Banking & Business Review by Sterling Publications

January 2009

Vol. VI. No. 40 MARCH 2009

Editor’s note

Editor K Raveendran

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consulting Editor Matein Khalid

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Publisher & Managing Director Sankaranarayanan

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Director Finance Anandi Ramachandran

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Editorial Staff Writer Ambily Vijaykumar

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Reality check

ny crisis demands responses and attitudes that are in accordance with the situation on hand. As such, the shifts that are taking place in the marketplace provide some insight to the gravity of the current crisis. The implications are not restricted to just demand-supply or profit and loss: there is apparently nothing that is outside of its purview, inter-personal relationships, family bonds, social values all included. Dubai real estate has been swept full steam into the trail of devastation left by the financial tsunami. So, the response has been equally drastic. The unprepared and the weak-founded have taken a very heavy toll and those who are left behind now have to come up with appropriate action so that they can hold out on the long haul. Thankfully, the process has already started. Dubai’s real estate players have realized that they have to pull together and change their ways to get out of the mess that they find themselves in today, part of which is created by the global crisis, but an equally important part is of their own making. It is time for a reality check for the banks as well. The pickings of the past few years were too good to last and the banks seem to be quite ill-prepared. They have simply gone into a shell, with their response to the emerging situation bordering on panic. But for them to survive meaningfully it is imperative that they come out of hiding. It is gratifying that there are at least some positive signals, which is good for themselves as much as it is for the others.

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CONTENTS COVER STORY

Shake-up, shape up banks rethink strategies to stay aloft during distress times

24 HOSPITALITY Enter the economy traveler Survey shows executives will travel less in the next 12 months

24 REAL ESTATE onn a strict dieting course Dubaiâ&#x20AC;&#x2122;s property sector is becoming leaner and fitter

March 2009

24 COMMODITIES Fewer tourists to buy gold Dubai jewellery trade braces for lower sales as financial crisis hits tourist flow

24 COPING UP cash is king Companies tighten the belt as meltdown begins to bite

24 FOCUS caught napping again S&P chief says ratings are about ‘default’ and not market value

24 WELATH no excitement yet Sovereign wealth funds think it’s too early for bargain hunting

24 MARKETS ripe for long-term value seekers Markets continue to be weighed down by adverse conditions

24 INTERNATIONAL Practical to be tactical It’s highly rewarding to remember trees don’t grow to the sky

March 2009

ROUNDUP Dubai as hub for pearl industry

he pearl industry believes that Dubai can complement its status as the gold and jewellery hub by serving as a base for the global pearl industry as well. Industry leaders cite Industry leaders cite Dubai’s positioning as the ideal location and the presence of Dubai Pearl Exchange as the ideal platform to coordinate such an initiative given its neutral positioning and ability to drive fundamental projects. In fact, the Dubai Pearl Exchange (DPE) is committed to establishing a working committee by inviting the participation of industry leaders from key producing regions to develop a strategic plan that will promote the interests of the global pearl industry among the various stakeholders. Assurances in this regard came during the two-day World Pearl Forum, organised by the Dubai Pearl Exchange, a subsidiary of the Dubai Multi Commodities Centre (DMCC) in Dubai recently. The industry has called for Dubai to take a leadership role in driving the future collective growth of the global pearl trade. According to the organizers, the event proved successful in achieving the objective of uniting leading pearl industry professionals for the first time. Stressing the need for greater coordination among the diverse types of pearls represented by the global pearl industry, participants from across the world called for action from industry leaders to ensure effective positioning of pearls as a division amongst the jewellery sector. According to Ahmed Bin Sulayem, Executive Chairman, DMCC said the first World Pearl Forum has injected a positive note through a commitment to collaboration on the part of the world’s major producers and industry decision-makers. Dubai’s geographic positioning and DMCC’s commitment to the pearl trade are factors in our de-

March 2009

cision to spearhead and proactively establish the new international working committee for pearl promotion, he said. Tawfique Abdullah, Chairman, Dubai Gold and Jewellery Group, said the time is right for all pearl producers to work together and with traders towards a single coherent strategy for pearls. At the centre of the future consuming economies, Dubai is ideally located to co-ordinate and drive such a strategy, he said. Echoing the suggestion for creating a universal support group, Akshay Kumar Sharma, CEO, Lucky Star Jewellery Expots Ltd, Rosy Blue Group of Companies, said there was a strong case for the pearling industry to unite so that it can overcome the troubles of these times. The gold and diamond industry comprises many well-established, long-standing bodies and forums that unite traders and producers but there is an absence of a global forum for members of the pearling trade. The forming of a working committee is needed to provide direction and leadership to the pearl industry, he said. Also recognised during the forum discussions and presentations was the need to establish a universal language and set of definitions that would facilitate in educating both retailers and consumers about all types of pearls available. Sonny Sethi, President, Cultured Pearl Association of America (CPAA) explained: “Neither the retailer nor the consumer completely understand pearls and it is important that producers work together with the trade to educate consumers on the different types of pearls to create a stronger demand. Trust and reliability are important aspects of any customer relationship, especially for jewellers, and forming a committee who will work on and in-

troduce a universal grading system by providing expert certification for pearl strands will lead to a new layer of confidence in their quality.” Gaiti Rabbani, Executive Director, Coloured Stones and Pearls, DMCC, invited leading pearl producers of South Sea, Tahitian, Golden, Freshwater and Akoya pearls to be part of the first-ever global focus group for pearls. “Given Dubai’s neutral position in the pearl industry, DPE is pleased to take on the responsibility of initiating a cohesive working group dedicated to promoting the interests of the global pearl industry,” she said. “Moving ahead, we look forward to garnering the expertise from the leading pearl producers of the world to create this working committee. Their combined knowledge and long-term experience will go a long way towards directing future growth strategies. With the support of international pearling companies and industry experts, the Dubai Pearl Exchange hopes to coordinate this working committee in the coming months.” The World Pearl Forum witnessed interesting debates and presentations from over 25 international speakers in front of a global audience of over 200 participants.

G Electronics is expending increasing R&D budgets as part of its strategy to weather the current economic storm, along with a focus on green technologies, the group’s global CEO Yong Nam indicated in Dubai. Yong Nam, who was on a visit to Dubai, said his company was seeking to turn the ‘crisis into opportunity’ by maintaining product leadership and to grow market competitiveness the company would intensify marketing, branding and design efforts. “Every company –- not just LG -- has been affected negatively by the economic downturn,” said CEO Nam, who was behind the successful turnaround of LG Telecom during the Asian Financial Crisis of 1997. “The poor performance of many global companies in the last quarter of 2008 was a wake-up call that we needed to take drastic actions, not just safe ones.” LG has intensified its efforts to increase market share despite the volatile economic situation. To achieve this, the CEO said the company will boost its focus on investing in future growth engines such as solar power, commercial air conditioners and business (B2B) solutions. LG has also reorganized its business portfolio to focus on areas with longer-term growth potential, profitability and partnerships will continue to be a key element of the company’s marketing activities to elevate its brand position. LG has established a Crisis War Room (CWR) to bring together the group’s five business units, eight regional headquarters and executives to implement and manage the company’s aggressive business plan. In just three months the CWR, with the collaboration of each of the company’s business units and company divisions such as supply chain management, marketing, procurement, hu-

LG seeks to ‘turn crisis into opportunity’

man resources and finance, has identified and developed 11 key action items, according to Nam. Business units have

curement system, which includes everything from raw materials to investment in facilities, financial services and recruitment. The efforts to improve its cash flow have already resulted in reduced inventory, increased liquidity, optimized supply chain management and a more consolidated, efficient purchasing process overall, he pointed out. To cement its position as a global company, LG will continue to direct significant resources toward improving standards to global organisational levels. Efforts currently underway include improving its HR system, reorganizing business portfolios, focusing on customer-centric processes, recruiting and retaining global talent, eliminating unnecessary costs and continuing to foster technology and design innovations. LG now has nonKorean executives occupying five of

been instructed to establish task force teams to take responsibility for managing the cost-saving initiatives. LG is targeting a reduction in expenses of more than $2 billion in 2009. This company-wide initiative, which includes headquarters and all 82 subsidiaries around the world, also applies to manufacturing and indirect costs. Nam said globally LG has been working to further improve its pro-

its seven highest positions and has recruited approximately 200 other professionals around the world to oversee marketing, supply chain and procurement, Nam said. “These initiatives will enable LG to improve both growth and profitability over the long-term, regardless of the economic climate,” he remarked. “Becoming a stronger global brand will be a natural outcome of this effort.”

