve more than 250 institutional clients in the Middle East and Africa region. The bank already has representative offices in Beirut, Cairo, Abu Dhabi, Istanbul and Johannesburg, but Hani A Kablawi, Senior Executive Officer of DIFC Branch, says that the new branch aims to relocate product specialists from New York and Europe who were serving the region to Dubai due to the fast regional growth in both wealth and sophistication of required services. In an interview with Emirates Business, Kablawi spoke about the strategy of DIFC branch.
Tell us about The Bank of New York Mellon's presence in the region?
We are covering a fast region from Pakistan to Morocco and from Turkey to South Africa. The bank has strong presence and long relations with major institutional investors in the region for over a century and we were serving our clients through representative offices, which were being run by generalists.
We are not newcomers to the region, but the DIFC branch will help as continue our products sets and prospects for our clients in a different fashion. With the recent regional developments, our market here needed product specialists to be close to our clients. We plan to relocate between 20 to 25 product specialists during the next six month and then we may hire local product specialists from the regional market.
We have more than 250 institutional clients in the region including financial institutions, investment institutions, corporate and institutional issuers of debt and equity, pension institutions, insurance companies, sovereign wealth funds, fund mangers and banks. We help those institutional investors to access global financial markets for both investment side and issue side. The bank's branch will be also targeting major institutional investors in the region as well as small ones who are growing very fast. We are interested in the increasing institutional investors and issuers.
What the DIFC branch will offer to regional clients?
We are the largest bank offering depositary receipts services globally and regionally. Around 83 per cent of debt and equity issuers in the Middle East and Africa region are our clients. We have 100 per cent in countries such as Egypt, Tunisia, Oman and Kuwait. We have 95 per cent in the market of South Africa and 93 per cent in the Turkish market.
The BNY Mellon is roughly asset manager with $ 1.1 trillion of assets under managements, including a considerable portion from the MEA region, which makes us among the top ten players around the world.
We have more than $20 trillion in assets under custody and administration and we offer services for $11 trillion in outstanding debt. Other banking products include asset servicing by supporting institutional investors and fund managers through giving them holistic view about their investment portfolios across all markets they are investing in. Our services also cover banks operating in the region including US dollar clearance, trade finance and treasury services.
We noticed global banks shifting their SWF's specialists to the region, is BNY Mellon relocation of staff here part of this trend?
Sovereign wealth funds are part of our clients in the region and we have relations with them from a long time, but the BNY Mellon does not have a separate division for SWFs. Our banking model depends on offering best practices to our clients so we focus on introducing the best products globally.
How do politicians see SWFs in the light of current credit crunch?
I think politicians are learning a very important lesson from the credit crunch. We saw politicians who made lot of noise about Dubai Ports acquisition, suddenly turned quiet, silent and even happy with the capital flow of SWFs to major banks in the US. Politicians learnt the lesson and understood the importance and benefits of SWFs as long-term investors.
At the end of the day, those companies and their employees are the voters who will elect them and this is becoming a critical issue because 60 per cent of the growth in the US markets depend on the flow of global liquidity to the US markets.
I think the real issue is that new SWFs, especially from China and Russia, are taking more aggressive investment strategies so the West is negotiating with historic SWFs to agree on a set of rules regarding transparency about their investment strategies so that historic SWFs will lead new comers to adopt the same practices.
Issuers of bonds, sukuk and equities had a long list of postponement and cancellations during the first half, what is the impact on your business?
That is true as issuers of bonds and Sukuk are part of our clients. The postponement and cancellations came due to tightness in liquidity and increasing deleverage in the global markets. However when the liquidity returns to the mar kets, the trend will go upwards again. This downturn is temporary. In our Dreyfus fund, which is a money market fund series, we witnessed a massive flow of liquidity during the last 12 months going to these funds because investors were leaving high risk and structured securities and shifting their investments to the short-term money market.
What is your expectation for the end of this stage?
The US house prices are down by 15 per cent and the BNY Mellon economists expect that the prices should be down by another 10 per cent. We hope that this will happen before the end of 2008 so the markets will start moving up.
PROFILE: Hani A Kablawi, Senior Executive Officer, DIFC Branch at the Bank of New York Mellon
Since joining The Bank of New York in 1997, Kablawi has held a number of senior positions in the international banking division both in New York and in the Middle East, with him being named Managing Director and head of Client Management for Middle East and Africa in 2006.
Kablawi is based out of the bank's regional management centre in the UAE and reporting to him are regional offices and staff in Abu Dhabi, Beirut, Cairo and Johannesburg as well as division staff in New York and London. Kablawi has client management responsibility for the GCC sovereign wealth funds and central banks.
Prior to joining The Bank of New York, Kablawi worked for HSBC, New York and Mashreqbank, New York. Kablawi earned a Bachelor of Business Administration in 1989 and a Master of Arts in Finance in 1990, both from The University of Iowa. Kablawi represents BNY Mellon on the practitioner committee of the Dubai International Financial Exchange.