Overcoming challenges and retaining four competitive advantages have kept Gulf International Bank in the lead
Gulf International Bank
) has always looked beyond the immediate horizon, seeking opportunities for expansion abroad. This global view was the driving force behind the creation, and continuous growth, of one of the Gulf’s premier financial institutions.
Today, GIB has a flourishing subsidiary in the UK as well as offices in New York. But the bright lights of the world’s financial markets have not dimmed GIB’s commitment to the GCC bloc: the bank was awarded ‘Best Investment Bank in the Middle East’ and ‘Best Investment Bank in Bahrain’ in the investment banking category of the 2014 Global Banking & Finance Review Awards, adding to an already lengthy list of recognition from the international financial community that includes being named ‘Most Innovative Investment Bank in the Middle East’ by The Banker magazine in 2012.
Here, Dr Yahya Alyahya, CEO of GIB, discusses the bank’s evolution and role as a cross-border financial bridge.
How would you place GIB in the context of Bahrain and the Gulf?
GIB was established as a conventional wholesale bank in 1975, during the first oil boom in the Gulf region. As one of the region’s first GCC-owned financial institutions based in Bahrain, the bank’s initial mission was to aid in the recycling of petrodollars given the limited investment capacity within the Gulf at the time. This was followed by the financing of ports, airports, industry and infrastructure, and today GIB has built up a broad spectrum of capabilities in finance and investment.
The bank has endured many of the challenges faced by financial institutions around the world, including the Latin American crisis in the 1980s, the Gulf War and the global financial crisis. In all instances strong support demonstrated by the bank’s shareholders enabled GIB to recover and continue growing. In 1999, GIB’s merger with London-based Saudi International Bank (which became GIB UK) added asset management and corporate finance to the portfolio of capabilities. This was followed by the launching of corporate finance activities in Saudi Arabia with the establishment of a subsidiary in the kingdom, GIB Capital.
Over time and in spite of the many challenges faced, GIB has retained four key competitive advantages.
First, it has an excellent footprint in the GCC region and strong relationships with top-tier clients, and we want to build on this.
Second, the bank has global outreach; GIB has been interacting in the international financial markets for a long time, and we want to capitalise on this as well.
Thirdly, the bank has developed niche areas such as project finance, a presence on the capital markets and in asset management – an area in which not many local and regional institutions are active.
Finally, deep penetration into Saudi Arabia has placed the bank in a favourable position for further growth and expansion in the GCC’s largest market.
These inherent advantages motivated our shareholders to adopt a new strategy in the aftermath of the global financial crisis. After a period of derisking and deleveraging to eliminate external vulnerabilities, we have been executing our new business strategy – to become the first pan-GCC universal bank.
This includes building on our existing wholesale banking expertise and focus on diversifying through developing relationship-based business in large and mid-cap corporate segments rather than long-term project and structured finance. We are also creating a new and sophisticated retail brand built on technology and innovation rather than the old brick-and-mortar model – which is not only outdated but also very expensive.
We are now in the process of designing products and services for our retail segment, as well as continually adding to our portfolio of innovative financial solutions for the wholesale segment.
Our healthy capital adequacy ratio of about 19 per cent and compliance with most Basel III requirements place GIB in a position of strength that will also enable it to successfully meet its goals.
How will GIB UK and the UK market overall contribute to GIB becoming a GCC-wide and worldwide universal bank?
GIB UK manages assets for institutional clients in the region. We want to leverage that expertise to create asset management in the region to complement that in the UK. We have the experience to market UK products here. Secondly, we want to build on our corporate finance capabilities to facilitate cross-border investments. 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.
In the context of bilateral relations, can we consider GIB one of the bridges that need to be consolidated between the UK and Bahrain?
Absolutely. It is one element of our three-pillar strategy: corporate, retail and asset management, and corporate finance. In all three areas we can leverage our presence in the UK to facilitate cross-border activity.