Yong Nam global CEO , LG

March 2009

Islamic banks resilient, but face risk: S&P

ulf Islamic financial institutions and takaful companies are feeling the repercussions of the current global financial market disruption less than most of their conventional counterparts because Shariah law prohibits interest-based financial products, according to a new report by Standard & Poor’s Ratings Services. “IFIs didn’t invest in the structured products that have hampered many conventional banks’ financial profiles and performance,” said Standard & Poor’s credit analyst Mohamed Damak in the report, titled Rated Gulf Islamic Financial Institutions And Takaful Companies Have Shown Resilience To Global Market Dislocation, But They Are Not Risk Immune. “And most IFIs should be equipped to weather the financial downturn and keep the effects on their financial profiles at manageable levels.” S&P said it expects takaful and retakaful insurers to continue to resist the toughening market environment. The agency attributes their resilience to sufficient liquidity flows--in part due to reportedly higher new business-to service normal claims levels, and to capital adequacy, which, despite being affected in the current climate, remains supportive of the ratings across the sector. Still, Standard & Poor’s notes the squeeze that market conditions are putting on many Islamic banks and takaful insurance companies. “We see the liquidity dry-up, mounting pressure on the real estate sector in the Gulf Cooperation Council countries, the sharp correction in regional stock markets, and certain investments made by IFIs--mainly investment banks--in European or U.S companies and real estate as the main sources of stress,” said. Damak.

March 2009

Like their conventional peers, IFIs stand to post weaker financial performance and asset quality indicators in the coming quarters, the report said. S&P feels that rated IFIs’ financial performance will deteriorate because they are expected to book some market-related provisions covering their exposure to the dropping values of stock markets and to Shariahcompliant investment products (mainly sukuk notes and funds). The anticipated slowdown in loan growth, the inflated cost of funding because of tight liquidity, and the increased cost of risk in the Gulf region also stand to test IFIs’ performance and constrain their growth. Liquidity management is challenging for IFIs due to the lack of liquid Shariah-compliant asset classes. “We understand that IFIs’ instruments for managing liquidity are scarce compared with those of conventional counterparts. “In our view, IFIs could take advantage of the current challenging times to innovate and broaden the offering of acceptable instruments for liquidity management,” said Damak. Following the liquidity crunch, total sukuk issuance worldwide reportedly declined to $14.9 billion in 2008, compared with more than $34.3 billion a year earlier. Still, S&P continues to foresee long-term positive prospects for the sukuk market, with sustainable growth poised to come from the increasing popularity of Shariah-compliant financial instruments, governments’ increasing openness to Islamic finance around the world, substantial investment and financing needs in the Gulf, and issuers’ desire to tap investors from the Middle East and Muslim Asia.

Leading Indian bank expands DME technology partner launches upgraded software operations

rading Technologies International, provider of trading software for the derivatives trade, announced the launch of a new version of its market-leading X_Trader adding new features that enhance functionality, usability, deployment and user administration. Trading Technologies, which is the technology partner to Dubai Mercantile Exchange, provides trading software and services facilitating direct access to the major international derivatives exchanges in Chicago, New Jersey, London, Frankfurt, Singapore and Tokyo, besides Dubai. The company supplies it solutions to investment banks, proprietary traders, brokers, Futures Commission Merchants (FCMs), hedge funds and other trading institutions. Headquartered in Chicago, Trading Technologies maintains a worldwide presence with offices in New York, Stamford, Houston, London, Geneva, Frankfurt, Singapore, Hong Kong, Tokyo and Sydney. The regional expansion plans include the move to set up an office in Dubai, the company’s marketing executives told BBR. “In this tough economy, traders are demanding more and more from their trading platforms. We have to stay ahead of the curve and innovate every day. This new version of X_Trader incorporates a number of cutting-edge enhancements and should give our customers an advantage,” according to Harris Brumfield, CEO of TT. X_Trader 7.6 significantly improves performance across all ma-

jor functional areas, including price updates, order handling, contract loading and workspace opening, the company said. The new version benefits from TT’s upcoming PFX price protocol architecture, which maximizes the speed of price delivery, minimizes the size of price messages, reduces client interactions with the price server and achieves faster price recovery in network outage scenarios. The breakthroughs in PFX design and architecture have produced greater than a 10-fold increase in data throughput capacity while further optimizing machine resources, a company statement said. It said X_Trader 7.6 also provides traders with additional market insight and decision support by adding new ways to filter and manipulate the display of market data, price movements and specific trading activity at the most detailed level. Any X_Trader user could potentially benefit from these enhancements, which include: • The ability to highlight large trades and apply different filters to multiple products in the Time & Sales window. • “Live Only”, which when enabled will display only those contracts with an active bid, ask or last traded price in the Market Grid window. This feature is especially useful for options and energy traders. • Usability enhancements that make it easier to add, subtract, highlight and manage data in the Market Grid window. • Advanced search capabilities to more easily locate spreads, strategies and options in the Market Explorer window.

tate Bank of India (SBI), which has set up office in DIFC with a category 1 licence, is launching operations of SBI Mutual Fund and SBI Life from the centre, according to bank officials.. While SBI Mutaul Fund is in the final stages of obtaining a licence from the UAE Central Bank for opening a representative office, SBI Life is in the process of securing such approvals, A J Vidyasagar, chief executive officer of SBI’s operations at DIFC, said. He said SBI’s commercial operations from the DIFC had got into a full swing with the bank beginning to accept nondirham deposits. Under the Category 1 licence, a DIFC-based entity can accept only non-dirham deposits from non-UAE corporates and professional clients. He said SBI group, which has a network of 17,000 branches across the globe, would be opening its Jeddah branch soon. In the Gulf, SBI also operates two branches in Bahrain, one branch in Oman, representative offices in Teheran and Cairo. The bank has tied up with various exchange companies including Emirates India International Exchange, Al Rostamani Exchange, Wall Street Exchange, Al Ansari Exchange, Al Fardan Exchange, Al Ahalia Exchange, Citi Exchange and UAE Exchange enable customers to remit funds to their accounts with SBI in India. Vidyasagar said customer confidence in SBI rose when the bank came out with excellent results for the quarter ended December 2008 amid the global financial crisis. The profit of the group, comprising several subsidiary banks and other financial operations, surged 52 per cent to Rs36.08 billion while non-per performing assets declined from 1.44 per cent to 1.36 per cent.

March 2009

Residency visas for Abu Dhabi property owners too

he UAE Ministry of the Interior has announced that the federal government will be looking to roll out uniform residency visas for property owners across the country. The visas will be issued on a renewable six month basis. According to Brigadier Nasser Al Menhali, the acting Director-General of the federal Naturalisation and Residency Department, the Ministry of the Interior was looking at finalising the new visa laws within the next month, with the roll out expected this year. The scheme will grant residency to owners of freehold properties, regardless of the size or value of the property. The government is also looking at proposals to extend the visa scheme to include the families of property owners, although this is in the very early stages, he indicated. ‘We are looking to unify the procedure for the issuance of residency visas for expatriates who purchase properties,’ said Al Menhali. Analysts and industry insiders have welcomed the proposal as an incentive to increase interest in the property market, although the short-term nature of the visas is still viewed as a downside. The announcement addresses a core issue behind investor confidence. Although not as widespread a practice as in the Dubai property sector, some developers in Abu Dhabi had attracted prospective buyers by claiming that the units were accompanied by residency status for the investor. Similarly, Abu Dhabi developers are also beginning to offer their own incentives to attract investor interest. Arady, a property market-focused private equity and investment firm, announced that it would pass on the benefit of the fall in construction costs to buyers of its Reem Island project. The group said that it would lower prices on units at the, as yet untendered, Helix Towers project by 20 per cent. Bloom properties, the company behind the Bloom Gardens development, a community project in the centre of Abu Dhabi targeting Emirati investors, also announced that it would be lowering its prices - an offer which also covers retroactive purchases. Average prices in Abu Dhabi have fallen approximately 18 per cent since October as the emirate feels the effects of the global slowdown. Despite this , analysts remain cautiously optimistic about the property market’s future, citing the continuing supply-demand imbalance and pointing to the fact that rental prices continue to hold steady, despite previous warnings that leasing prices are set to fall.

