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Taking commercial banking by storm

Article - March 7, 2013
Established in 1960, Gulf Bank of Kuwait has certainly seen its share of ups and downs in the past five years, yet has remained true to its focus on local and retail commercial banking
It is this steadfastness that differentiates Gulf Bank from the competition and has made it the fourth largest lender by market value.
“We do not aspire to be an asset manager, a broker, an Islamic bank or an insurance company,” says Michel Accad, Chief General Manager and CEO of Gulf Bank. “We aspire to be a commercial and retail bank and to dominate locally; so we don’t have aspirations overseas either. That has allowed us to offer our commercial and retail clients a level of service that I think is pretty unique. 
“There are no banks in Kuwait or the entire Middle East – and I would assume that there are very few banks internationally – that can offer a customer a loan the same day they make the application. 
“When I say the same day it doesn’t mean the loan is approved the same day; it means that you get the funds in your account the same day. It doesn’t mean that your credit card is approved the same day; you actually get your card the same day. If you’re approved for a car loan, you get your car keys the same day you apply.”
Unsurprisingly, customer reactions have been overwhelming. 
Mr. Accad was brought in as CEO in mid-2009 as the bank was climbing out of a $1 billion loss caused by clients defaulting on euro-linked derivative contracts, used for speculative trading or hedging. 
“We do not aspire to be an asset manager, a broker, an Islamic bank or an insurance company. We aspire to be a commercial and retail bank and to dominate locally.”

Michel Accad,Chief General Manager and CEO of Gulf Bank
“It was a failure of the governance structure and a failure of the risk management, and of course a failure of the audit and controls to detect the problem,” he explains. 
With Mr. Accad at the helm, the bank devised a four-tiered, two-year strategic plan. “The first pillar was to build a ‘fortress’ balance sheet… and having a governance structure and risk management that would make us essentially impregnable,” he says. 
“The second was to ring fence the legacy problems from the new opportunities.” By this, he means that rather than having the same office managing both, Gulf Bank separated the good accounts from the bad ones, thus allowing some units to focus on bringing in new business and others, to work on recoveries.
“The third pillar was about refocusing on our core competency and exiting all peripheral activities that actually had cost us all these huge losses,” says Mr. Accad. Proprietary trading and non-client based activities, for example, were dropped, sold off or left to lapse. 
“The fourth pillar was something that we called differentiating ourselves from the competition through service excellence,” he continues. 
It took Gulf Bank one year to put the IT infrastructure in place and to remap all its processes, but the end result was the “We Promise” campaign of delivering same-day loans.
“We can now say that on those four key pillars we have really delivered on practically every objective that we had set for ourselves,” claims the CEO. 
Furthermore, the bank’s results demonstrate that these efforts have paid off. In 2011, Gulf Bank posted a net profit of KD30.6 million ($108.4 million), up from KD19.1 million the previous year. 
Perhaps most promising is the fact that Gulf Bank was the only bank in the region for whom Standard and Poor’s raised their credit rating (from BBB- to BBB) and outlook (from stable to positive). 
Recent bank awards include “Best Bank in the Retail Sector” from Arabian Business magazine in 2011, “2012 Best Foreign Exchange Bank Provider” in Kuwait by Global Finance, “International Excellence in Retail Financial Services” award from The Asian Banker, “Best Retail Customer Service” from The Banker Middle East, and “Quality Recognition Award” from Citibank.