Mashreq CEO highlights growing role of Dubai as global hub for trade and finance
The Middle East & Africa day at Sibos began with a speech by Alain Raes, Chief Executive, EMEA & APAC at SWIFT, who then introduced to the stage His Excellency Abdul Aziz Al Ghurair, CEO of Mashreq Bank and Chairman of the UAE Banks Federation, for his opening address.
Mr Raes stressed the relevance of the region to the global economy and its significance to SWIFT’s business. “The increasing importance of the vibrant Middle East and Africa regions on the global stage is clear. Though they face challenges, their current and potential growth is obvious, and at SWIFT we are committed to supporting our customers within and outside the regions by driving discussion and debate about the opportunities and challenges and how best to tackle them. This first Middle East & Africa Day at Sibos is one way in which we are doing this, and I am sure the senior expert speakers and in-depth sessions will bring major value to our community.”
In his opening, His Excellency told the gathered audience that the UAE represents calm in an often turbulent region, and praised the “visionary leadership” that had made this possible.
“I am happy that by coming to the UAE you have had a first-hand opportunity to see that the GCC in general, and UAE in particular, is an oasis of stability and growth within this troubled region. The remarkable social and economic transformation of our region in the last few decades is an outstanding success story of what political stability, good governance, and the pragmatic economic policies can do to the growth of the region,” said H.E. Abdul Aziz.
“Of course, we have been blessed with natural resources in the form of oil and gas which has helped us to accelerate the economic growth. However, the transformation we have gone through in such a short time would not have been possible without the visionary leadership and the stable political system,” he added.
His Excellency went on to talk about the GCC region’s economic growth and focus on increasing diversity. “With our GDP at US$ 1.56 trillion, the GCC is the 12th largest economy in the world. Though oil and gas continue to be the mainstay of GCC economies, over the last few decades all the countries within the bloc have made very conscious and successful attempts to diversify the economies. For example, in the UAE non-oil economy constitutes over 65% of its annual GDP. Tourism, transportation, manufacturing, retail trade, services and real estate are major contributors of non-oil trade in the region.”
GCC exports have doubled since 2009 to reach US$1 trillion, he added, and by 2020, the region is expected to be a US$2 trillion economy. This growth is supported by the world class infrastructure of the UAE and its strategic location between east and west.
His Excellency then went on to outline the importance and relevance of the financial sector to the UAE economy. The UAE banking sector is the largest in the Arab world – with banking sector assets of 1.3 times its GDP.
More importantly, after the financial crisis, UAE governments took fast action to ensure the region’s banks recovered quickly. The Ministry of Finance disbursed US$19bn as subordinated deposit to UAE banks which provided the required liquidity to the market and boosted capital adequacy ratios of the banks by at least 5%, which took UAE banks’ capital adequacy to more than 20%. The UAE Central Bank also set up an additional liquidity facility of US$14bn, available to banks in case they needed it.
“Their instant actions stabilized the banking sector quickly and protected it from further shocks from the global economic meltdown, which continued to jolt the global banking sector for the next few years. As UAE economic growth bounced back in 2010, the banking sector was the first one to recover and since then has been growing steadily. Most of the banks have already returned the subordinated deposit of the Ministry of Finance, while the liquidity facility made available by the central bank was sparingly used,” said His Excellency.
As a result of these actions and a very proactive banking regulator, the UAE has a robust banking sector, he added. “Central Bank always maintained high standards for capitalization of the UAE banking system, and has encouraged the banks to maintain higher than minimum required capital. The minimum regulatory Tier-1 capital requirement is 12% for UAE banks, which, is one of the highest in any banking system. However, in 2012 the average Tier-1 capital of UAE banks were 17.6% which reflects the strength of the UAE banking system.
Sido Bestani, Head of Middle East & North Africa, SWIFT, said. “We are honoured to have His Excellency speaking at Sibos today. It is evidence that Sibos creates a great platform which brings together the key people from across the region and around the world to discuss the topics that are shaping the future of the global financial industry.”
Photo-Daniel Cheong (used with permission)