March 2009

Gold-backed investment product

ubai Gold Securities, an initiative of World Gold Council (WGC) and the Dubai Multi Commodities Centre (DMCC), has begun trading on NASDAQ Dubai. Dubai Gold Securities represent the first Exchange Traded Commodity (ETC) to list on NASDAQ Dubai and the first Shariah-compliant gold ETC in the region. Dubai Gold Securities offer investors simple, secure and Shariahcompliant access to gold bullion investment without the additional costs normally associated with insuring, storing and transacting in physical gold. Each security is 100 per cent backed by physical allocated gold held in safekeeping by an independent custodian. One share represents an initial interest of one-tenth of a fine troy ounce of allocated gold bullion. Gold is widely-accepted by the investment community as an important portfolio diversifier and preserver of wealth. It is a proven hedge against inflation and the dollar. Dubai Gold Securities will be marketed in the UAE by Dubai Commodity Asset Management, a wholly-owned subsidiary of the DMCC that is licensed by the UAE Central Bank, and which develops and distributes commodity-linked investment products. HSBC Bank will act as the primary market maker for Dubai Gold Securities. Investors can trade in Dubai Gold Securities through registered NASDAQ Dubai brokers. Dubai Gold Securities comply with Shariah law and practice. A Shariah Supervisory Board has been constituted to supervise the issuance of Dubai Gold Securities and will conduct regular physical inspections of the gold held on behalf of investors. Integral to Dubai Gold Securities’ compliance with Shariah law is the fact that each security is fully backed by an identifiable amount of allocated gold held by the Custodian, HSBC Bank USA, N.A., at its London vault premises. The gold will be held in an allocated account on behalf of securities holders. The Custodian also plans to appoint a sub-custodian with vaults in Dubai. According to Aram Shishmanian, Chief Executive Officer of World Gold Council, the initiative is part of the council’s efforts to remove the barriers to investing in gold across the globe. “As financial turmoil continues all over the world, investors are wondering where their money will be safe. Gold has represented an important currency for thousands of years and it is a major store of value for governments, institutions and individuals alike. As a physical asset, gold is no one’s liability and is not exposed to financial market or corporate failures. Having an allocation to gold is like an insurance policy, gold’s value as an asset becomes most obvious when it is most needed. With future inflation looming, gold’s ability to preserve wealth will become key.” The listing on Nasdaq Dubai follows the successful listing of similar bullion securities products on a number of stock exchanges around the world, including the NYSE Arca and London Stock Exchange. The value of gold held by products in World Gold Councilbacked gold ETFs, as of 23 February, 2009, stood in excess of $38 billion, equivalent to 1202 tonnes of gold.

HOSPITALITY

ENTER the economy traveller Survey shows executives will travel less on business in the next 12 months

isitor flow is considered to be a major factor in determining how soon Dubai would be able to overturn the current downtrend in its economy as a tourism boom has also got a lot to do with the revival of the real estate market. When more people come to the city, there is demand for more services, which in turn require more people to perform those duties. The growth in the services sector implies higher immigration levels, particularly for employment, and this in its wake impacts the whole spectrum of business, including the real estate sector. More visitors also means an increase in the

footfall for the shopping malls, which have taken a severe hit in the aftermath of the credit squeeze and the uncertainties that it has created in the marketplace. In this context, the results of a survey by the Economist Intelligence Unit on corporate travel during the current financial meltdown have significant implications for Dubai, as the boom in the city has corresponded to the consolidation of its status as a global financial and business hub. Perhaps, Richard Branson’s description of the ostentatious opening of Atlantis towards the end of last year as ‘probably the last party of the decade’ is proving ominous. The sur-

vey found that the downturn is leading to corporate travel budgets coming under greater scrutiny. Pressure is coming not only from CFOs looking to cut cost from their bottom lines, but also from shareholders keen to address criticisms that corporate culture had become excessive before the downturn. Executives believe that they will travel less on business in the next 12 months—many significantly less—with executives based in Asia-Pacific and North America likely to see the biggest cutbacks in their travel plans. In contrast, over one-half of those based in Europe believe that the number of their trips will be unchanged. But this will not be the only hardship with which

March 2009

the hotel sector will have to deal. Alongside fewer trips, business travel will also get shorter in duration and, in many cases, companies will expect executives to downgrade from business-class cabins and five-star hotels, EIU said in a report on the survey’s findings. The EIU, jointly with Amadeus, surveyed 354 executives worldwide in November and December 2008 to obtain their views on how the global economic downturn will feed into corporate travel plans, with particular focus on the impact on the hotel sector. All of the executives surveyed travel at least once a quarter for business, with 37 per cent travelling more than once a month and 7 per cent travelling weekly. Geographically, respondents were split as: North America, Europe and Asia-Pacific 29 per cent each and the Rest of the World 13 per cent. Close to one-half (47 per cent) of the executives in the survey said that they planned to take fewer trips over the next 12 months because of the economic downturn. Of particular concern for hotels is that a sizeable proportion of these (16 per cent) believe that economic woe will mean a drop of over 30 per cent in the number of trips undertaken. Travel budgets are under pressure worldwide, and companies are pursuing various strategies to keep them under control. The most popular has been to cut out travel for internal meetings—an approach that has been adopted by 46 per cent of respondents’ companies. But it is not just a drop in the frequency of trips that will concern hotels. Even where trips are undertaken, business travellers are being asked to economise, economy for the earlier business class and three star for what was earlier five star. Over one-quarter (28 per cent) of executives surveyed expect their company to downgrade them from five- and four-star establishments. Keenest of all to cut out the luxury will be Asian business travellers—33 per cent of executives from that region expect to be downgraded. In the case of airlines, 36 per cent of executives expect to travel by economy class over

March 2009

Richard Branson’s description of the ostentatious opening of Atlantis as ‘probably the last party of the decade’ is proving ominous

the next 12 months. According to the survey, another strategy that companies may look to follow is convening larger, centralised meetings in regional hubs, rather than sending out individuals into provincial offices. This is considered good news for hotels in cities such as London, New York and Hong Kong, where supply already struggles to keep pace with demand, but bad news for everyone else, EIU said. Other popular measures to curb travel expenditure will include requiring trips to be signed off by a more senior manager, cited by 37 per cent of respondents; cutting back on travel for junior staff (33 per cent); and only allowing travel that is linked to new business generation (24 per cent). If there is a silver lining for the hotel sector, it is that very few businesses indeed are looking to implement a blanket ban on international travel, EIU pointed out. As if having to contend with fewer,

more parsimonious travellers were not pain enough for hotels, the executives surveyed also predict that business trips will become slightly shorter. Over the past 12 months, the average length of stay for 11 per cent of executives was one night. Over the next 12 months, this figure is expected to rise to 16 per cent. Unsurprisingly, companies see pressure within their organisation to reduce costs as the primary reason to cut back on hotel spending. But this will not be the only impact on hotels. Expensive business trips are increasingly being shunned as companies use collaborative technologies, such as video-conferencing, cited by 41 per cent of executives as a factor that would encourage them to curtail travel over the next year. But the research is clear that in order for hotels to continue to attract business travellers, price will be of the essence. Forty-five percent of the ex-

Of particular concern for hotels is that a sizeable proportion believes that economic woe will mean a drop of over 30 per cent in the number of trips undertaken

ecutives agree that room rates would be ‘absolutely decisive’ to their choice of hotel in the coming year, with a further 36 per cent ranking it an important consideration. Furthermore, companies won’t be shy in pushing home an advantage as hotels fight for fewer customers. Most respondents say that their company would use the economic downturn to extract the best possible rates from hotels. According to the EIU, the effect that this belt-tightening will have on the type of hotel that executives will choose is the most interesting aspect. With less money to spend on exclusive hotels, most business travelers will revert to the tried and trusted. A majority (61 per cent) of executives cite a dependable brand, with uniform levels of service across locations, as something that will be important to them over the coming year. Brand is particularly important to executives in the AsiaPacific region and in North America, but West Europeans (53 per cent) are relatively less likely to stick with what they know. But the survey showed that executives are realistic about what this

means in terms of service. They are willing to accept less luxury for fewer dollars. The research suggests that hotels that bolster their high-end, ancillary products in order to gain an advantage, or install fancy business centres or meeting facilities, will be wasting their money—at least when it comes to attracting business travelers. Instead, executives will be focusing on whether hotel chains do the simple things well. The best indicators of good service are supposed to include efficient checkin (68 per cent), flexibility to change requirements, such as a last-minute cancellation (64 per cent), and a quick resolution to problems (59 per cent). In comparison, anything with a whiff of luxury—such as concierge services—is considered far less of an indicator. Even brand loyalty programmes fall way down the list. But there are slight regional variations. West European executives, for example, are more likely to be impressed by a flexible check-in, while Asians are keener than others to have their loyalty rewarded. As if to underline the all-pervading sense of austerity, well over one-half (54 per cent) of respondents say they value convenience over comfort. Only 19 per cent like to travel on business trips with their families and less than one-half (43 per cent) consider extending their business breaks to include some leisure time. Again, there are subtle differences across the regions, with North Americans the most likely to travel with their families, and North Americans most likely to take in a holiday at the end of the trip. The survey showed that budget establishments are particularly wellplaced to treat the downturn as an opportunity. Indeed, 44 per cent of the

survey panel agreed that putting up executives in budget hotels is a smart move in the current climate. In comparison, 29 per cent feel it is important for the prestige of their company to stay at the best hotels. However, top-end hotels in London, Milan or Paris might want to take heed: the number who equate the prestige of the company to the prestige of the hotel they are staying in drops alarmingly in Western Europe—to just 14 per cent. But, even in the downturn, for budget hotels to be successful they will need to compete on more than just price. While executives are actively seeking cheaper alternatives, they are clear about the minimum level of service that they expect from a low-cost alternative. Most important of all is Internet connectivity. Good transport links, a quiet room and a central location are also considered essentials. What is not apparently considered as important—in either budget or fullservice hotels—is the quality of the business facilities. Only 24 per cent of respondents say that the lack of such facilities as a dedicated business centre would stop them from staying at a budget hotel. At higher-end hotels the figure was, interestingly, even smaller, at 13 per cent, although a further 37 per cent cited them as somewhat important.. EIU feels that the relatively costeffective ways for hotels to continue to appeal to business travelers in the lean times should be of some comfort to the sector. “But, in an age of increasing time pressures, security fears and greater bureaucracy—when the conventional wisdom sometimes seems to be that business travel has become something of a chore—perhaps the most heartening finding of the research is that executives still enjoy and see the benefit of travelling for work”.

