CAIRO: Since its establishment in Egypt in 2006, Ahli United Bank Egypt S.A.E. has been working on creating an infrastructure for a strong, customer-focused business.
After purchasing the bank in August 2006, the management in Egypt spent the rest of the year and the first half of 2007 cleaning up its balance sheet and creating a foundation on which to build a modern financial institution.
The year 2007 has been a transitional one for Ahli United Bank Egypt.
“To make sure the bank is stable on a big capital position, we had to raise additional capital. At the end of 2006, we raised LE 370 million and used that exercise also to bring in IFC – the private-sector arm of the World Bank – as a shareholder, James Goold, CEO and managing director of Ahli United Bank Egypt, told Daily News Egypt.
Ahli United Bank B.S.C. is a Bahrain-based commercial and investment banking institution providing wealth management, retail, corporate, treasury, offshore and private banking services.
In August 2006, a group of investors led by Ahli United Bank purchased an 89.3 percent stake in Egypt’s Delta International Bank.
To comply with the standards of Ahli United Bank Group, the management team in Egypt “revamped the IT side and created a much stronger IT platform for launching products.
Goold continued, “We have completely revamped the bank’s policies and controls to create a type of governance that we – as a group – require to be within a bank. We hired people that brought in specific product and departmental skills an international bank should have, Goold said.
Once the basic infrastructure was set in place, the bank’s name was officially changed from Delta International Bank to Ahli United Bank Egypt on May 28, 2007.
Goold realizes that the bank is still new and that the competition in the market is fierce. Ahli United Bank Egypt has not set goals for a specific market share, he said, “We’re ambitious but we’re realistic in what we want to be here.
By the end of the year, Ahli United Bank Egypt hopes to have the basic infrastructure and products in place so that they will be able to run operations in a more “normal way in 2008.
It will take anywhere between 18 months to two years, he says, to create a corporate culture within the bank.
Ahli United Bank B.S.C. is geared towards growth through the development of a larger client base in the Gulf States and through its close partnerships with customers, staff and product providers.
The evolution of future mergers and acquisitions in the Gulf region remains central to the bank’s expansion strategy.
“The group’s strategy is to grow through acquisition. There are two types of markets, he said. The bank’s main market is the Gulf, and its “strategy is to own banks through acquisition in each of the countries that border the Arabian Gulf, Goold said.
The second part of the strategy is to own banks in other parts of the world that have a specific synergy with the Gulf, particularly the Middle East and North Africa. “Egypt is probably the best example and was one of [Ahli United Bank’s] prime targets because of such strong synergies between Egypt and the Gulf, Goold said.
Through studies, Egypt has proven beneficial for both sides of the banking business.
From the retail side, there is a large Egyptian expatriate population in the Gulf and from the corporate banking side there is a lot of interest from Gulf-based companies in doing business in Egypt, he said.
“An important part of our strategy is to capitalize on that, said Goold.
“We’ve already completed some large transactions between Gulf clients and Egypt. We work with colleagues in Bahrain, Qatar, Kuwait and Oman to encourage their clients to invest in Egypt, he added.
The key to starting a new “strong, domestic business in the highly-competitive banking sector is making sure the marketing is done properly and being able to identify opportunities, explained Goold.
“One of the problems banks will have while applying a Gulf-based strategy is making bank [employees] work across geography, he said. For example, to be successful in the corporate banking sector, it is important for the corporate banking officers in Egypt to work closely with their counterparts in the Gulf.
It’s no secret that Gulf investors are eyeing the Egyptian market, which is obvious by the series of major corporate transactions that have taken place recently: Barwa Real Estate, Damac, Emaar and Etisalat, among others.
Although some of the major players who have entered Egypt’s market are real estate companies, Goold said, “The focus is not on owning property, but more on the infrastructure side.
There is a wide spectrum of cooperation and investment opportunities, and “the interest from the Gulf is much wider than . property in the Red Sea, North Coast or New Cairo, he explained. “Most recently, we worked successfully with the Kuwaiti client KGL to finance the Damietta Port, he said.
The interest in Egypt stems from the nation’s focus on attracting foreign direct investment, a priority for any country trying to create new infrastructure.
“There is a lot of liquidity in the Gulf and it is wiser to invest it in Egypt than elsewhere, said Goold.
Although Damac, Emaar and Barwa have established niche investments in Egypt that do not necessarily cater to the masses, it’s important to mention that “KGL, Damac, Etisalat and Barwa are creating jobs [in Egypt] and bringing in new technologies.
“Consider how many Egyptian subcontractors are going to be working on KGL’s Port project in Damietta, he said.
Egypt is the most attractive destination for Gulf investors in the region because they “are quite excited by the reforms taking place, the growth in the economy, and the increase in population, which creates a big market, he said.
Egyptian businessmen see investment opportunities in the Gulf as well. “We are working with Egyptian companies that are setting up projects in the Gulf in the fields of cable manufacturing, he said.
