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GULF INTERNATIONAL BANK

Bahrain’s key role as GCC finance centre

Interview - January 17, 2017

Financial corporations have been at the forefront of diversification in Bahrain and have seen steady increase in their percentage contribution to GDP over the past decade. Even though the sector was tested by the global crisis, its size and track record provide grounds for optimism about continued expansion over the coming decade. For financial institutions like GIB, Bahrain offers a highly-skilled bilingual workforce, low operating costs and excellent connectivity, with strong access to Saudi Arabia.

ABDULAZIZ A. AL-HELAISSI, CHIEF EXECUTIVE OFFICER OF GULF INTERNATIONAL BANK
ABDULAZIZ A. AL-HELAISSI | CHIEF EXECUTIVE OFFICER OF GULF INTERNATIONAL BANK

How is the 40 years of financial infrastructure helping to maintain Bahrain’s key role as a finance center?

The excellent legal backdrop offered to Bahraini financial institutions by the Central Bank of Bahrain (CBB) is an important advantage in the post-financial crisis era. In fact, Bahrain’s regulatory environment is highly respected with the CBB considered one of the best in the region. This is amply evident in recent years. Despite the difficult consequences of the global crisis, Bahrain’s financial sector has continued to operate successfully, while the CBB has maintained a proactive initiative to manage the challenges - for example, encouraging consolidation of the retail banking sector.

Bahrain is also a leading center for Islamic finance and the local authorities in fact remain very committed to continually enhancing the regulatory framework and market practices in this still evolving segment of financial services.

For financial institutions like GIB, Bahrain’s solid legal backdrop is a key reason to be headquartered here. This is more so given that we’re in an era of seemingly burdensome global regulation and in this regard, the CBB’s measured approach in implementing the still-evolving regulations is highly valued.

In addition to the tried-and-tested regulatory framework, Bahrain also offers a highly-skilled bilingual workforce, low operating costs and excellent connectivity, across the region, with particularly strong access to the region's largest economy, Saudi Arabia. All these aspects continue to give Bahrain a regional competitive edge as an ideal location for financial corporations.

 

Considering that Bahrain’s financial sector is mature compared to other neighboring regions, do you believe that there are still opportunities available in the sector?

Financial corporations have been at the forefront of diversification in Bahrain and have seen a steady increase in their percentage contribution to GDP over the past decade. Even though the sector was tested by the global crisis, its size and track record provide grounds for optimism about continued expansion over the coming decade.

The growth contribution of finance continues to increase in parallel with the liberalization efforts undertaken by the government. The process of reform is expected to deepen going forward and this will provide more opportunities for the financial services sector.

The growth of financial services in Bahrain has been partly due to the success of Islamic banking, an area where the country has emerged as a regional hub. The growing role of Shariah-compliant finance in the Middle East and beyond is likely to make it a key element in the further growth of financial services in Bahrain.

Bahrain also offers opportunities in the ancillary financial services area, including ‘fintechs’. The country has developed a large and diverse national skills base and a strong infrastructure for financial services. Ancillary service provision can further benefit from the most competitive operating costs in the region.

 

Gulf International Bank (GIB) very recently revealed its new corporate identity coinciding with the bank’s 40th anniversary celebrations. You have said, “As part of a GIB strategic review, we identified a need to refresh our brand and visual identity. GIB has grown steadily over the past four decades to deliver bespoke financial services.” What is the importance of a unified brand identity across the markets you deal with and how is it aligned with your growth plans?

The unified brand identify is aimed at bringing the GIB Group closer together. Allowing us to further cement ourselves as a holistic financial institution partner that can meet all our clients’ banking needs.

We continue to progress in our transformation of GIB from a Merchant Bank to a Universal Bank. The change helps keep management and staff focused and aligned to position GIB as the preferred regional partner in delivering innovative solutions. As part of a GIB strategic review, we identified a need to refresh our brand and visual identity. GIB has grown steadily over the past four decades to deliver bespoke financial services. With a strong unified brand identity and an exciting program of change implementation ongoing, we are better positioned than ever to maintain our leadership in the provision of bespoke international banking services, helping our clients thrive by working together. Through 40 years of growth and achievements, GIB has always embraced progress and development. This is now personified in a refreshed brand, designed to complement our strategic ambitions in a challenging financial environment.