March 2009

COVER STORY

SHAKE-UP SHAPE-UP Banks rethink strategies to stay afloat in distress times By Ambily Vijaykumar

customer of a leading international bank operating in the UAE was recently offered a top-up on an existing loan. The offer was obviously due to the fact that he has been ‘regular with repayment’ and his salary fell in the ‘safe bracket’. But the customer laughed off the offer and asked the bank whether they could give him a waiver on the existing loan instead. The incident is typical of the prevailing scenario where banks across the board are cherry picking. Credit card holders with credible repayment history are being bombarded with all kinds of offers. The banks seem to be desperate in their bid to lure customers with a ‘good track record’ with loans and top-ups. But those who are genuinely in need are deliberately avoided if they are from the vulnerable sectors, such as real estate and construction. Also, the entire lower spectrum of the income chart is out of the lending game, although a couple of years ago this was among the most sought after segments. The new selectivity has meant that loans have become out of bounds for thousands, who don’t qualify because minimum salary requirements have

March 2009

been doubled or raised three fold in many cases. The stricter lending rules have also meant several other things. There is a lot less that people who don’t have liquid money can do. The effect of the credit squeeze on the real-estate and construction sector is all too wellknown. The automobile industry is also struggling as banks refuse to finance purchase of vehicles. The reason for the new found cautiousness is that banks now want to be seen as ‘responsible lenders’ who have ‘the best interest of their depositors and share holders in mind’. “If you overburden the customer with a loan and he is unable to give back, we are not being fair to our cus-

tomers,” says Sanjoy Sen, the business manager of Citibank’s consumer banking in the UAE. It is precisely to get the banks to lend again and invigorate the economy that governments across the globe, including the UAE, have pumped in vast amounts into the banking system. The UAE Central Bank has already made Dh120 billion available to financial institutions to help stabilize the market.

Considering that the situation continues to be delicate, we could expect bigger stimulus packages. The banks, which have been at the epicentre of the financial earthquake that hit the world last year, have suffered tremendous damage both in terms of finances and investor confidence. Many in the West have shut shop, several others have been nationalized and many are merging to stay afloat. To stop the crisis from deepening, banks are revisiting their underwriting criteria for lending money. While several banks have been forced to do that in the aftermath of the economic crisis, others say they ‘proactively changed’ their lending terms much before the crisis struck and hence have not been forced to take any ‘knee-jerk’ reactions. “This market does not have any credit bureaus. But we have over a period of time set up our own set of underwriting criterion based on which we judge how much loan to give. Income is one of the criteria; others include background and whether a customer has taken other loans or credit cards from us,” explains Sanjoy Sen. HSBC has excluded new customers-- non-relationship customers as they are called—from the auto loan business. Moreover, they have doubled the minimum salary requirements for vehicle finance. As against the earlier Dh10,000, the threshold now stands at 20,000 for eligibility. “In line with current market conditions, HSBC has further tightened its lending criteria in order to ensure that customers who do receive loans can afford to repay them at a time of considerable uncertainty around the world,” says Abdulfattah Sharaf, CEO of Personal Finances Services in the region. This tightening has happened in the wake of increasing cases of loan defaults across the country. The defaults have particularly hit the auto loan segment. Reports of people returning their car keys in envelops to banks are testimony to the piling bad loans for banks on this account. In the backdrop of such developments lenders across the board have hit the panic button. With the real estate

sector being the worst-affected, layoffs have become the order of the day. And predictions of further large-scale redundancies have made the prospect of more defaults and slimming bank deposits real. Ironically those who have been the drivers of the economy in the last few years are being driven away. Massive layoffs have prompted several banks to suspend lending to expatriate employees working in leading real estate companies. Many have increased minimum salary limits for expatriates by almost

determine whether they are eligible for a loan. Banks now demand that a certain minimum amount be transferred to the account every month to avail of a loan. This is one of the methods being used to determine whether you have a consistent source of income. The new stance taken by the banks is in complete contrast to what was happening early last year when, riding high on the real-estate boom, banks were not only generously giving loans, they were also engaging in aggressive cross-selling. All that resulted in a massive dis-

The new selectivity has meant that loans have become out of bounds for thousands, as salary requirements have been doubled or raised three-fold in many cases 200 per cent, while others have settled for a more realistic 60 per cent hike in salary limits for personal and auto loans for all customers. Moreover banks are doing a thorough credit analysis of its customers to

parity in the banks’ loan to deposit ratios. Much of that has now cooled down or as banks would want to say they have ‘paced the cross-sell’. “Generally banks first start by giving a credit card, a few months down the line, they give a personal loan and again top up

March 2009

Strict adherence to new criteria Troubled times demand appropriate policies, says HSBC

Abdulfattah Sharaf, CEO of Personal Financial Services, HSBC Middle East

March 2009

iquidity challenges have forced HSBC Middle East to tighten lending norms. But the bank has reposed faith in the ‘robust’ steps taken by the government to combat the crisis. One of the immediate steps by the bank to stem defaults has been to raise the minimum salary bar for eligibility for loans. The minimum salary requirement for auto loans has been doubled. From the previous limit of Dh10,000, this has now been increased to 20,000. According to the bank, these steps come at a ‘time of considerable uncertainty around the world’. The tightening is also attributed to fact that the bank takes its role as a ‘responsible lender’ very seriously and also ‘for the sake of our customers and long-term sustainability of business,’ says Abdulfattah Sharaf, CEO of Personal Financial Services, HSBC Middle East. With reports of vehicles being abandoned, indicating a crisis in the auto loan segment, the bank has gone to the extent of rejecting applications from ‘non-relationship customers’. In short, HSBC does not want to lend to a customer it does not know. Layoffs, especially in the real-estate sector, have meant that the possibility of default has increased. So raising the salary bar would automatically leave out a large number of people from the borrowing cycle. Even personal loans are hard to come by. There have been numerous instances where people have used personal loans for investment purposes and defaulted as the investments have gone bad. HSBC has hence increased the minimum salary limit to Dh20,000. The bank defends the new criteria saying it is to ensure that ‘customers who take loans can afford to repay them.’ Affordability has also become the buzzword when it comes to home loans, with the loan to value ratio having been brought down to the range of 50-60 per cent, depending upon whether the property is under construction or ready. Also, the finance is available only for the list of

properties approved by the bank. An interesting aspect that the bank stresses is the ‘sustainability’ factor. There was a time in 2008 where banks were offering loan to value of up to 90 per cent. This was clearly a recipe for disaster. During a crisis of such proportions, when people are losing jobs and there is very little surety about things, being strict with regards to products and services is the key, says HSBC. ‘The group’s financial strength is built on maintaining a strong capital base, ensuring strong liquidity, a conservative appetite for risk and well-diversified earnings both by geography and business type,’ says Abdulfattah Sharaf. And this, the bank says, is the very reason why it is ‘well-placed’ to navigate the tough times. Unlike early last year when the bank achieved ‘excellent results’ largely because of the sheer quantity of loans, HSBC plans to ‘curtail lending’ until the deposit base is built up sufficiently. The steps have been taken to ‘protect’ the bank in its forward march in today’s economically excruciating times. The bank, however, is offering more diverse products. Insurance, for instance, is one product the bank thinks will be in demand. ‘We need to look to changing our product offering. I am sure there will be a huge increase in appetite for guaranteed products,’ says Abdulfattah Sharaf. In times of economic uncertainty, ‘customers re-assess their insurance needs’, a trend that HSBC is keen to tab into. ‘As a bank we need to offer products tailored to our clients’ needs coupled with a brand guarantee that we will only sell products from the solid providers still out there,’ adds Sharaf. So with a 100 million customer base worldwide and being the largest international bank in the Middle East, HSBC says it ‘continues to operate normally’ and ‘invest in its operations in the region’. The bank says that despite the upheaval in the banking sector, it is ‘well-placed to capture the growing business opportunities’ in the region. Ambily Vijaykumar

that loan. In the past if we would have given a loan after four months of having given a credit card, now we would give it after six months,” says Citibank’s Sanjoy Sen. The bank has also worked out different sets of underwriting criteria, giving preference to their ‘target market customer’. So while others have to fulfill a minimum salary requirement of Dh10,000 for loans, the ‘target market customer’ gets the benefit of half the salary limit. But fulfilling the loan criteria is no guarantee that the customer will be consistent with repayments. Hence to minimize risk, banks are employing new methods of vetting customers; a process that rates existing customers on the basis of their performance with repayments. So a credit card customer repaying on a timely basis is more likely to get a loan from the banks than the one who is irregular with payments. The underlying theme of all lending now is ‘be prudent’. But the aftereffect of this has been little money flow in the system. With finances drying up, the construction industry, one of the engines of the UAE economy, has virtually ground to a halt and banks are wary of lending to them. Several big projects announced by big developers have been shelved, many are now being ‘completed in phases’ and contractors are packing bags. Reports say over 50 per cent of all construction projects in the country have been suspended. As for those who dreamt of buying a house, only those who have saved consistently can realize them now. Most banks have decreased their loan to value ratio. Which means that earlier when banks were happy to finance anywhere between 90 per cent and 95 per cent of the value of the property, now they’ve come down to an average range of 60-70 per cent. The buyer now has to shell out huge amounts as initial payment to be able to buy a house. With lenders having already burnt their fingers due to their large-scale exposure to the real-estate market, many banks are now offering home loans only to ready projects and not to the ones that are under-construction. Most people are hand-tied as far as

new purchases are concerned. Another interesting fact that has emerged out of the crisis is that apart from the banks not lending, people are also skeptical about keeping their money in the banks. Banks are admitting that they have faced such instances in these troubled times. For customers, removing money from a bank they think is ‘not reliable’ to another that they believe will safeguard their money is a reflection of the loss of faith several major financial institutions have suffered. A coffee-table conversation this reporter was part of revolved around an instance when a couple who had huge savings in a bank was offered a higher interest rate as an incentive not to withdraw the amount from their accounts. The lack of faith in banks is not restricted to customers alone. Banks are unwilling to lend to each other. With many big names in the banking sector across the world going under, competitors feared the worst and stopped offering a helping hand. But with the UAE government guaranteeing banks their deposits, the sector now feels that the situation will improve. An overall squeeze of money from the system has also hit the retail sector. In uncertain times when manufacturers, suppliers and consumers cut down on expenses, the vicious cycle of less lending and less spending is further slowing down the economy. But considering that no one can escape the crisis, banks are also adopting an empathetic approach to customers who are facing difficulties in repaying large amounts of loans. For example, banks are willing to talk to such customers and decrease their monthly payments and lengthen their repayment tenure. However, if it is not a question of ‘capacity’ but of ‘intention’ then most banks are “treating it differently”. Individually banks are taking measures to ensure that their loans do not go bad. But given the fact that customers tend to misuse the luxury of having multiple credit cards and multiple loans from several banks, predicting a default has become very difficult. But lenders are taking solace from the fact that the UAE Central Bank is working towards

setting up credit bureaus that will not only ensure there is data available about individuals, but in case of defaults, other banks are alerted and they don’t end up giving loan to the same individual. The Central Bank has already predicted ‘a two-year slump’ for the UAE economy and now intends to implement a slew of measures including ‘ring-fencing’ the banking system according to the Central Bank governor. With the emphasis for the coming years being ‘reasonable but low rate of credit expansion and restricted banking expansion’, lenders across the board are becoming ‘extremely vigilant’and getting ready for ‘restricted growth’.

Massive layoffs have prompted several banks to suspend lending to expatriate employees working in leading real estate companies

Amidst all this, banks are also looking to change their product offerings. Many are concentrating on the insurance market, which is considered to have a huge growth potential in times like these. The demand for Islamic products too has increased with many already being launched. But not many banks are willing to concede that once the dust settles lenders will opt for ‘conservative’ methods of functioning. The last few months, banks say, have been ‘very challenging’ and they don’t believe that the crisis has hit a plateau yet. Banks are in fact bracing for a tougher 2009, signs of which have already begun to show with a local bank axing four per cent of its work force.

March 2009

Timely moves pre-empted trouble Citibank’s Sanjoy Sen says underwriting criteria helped restrict problem lending

he news of Citigroup selling Smith Barney brokerage to Morgan Stanley in the US has done little to shake the faith of its executives in the Middle East, who do not have any ‘immediate concerns’. But their optimism does have a tinge of caution. “We are not taken aback by the turn of events and have not been forced to take any knee-jerk reactions, since we have been fine-tuning our credit criteria all along over the last year and a half,” says Sanjoy Sen, the business manager of Citibank’s consumer banking in the UAE. He says the bank pre-empted a market correction and hence ‘starting probably a year back proactively changed’ its credit criteria. Operating without credit bureaus in the market is a challenge and Citibank therefore came up with its own set of underwriting criteria based on which it judged how much loan to give. The bank takes into account factors like income, background, multiple loans, credit cards etc, and decides whether the customer has the capacity to repay the loan. Sen says the bank’s ‘strong analytics unit’ has helped it keep credit defaults ‘largely as per plan’ for 2008. “If we see certain segments of our portfolio not performing, we tweak our criteria to get back what we want. That is why I feel risk management and credit skills are very important differentiators in the industry and as we go forward it will become all the more important. That will differentiate between leading banks and other banks that rampantly give out loans,” Sen points out. Banks in general were doling out loans rampantly for the better part of 2008 and are now suffering the consequences. The auto loan sector has seen large-scale skips. “We used to be one of the largest

March 2009

Sanjoy Sen, Business Manager, Citibank Consumer Banking auto finance players in the region. But more than a year back we decided to exit the business and stop doing incremental auto business, because we saw that it was getting quite indiscriminate. Where the interest rates were coming down, there were lots of defaults, lots of cars were getting repossessed, the residual value of the cars was not justifying enough and all banks were facing huge default; so we decided to quit that business and we are very happy with that decision, because that would have cost the bank a lot financially,” says Sen. Several banks in the country are facing this scenario, with large number of people losing jobs and defaulting on their vehicle loans. Citibank feels that the current situation gives lenders sufficient reasons to tighten the lending criteria. With many banks already doing that, Citibank feels it will only get stricter. “There has been a situation in the market where customers have a higher amount of loans to service than their income, which is wrong. For example, someone who has Dh20,000 as salary is servicing Dh40,000 of loans between mortgages and personal loans. This is

clearly unsustainable,” says Sen. The very reason why banks are finding a huge disparity in their loan to deposit ratios. The financial meltdown has been an eye-opener for the bank, which admits it was aggressive with cross-selling till some time back. A new credit card customer with the bank would be offered a personal loan within few months of association with the bank. The current situation, Citibank feels, has left scope only for ‘paced-out’ cross-sell. But managing loans is a job that begins the moment the lender chooses its customer. Inaccurate documentation has resulted in several fraudulent loans in the market. So Citibank has come up with a system to grade its customers. It has generated a scoring model that helps determine a customer’s performance with regard to repayment. “It is an automated model which defines the score for every individual based on certain application criteria. It builds up a behaviour score based on certain parameters. So if you have a credit card customer who has been using his card in a certain manner and has been paying on a timely basis, then we build a score around him so if that person comes for a personal loan, he will get a higher loan or have a greater propensity to get a loan than a person who has been defaulting or paying up late for the last three months,’ explains Sen. But do in-house checks rule out the possibility of defaults? Not entirely. Because there are several lenders in the market and the customer has been spoilt for choice, with competing banks also vying for their attention. The same person can take six credit cards and use up all the credit lines and not pay up at all or take multiple personal loans based on the same income. So even if a bank checks on the customer’s income to loan ratio, it does

not make any sense since the loans have been sourced from different banks. The need of the hour then is ‘for banks to get together and have credit bureaus, which is how it works in all developed markets,’ says Sen. However, the bank is willing to be considerate to customers with repayments. It is open to reducing monthly repayments and increasing the tenure for customers and believes in ‘curing on a case-by-case basis.’ But as a larger part of the risk management methods, the bank is assessing whether it is the customer’s capacity that is an

as compared to other customers. For them the minimum salary limit is Dh5,000 while for the rest it is 10,000. New customer are not a taboo but ‘how much loan to give and when to give will vary depending on types of customers.’ A tighter lending norm is, however, is not an indicator that the bank has slowed down on its loans business. “We continue to grow our loans business everyday even in the last five months. We have tightened our credit norms, but our business strategies remain the same, since we started realigning our strategies much before the crisis hit,”