Lastly, the Value Proposition of GIB’s Wholesale Banking is predicated on bespoke solutions. We hope that the new Brand Identity helps convey the message of what we have transformed into and stands out.

 

The global banking industry currently spends $500 billion (Dh1.83 trillion) on technology. A Boston Consulting Group study shows that over the next five years, corporate banks that remain digital laggards could see profits drop by as much as 15-30 per cent relative to their digitally fast-moving competitors. GIB is not lacking behind, where part of your services is the high-tech banking services, Meem, which utilizes technology in an innovative way. Can you tell us more about how innovation is a key part of GIB’s growth?

We realized early on that the customer profile has evolved and their expectations from financial institutions have increased. While their product requirements remain the same, the way they do banking and their service expectations have evolved demanding institutions to become more available anytime, anywhere. Thus, we have created Meem. Combining online and mobile banking with state-of-the-art physical locations, Meem caters to the Kingdom of Saudi Arabia's increasingly sophisticated retail banking segment, offering convenience, freedom of choice, and exceptional value for money. Meem services are supported by three retail stores and nine ‘nano-stores’, which together create a unique retail experience for its clientele.  These futuristic customer stores are all touch-screen with virtually no paper work required. It is a complete departure from the traditional banking branch. By eliminating the costs associated with large physical branch networks, Meem generates significant savings, which are passed on to customers via higher rates of return for deposits and lower service charges.

Furthermore, technology has evolved and continues to evolve faster than anything experienced in the past decades. This has resulted in a lower barrier of entry allowing fintechs and smaller banks to penetrate the market and capture market share, ultimately cannibalizing banking income. Moreover, technology has also evolved to allow banks to become more agile in their operations and service/product delivery. As such, when formulating GIB’s strategy it was agreed from the outset that innovation is a strategic focus area that we would continue to foster in order to remain ahead of the pack.

 

Today, GIB has a flourishing subsidiary in the UK as well as offices in New York. Former CEO Dr. Yahya Alyahya, in an interview to The Worldfolio, told us, “We want to help our regional investors, especially those in areas like real estate and trade finance, to have access to the UK market, while also helping UK investors who want to invest in this region.” GIB UK was also recently awarded Bahrain Asset Manager of the Year and Regional Equities Manager of the Year at the MENA Capital Markets Summit and Awards 2015. What is the significance of the UK market as the preferred financial services partner for GIB?

The UK market is the preferred financial services partner for GIB due to the strong links with the GCC region. In regards to the financial links, the UK financial services industry is an important avenue for the GCC region to manage oil wealth whereby London has long been the conduit through which such monies were channeled into investments. In recent years, London is providing two-way flows: mobilizing GCC capital into infrastructure and investment banks in the UK, as well as mobilizing UK and other non-Arab capital into infrastructure in the GCC region.

London has been the most significant non-Arab center for GCC financial services and the UK government has been working closely with the domestic financial industry to encourage GCC investment

In regards to GIB’s link to the UK, GIB’s Asset Management division is managed through Gulf International Bank (UK) Limited, [GIB (UK)], a wholly owned subsidiary of GIB. London-based GIB (UK) started life in 1975 and has been managing portfolios on behalf of clients for nearly forty years. GIB (UK) has scale, managing close to $13 billion of assets on behalf of institutional clients, making us the largest institutional investment manager in the Gulf. In the UK and Globally, our high level of service, attention to detail, and commitment to long-term partnerships with our clients ensure delivery of the appropriate solutions to match individual requirements. This approach, coupled with our track record, has helped us develop and maintain strong relationships with our investors, some of whom have been doing business with us for more than 30 years.

 

How would you describe GIB as the perfect ambassador for GCC and Bahrain in the UK?

While the situation with Brexit is not ideal, the UK continues to be a global financial center and a gateway to the European region, creating a strategic advantage for GIB. First and foremost, for the access of high caliber talent that it allows for. Second the regulatory environment and third the pre-eminence of the British court system in upholding the rule of law, including the protection of creditor and shareholder rights

Having our UK presence supported by GIB’s regional presence across the GCC, the holistic financial services that we offer as well as our distinguished capability, this allows us to position ourselves as the financial services firm that regional investors prefer when channeling their investments into the UK as well as UK investors prefer when looking to do business within the GCC region.

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