The same person can take six credit cards and use up all the credit lines and not pay up at all or take multiple personal loans based on the same income issue or his intent. If capacity is the issue, then the bank is talking to its customer and working out a repayment model that addresses his concerns, however if it is the intent that is the trouble, then the bank is ‘treating it differently’. Citibank in the UAE has raised its minimum income criteria across the board. However, the bank’s ‘target market customer’ stands to benefit

says Sen. And the crisis in the UAE has hit the real-estate sector the hardest. Citibank says it has been ‘really far sighted’ about its home-loans portfolio and ‘there has been no exposure at all to the real estate recession, which all other banks have faced in the market.’ After noticing an unsustainable market trend of offering 90 per cent loan to value ratios, the bank restricted the lending to selective

clients for ready property only. This prudence kept it safe and sound. With the bank ‘never going for an 80 per cent growth or indulging in market share games, its liquidity ratio has been sound’ and it has not stopped it was doing. That is applicable to credit lines for businesses too. The lending is based on ‘security’ and ‘debt capacity of the customer’. That only resonates to an old saying that one must not swallow more than one can chew. But that is what many lenders and buyers were doing. According to Citibank, once the impact of the economic crisis begins to recede, the rules of the game would be changed forever. “The industry will get redefined as we go along, not only in the Middle East, but across the world. The entire banking industry will get redefined,’ says Sanjoy Sen. “Regulators will change their rules, you will have to do what is right for the business and what is best for your customers and profitable for you. “There is also a need to ensure that there is matched growth in demand and supply and there is growth that the market can take, because one of the things that we can learn from this crisis is that top-line growth is not necessarily an indication of good health and bottom-line profit,”says Sen. Citibank says its business in the UAE is ‘the most profitable’; yet considering that there are job losses happening, the bank will be ‘extremely vigilant’ and ‘extremely credit conscious’ from now on. “The impact of the recession is not going to go away in a hurry. So there will be a slower growth. In fact, there will be a deflation in the market. Rentals, consumer goods, real estate prices will come down. Deflation is finally good for the consumers. The retail outlets, however, will have less profit,’ says Sen. But Citibank believes that the UAE has every reason to stay positive. Thanks largely to its ‘proactive rules and regulations and change in strategies’, the bank says the country ‘would emerge on top of the world market’ once the world gets out of the crisis. Ambily Vijaykumar

March 2009

REAL ESTATE

On a strict dieting course Dubaiâ&#x20AC;&#x2122;s property sector is becoming leaner and fitter

t is not only the demand and prices that have gone down in the Dubai real estate sector. The slowdown has already seen considerable trimming of the sector, with a process of weeding out going on relentlessly and those with a chance of survival coming together to cut down on operational costs. The situation is so drastic that near-

March 2009

ly half of the total number of 800 developers licensed by the Real Estate Regulatory Agency (RERA) have folded up operations. According to Marwan Bin Ghalita, CEO of RERA, some 300 developers have approached the agency on the ground that they are not in a position to go ahead with their projects and therefore want their licences cancelled.

RERA views the situation as having many positive effects as only players with a long-term view can survive the tough conditions and that will rid the market of most of the unprofessional players, who probably entered the fray to make a fast buck, although they did not have the wherewithal to conduct the business properly. â&#x20AC;&#x153;Some development companies

were registered but have now decided they don’t want to develop because of liquidity, which is a good thing. Others were forced to cancel their registration because we were sure that their developments would never be real,” Marwan Bin Ghalita pointed out. With buyers defaulting their payments on a large scale on the back of credit tightening by the banks and financial institutions, there is a serious cash flow issue for the developers, many of whom were depending on the proceedings of their off-plan sales to finance the construction. In most cases, these monies are stuck in the escrow accounts opened with the banks, which can release the funds only on the basis of construction milestones. Since there has been a general slowdown, and in many cases a virtual stoppage of work, cash flow on this account has been significantly impaired. Some of the more established players with the financial muscle have sought to re-schedule payments through more flexible payment options, but the majority of developers are in a desperate situation. A real estate analyst with the Swiss bank UBS has estimated that the Du-

bai developers will face a liability of $20 billion in the next two years. “Our assessment of leverage in Dubai’s residential property market is based on the cost to developers to finish properties should investors default on the upcoming supply of 140,000 units,” analyst Saud Masud said. “We estimate this liability to be roughly $20-25 billion over the next two years.” Developers, including the top ones, have resorted to significant staff reduction as activity in the sector has slowed down, whether it is marketing and sales or other supporting services, not to speak of construction work itself. Staff redundancies have occurred across the board, right from the highly skilled to the lowest level of employment. Nakheel laid off 500 employees at the end of last year as the master developer indicated delaying work on a number of leading projects. The affected projects are said to include the Trump International Tower and Hotel on Palm Jumeirah, Waterfront, Palm Jebel Ali, The Universe and the Tower and Harbour Project, which is supposed to include the world’s tallest tower, surpassing Burj Dubai’s record. The leading developer has followed up this by merging three business units as part of the ongoing restructuring programme in view of the crisis in the market. The move involves merging of Palm Deira, Mina Rashid and The

RERA views the situation as having many positive effects as only players with a long-term view can survive the tough conditions and that will rid the market of most of the unprofessional players World businesses into Nakheel Northern Coastal Projects, in addition to the merger of Nakheel Asset Management and the company’s design and development department. “Nakheel continues to readjust its current business objectives to match supply and demand in the most effective way. Last month, Nakheel merged a number of its business units,” a spokesperson said. The consolidation phase has got into right earnest and at one point of time it was strongly rumoured that Nakheel may be merged with Emaar, but this was promptly denied by Mohammed

March 2009

Alabbar, Chairman of Emaar Properties. The denial came in government announcement, which clarified that the merger between the two master developers was not on the agenda. Speaking at a conference in Dubai,

Alabbar also said small developers in Dubai could have to consolidate to weather the global financial crisis. “You will see more consolidation among third-party developers, who are facing lending difficulties,” he was quoted as saying. Developments that followed proved him rights. Within days, Dubai Holding announced that it will merge the back-office operations of three of its real estate entities, Dubai Properties Group, Sama Dubai and Mizin, a member of Tatweer, under one consolidated operation. While the ownership and core activities of the three companies will not change, this will lead to closer work-

A real estate analyst with the Swiss bank UBS has estimated that the Dubai developers will face a liability of $20 billion in the next two years Alabbar had said he would welcome a merger with Nakheel if the opportunity arose. “Nakheel and Emaar are two separate entities, but we welcome collaboration. If there is a chance, I will welcome it,” Alabbar said when asked about a possible merger of the companies, according to news reports. But he clarified later that there were no current plans to merge the companies.

March 2009

ing relationships, by realizing efficiencies through the consolidation of their back-office operations, the group said in a statement. The company said the arrangement will not impact the legal relationship that the companies have with their current partners including their suppliers, contractors and their investors. The new work alignment has hap-

pened along with some major changes in the management of Dubai Holding, under which Soud Ba’alawy, Executive Chairman of Dubai Group, and Sameer Al Ansari, Executive Chairman of Dubai International Capital, take on the roles of Chairmen of Dubai Holding Investment Group. Dubai Holding Investment Group is an existing whollyowned subsidiary of Dubai Holding that holds Dubai Holding’s stake in Dubai International Capital and Dubai Group. In addition to his current role as CEO of Dubai Group, Tom Volpe has become the CEO of Dubai Holding Investment Group and Acting CEO of Dubai International Capital. While the ownership and core activities of Dubai International Capital and Dubai Group will not change, both companies are to forge a closer working relationship to realize efficiencies through the consolidation of their back-office operations, the group said in a statement. The process of cutting flap is also visible in the mortgage finance sector, with Amlak and Tamweel deciding to combine under the Abu Dhabi-based Real Estate Bank to form the largest property finance firm in the country. The new entity will provide a strong growth platform for real estate financing and will serve as the cornerstone of the mortgage market, Amlak said in a statement. The statement said that the Real Estate Bank, a unit of the Ministry of Finance, has more than 7,000 customers and the combination of Amlak and Tamweel with the Real Estate Bank will ensure a fair process for the current shareholders and customers. Amlak’s Chairman Nasser bin Hassan Al Shaikh pointed out that by leveraging the combined expertise of Amlak Finance and Tamweel, the Real Estate Bank will enhance the value proposition for customers with broader product capabilities, and meaningful operational and financial synergies. The move for Amlak-Tamweel merger is the most important consolidation development in the UAE financial sector since the merger one year ago of Emirates Bank and NBD, creating Emirates NBD, which is now the biggest Gulf lender in terms of assets.

‘From pipelines to pipe dreams’ Bridge finance is not an option if there are no end-users to take inventory or banks to fund it, says Nomura

“P

restigious projects are being consigned to history with the UAE real estate sector facing unheralded challenges. Solid pipelines are quickly becoming pipedreams with construction order books contracting sharply and development delays now commonplace,” global financial company Nomura said in a report marking the Japanese company’s coverage of the local property market. Speculators fuelled the market with ‘easy’ liquidity that has evaporated, just as developers commence deliveries that cannot be financed. Nomura said the sector shakeout is likely to continue with direct markets possibly falling another 15 per cent, but it saw the key theme for 2009 as sector consolidation, though initially in the private, rather than the public, arena. “The sector is maturing at break-neck speed and we expect casualties.” Nomura has initiated coverage of the UAE real estate sector with a fundamentally cautious view. Real estate is capital consumptive and the market is currently capital constrained, it said. Bridge finance is not an option if there are no end-users to take inventory or banks to fund it. The report said development delays are likely to dampen earnings. This

and creating investment portfolios are likely to weaken revenue accounts. Dividends are at risk – if not this year, then next, as cash constraints bite. The decline of occupancy rates and rents as affecting the carrying values of investment properties, just as companies are forced to take unsold stock into their portfolios. According to Nomura, asset prices are set to suffer average peak to trough falls of 40 per cent across the direct real estate sectors, against 25 per cent average falls so far, but equities are pricing in more. Although the company has a fundamentally bearish view on the direct property market, it believes that there are pockets of value in the listed sector. “We regard the relatively ‘underdeveloped’ Abu Dhabi as having better prospects than the ‘overdeveloped’ Dubai, but there appears to be a wider, possibly unwarranted, disconnect from equity market valuations that are starting to appear oversold to us. Our clear preference is towards early cycle developers with committed sales and unencumbered balance sheets – or at least access to committed facilities – and low or no gearing”. It said most of the companies in its coverage universe tick most of the boxes, but this is more a call on sentiment

than fundamental equity valuations. The company feels there has not been enough of a sector shake-out yet to sort the ‘men from the boys’ and sector consolidation appears inevitable. Real estate stock prices have fallen on average 80 per cent over both the last 12 months and the last six months. “So while we are not positive on a macro level, we can see absolute value uplift of c30 per cent at current price levels. The implied market risk is probably too high if we assume these entities were to continue to operate as independent going concerns”. The company analysts believe that the market is near the floor in equity pricing, but stock prices will not improve until liquidity (or some form of direct government intervention) is force-fed into the system. They see the issue as a lack of obvious catalysts to attract capital back into the sector. “At 0.3x spot book, Emaar is a proven developer, diversified into international markets with strong demographic fundamentals and is the Dubai Government’s flagship developer, so there are enough positives to outweigh the negatives, in our view. Sorouh is our preferred Abu Dhabi based real estate company with what we perceive to be higher growth prospects, but at 1.0x spot book we regard it as still expensive

March 2009

relative to the sector.” The report views the sector as a homogenous basket. The market has relied too heavily on the (previously) easily ‘funded off plan’ sales market where speculators provided the working capital. But this passed the refinancing risk with each speculative ‘flip’, which has unwound sharply. Regionally, developers now face the situation where speculators can’t sell or can’t meet the final installments as developments complete. The end user market is being crimped by onerous (or no) bank lending terms, with banks trying to conserve already limited liquidity pools and reduce their sector exposure, the report pointed out. It said the UAE mortgage market has historically been thin, but banks leveraged their lending exposure with a classic triple exposure (bridge financing the development start up, financing

are being forced to evolve rapidly. The warehousing of unsold inventory for delivery into the rental market has increased, but this is now unavoidable, it said. The occupier market is rapidly weakening and capital markets may take years to recover (after all Singapore and Hong Kong are still below 1996 levels). Lower rents and occupancy, coupled with higher financing costs, will weaken revenue accounts, with the

Speculators fuelled the market with ‘easy’ liquidity that has evaporated, just as developers commence deliveries that cannot be financed the contractor’s bond, and financing the end user), clipping the ticket at each pass of the finance chain. The ‘halcyon’ days are over and the banking system has choked the desperately needed liquidity with developers now forced to provide incentives to gap bridge finance loans to clear inventory backlogs. The public sector has the tacit support of federal governments and also the ability to tap equity capital markets if need be – the private sector does not and are expected distressed asset sales and defaults to dominate news flow through at least the first half of 2009, the analysts pointed out. The report observes that companies

March 2009

payback in rental significantly longer than the payback in sales. In terms of business evolution, Nomura believes the next logical step would be to carve property assets into funds, but this assumes demand. This would recycle equity to the group and ultimately the shareholders, but until this happens, capital is locked into lower returning investment portfolios. “Current market conditions have introduced a dose of fiscal reality and financial discipline to the market. Catchcry calls of ‘the biggest’, ‘the best’, “the tallest” etc that typified summer development launches are now gone. Economically unviable buildings now rank

as pipedreams – they may come back to the market, but this is less likely,” the report said. Nomura cited reports that over 45 per cent of UAE developments, or around $580 billion in monetary terms have either been halted or cancelled. Contractor order books are falling sharply and margins are settling at around 5 per cent, having peaked at 20 per cent. Building material prices are reversing rapidly in the global commodity sell-off, so some schemes may come back on stream, but only the most sensible designs will now pass muster and ‘prestige projects’ are probably consigned to history. The report points out that liquidity, beyond monetary measures, is mostly about confidence. “The whole world appears to be in recession and capitalrich countries have also discovered that their accumulated wealth is not enough to keep them unaffected. The collapse of housing bubbles is now a global event and the UAE has had one of the biggest bubbles. Therefore, it is a question of normalisation after a long period of excesses”. On the government plans to increase domestic spending and roll out fiscal stimulation packages, the report feels it will probably not be enough to resurrect property prices. “We estimate another 15 per cent of average price declines, adding to the 25 per cent that the market has probably already fallen in 4Q08. This implies a peak to trough market decline of 40 per cent.”

COMMODITIES

Fewer tourists to buy gold Dubai jewellery trade braces for lower sales as financial crisis hits tourist flow

he decline in the number of tourists visiting Dubai due to the global financial crisis is affecting the city’s jewellery trade and this, along with some other factors, has led to jewellery demand struggling to sustain any surge in momentum, according to World Gold Council sources. Movements in the price of gold were also a key factor in quashing demand. Although the gold price dipped sharply in October, it soon recovered lost ground and this higher price level, together with a rise in volatility, discour-

March 2009

aged purchases in many of the more price-sensitive markets. Beginning with October’s Diwali festival, the gold trade had witnessed strong demand, thanks to a lower, and more stable gold price during that time. Notably, demand for gold coins also increased during the festival. The rise in off-take was sufficient to result in stock shortages, and low production-cost 22 carat gold jewellery such as bangles and chains absorbed the benefits of the excess demand. According to sources, these shortages were also apparent during the Du-

bai’s shopping festival, but at the same time jewellery demand has struggled to sustain any surges in momentum. The significant slowing in the global economy has resulted in fewer tourists, which contribute strongly to Dubai’s jewellery trade. Total gold demand in the Middle East in the last quarter was up 1 per cent on the levels of the same period in the previous year. Around 90 per cent of total consumer off-take in the region is in the form of jewellery, and a 7 per cent fall in demand in this sector had largely offset extremely strong growth

The demand for gold coins and low production cost 22 carat jewellery such as bangles and chains even created a stock shortage during the Diwali festival, but overall demand now has struggled to maintain momentum

in net retail investment, which actually registered a growth of 139 per cent. The surge in investment demand was reasonably widespread across the region – three times more than the same period in Saudi Arabia, 38 per cent in the UAE and 2 per cent in the Other Gulf countries. In contrast, Saudi Arabia, the UAE and the Other Gulf countries each recorded declines in jewellery demand of over 10 per cent relative to year-earlier levels, although Egypt showed continued resilience with a 4 per cent rise. India, the largest market for gold jewellery, experienced a strong resurgence during the fourth quarter, with

demand more than double year-earlier levels as a sharp drop in the gold price coincided with the key gold-buying Diwali festival. However, the comparison is distorted somewhat by the fact that demand in the fourth quarter of 2007, a time when prices were rocketing, was particularly weak. For the year as a whole, demand declined by 15 per cent, largely on the back of the relatively high and volatile gold price, although in local currency terms the value of annual demand was 12 per cent higher than 2007. The biggest source of growth in demand for gold, both last quarter and during the year as a whole, was investment. Identifiable investment demand globally reached 399 tonnes in the fourth quarter, up from 141.4 tonnes in the same period in 2007, a rise of 182 per cent. Demand in 2008 was 64 per cent higher than in 2007, equivalent to an additional inflow of $15.2 billion. Taking into account implied investment, which includes the more speculative side of the gold market, total investment was $10.1 billion higher than in 2007, according to World Gold Council. On the investment side, the main driver of flows was net retail investment, which rose 396 per cent from 61.4 tonnes in the fourth quarter to 304.2 tonnes in the comparable period of 2008. Over the year as a whole, the growth rate was 87 per cent. Bar and coin shortages were reported across many parts of the globe, although the most dramatic surge was in Europe, where bar and coin demand increased from just 9 tonnes in the fourth quarter of 2007 to 113.7 tonnes in the last three months of 2008. Gold jewellery demand declined during the fourth quarter as the global economic crisis began to bite and prices

continued to fluctuate around relatively high levels. Total tonnage off-take, at 538.9 tonnes, was down 6 per cent on Q4 2007, while the year-on-year decline was a more marked 11 per cent. The dollar -value measure of demand reveals that the fourth quarter demand of $13.8 billion was 4 per cent below year-earlier levels, with the result that 2008 annual demand – at $59.7 billion – was 11 per cent higher than 2007 levels. The main factor affecting jewellery demand was the difficult economic environment that has taken hold in most countries. Consumers are facing issues such as rising unemployment and falling house prices and stock markets and are focusing their spending decisions on necessities. Once again however, the value measure of jewellery demand confirms that spending on gold jewellery remains relatively robust. Although the severity of the economic climate took its toll in the fourth quarter, for calendar 2008 the primary value of gold jewellery demand increased by $6.1 billion. Some markets, including Middle East, mainland China and Russia, benefited from elevated levels of investment-related demand for gold jewellery, as the intrinsic value of gold lent a stronger investment perspective to jewellery purchases, although the rise in jewellery off-take in these markets was insufficient to fully offset the weakness seen in, most notably, the USA, Europe and Turkey. An interesting development in the gold market is the spread of the metal’s store value awareness to the western world. Gold has remained in the headlines of both consumer and financial media, which served to reinforce both the enduring intrinsic value of gold and its historic role as a store of value. Even the US consumer now recognizes the investment appeal of gold and this

March 2009

is evident in the very different picture of investment off-take, according to World Gold Council. In the US, for instance, both the fourth quarter and calendar 2008 comparisons of demand for gold bars and coins show a rise of around 370 per cent on year-earlier levels. Fourth quarter demand of 34.8 tonnes resulted in an annual demand figure of 77.8 tonnes, the highest annual total since 1999 when investment demand was boosted by the threat of the so-called â&#x20AC;&#x2DC;millennium bugâ&#x20AC;&#x2122;. At a time of crisis in the global banking sector and falling values of stock markets and other investments, investors appear to want the certainty of owning gold. But a further deterioration in economic conditions spelled mixed fortunes for gold demand in the US market as plunging jewellery consumption more than offset soaring investment demand. Total volume of gold off-take in 2008 fell by 6 per cent year-on-year, although in value terms annual demand of $7.2 billion represented a rise of 17 per cent over 2007. Rising unemployment, falling values of stock and property markets and plummeting consumer confidence produced a very weak quarter for jewellery demand. The fourth quarter jewellery demand

March 2009

was 35 per cent below the year-earlier quarter, while the 2008 annual total represented a 31 per cent decline yearon-year, and, at 179.1 tonnes, is the lowest figure on record. That 2008 was a very difficult year for gold jewellery demand is clear from the fact that in the first 11 months of 2008, 1069 jewellery-related businesses either ceased operations or were declared bankrupt. Amid the continuing financial crisis and economic downturn, the outlook is for a continued divergence in the two elements of consumer demand for gold, with jewellery suffering as consumers reduce their spending and focus on essential needs, while investors continue to respond to the safe-haven motive for holding gold. According to World Gold Council, the extreme uncertainty that currently surrounds the global economy is unlikely to abate and should continue to underpin net investment demand, particularly demand for bars and coins. However, the council expects this to be partly offset by ongoing weakness in both industrial and jewellery demand. The extent of the weakness in jewellery demand partly depends on the gold price. While western markets are expected to continue to struggle, dips in the gold price could trigger bouts of

A growth of 139 per cent in net retail investment was not enough to offset a 7 per cent fall in jewellery demand as 90 per cent of total consumer off-take in the region is in the form of jewellery buying in some non-western markets, similar to what was seen in the second part of last year. This buying is likely to be centred in those countries where the investment element of the jewellery sector is strongest. It is pointed out that the constraints surrounding mine output are unlikely to ease, and in fact, have the potential to worsen as credit conditions continue to cause problems for some miners and explorers. Furthermore, net selling by the central bank sector should remain at relatively low levels. However, much will depend on the direction of the gold price and the scrap response. Continued high levels of the gold price could see scrap levels increase further.

COPING UP

Cash is king Companies tighten the belt as they brace up to meet the effects of meltdown

iddle East firms have significantly scaled back on allocations for non–core and support functions as they brace up to meet the effects of the global downturn and they have started to relook at things critically, according to Fouad Alaeddin, Managing Partner, Ernst & Young EMEIA. “Like their international counterparts, it’s crucial that Middle Eastern companies proactively look at models that don’t just sustain or tide over during crises but can also be flexible enough to capitalize during adjustments in the economy. Clearly the best prepared were those that practised judicious financial discipline

during buoyant phases. The windfall along with the checks and balances in their systems would help them cushion the effect in the short to medium term,” he says while interpreting the results of a global survey by Ernst & Young titled ‘Opportunities in Diversity’, seeking to look at how companies are adapting their business strategies to a deep international recession and how their key priorities are evolving for the next 12 months. According to Alaeddin, current developments point to a firming up of expected growth levels in the Middle East. With most governments and economic blocs elsewhere in the world working

on bail out mechanisms for troubled institutions, GCC governments have signalled significant expenditure plans for 2009, especially on infrastructure and enhancing capacities in the energy sectors. This is expected to provide steady stimulus to the economy and play a prominent role in kick starting the engines of growth in the region. The starting point for any business is cash and many corporates have already drastically tightened their belts. Nearly 40 per cent of the companies surveyed felt there had been a significant deterioration in the business environment in their individual sectors, with over a third noting competitors withdrawing

March 2009

and a rise in bankruptcies. More than two thirds have already implemented increased frequency of reporting risk to their boards. The drive to cut costs has already impacted internal business strategy. Over 80 per cent of respondents have already undertaken a major costs saving analysis, nearly two thirds had instigated a headcount reduction programme and over half had rationalized their IT spend. European companies were more likely than their US counterparts to look to cut costs on Real Estate and IT rather than cutting direct or indirect employee costs. The credit crunch has forced companies to seek alternative ways of improving liquidity. Nearly half of all companies had disposed of or shut down parts of their business and 43 per cent were looking at alternate short term finance facilities whilst 23 per cent were considering options to renegotiate their debt covenants as well as proactively communicating with lenders, analysts and rating agencies and considering renegotiating debt covenants. Barely a quarter said the availability of cash was not an issue. According to Mark Otty, Area Managing Partner of Ernst & Young EMEIA, this is an important snapshot of global corporates already facing up to a credit crunch and thinking how to prepare for a recession. “But the business world has experienced serious downturns before and there are opportunities to learn from past crises. There will inevitably be losers over the next 12 months but there will undoubtedly be a significant minority of clear winners.” The companies surveyed have already been keeping a close eye on both their customers and their supply chain. And with good reason, as over half had seen a deterioration in creditworthiness of customers (nearly 60 per cent in Europe) whilst over half said that some key customers are in distress, and that there was an increase in the time lag between customer order and cash collection. Companies around the world have adapted their strategies to fit with this new environment, with nearly three quarters showing an increased focus on key accounts and over 40 per cent devel-

March 2009

oping new products. A third said that fears about existing customers meant they had broadened their customer basis and a third said they had terminated contracts with customers they perceived as high risk. In terms of suppliers, respondents were split equally between two very different strategies. Half the companies surveyed have narrowed their supplier base to obtain more favourable prices or terms whilst the other half have broadened the supplier base to reduce the impact of the failure of a key supplier. The majority of companies are already communicating more proactively with suppliers, half were negotiating payment terms with suppliers more frequently and over a quarter of companies said key suppliers were experiencing financial distress. On the question of where companies will be looking to save cash in the future, the survey found some fairly consistent messages. Most companies said they expected significant or reasonable savings in their supply chain operations (58 per cent), their sales and marketing (42 per cent), Operations (56 pre cent) and IT functions (43 per cent). In strategic terms 40 per cent of global companies and 53 per cent of European ones said they were actively considering selling non-core or nonperforming business, an increased use of shared services centre (27 per cent), increased use of outsourcing (31 per cent), making strategic alliances (30 per cent) and moving operations to lower cost locations (31 per cent). Companies particularly saw an increased role for outsourcing for their IT, Logistics and Human Resources. This would potentially imply a position of advantage for markets like India and the region which offer significant differentials in the costs associated with the above. However, a reasonable proportion of corporates saw the recession as an opportunity to expand with 34 per cent globally and 38 per cent in Europe thinking of making strategic acquisitions. Whilst most developed markets were either perceived as stagnant or in decline companies still saw major opportunities in emerging markets. Some

Nearly 40 per cent of the companies surveyed felt there had been a significant deterioration in the business environment in their individual sectors, with over a third noting competitors withdrawing and a rise in bankruptcies 18% of companies expect significant growth still in emerging markets in the near future; the majority (57 per cent) expects growth to continue but a slower pace than over the last two years and 25 per cent growth to slow significantly. Real estate and leisure, which were key components that fuelled the region’s growth trajectory, are currently experiencing a slow down. Most analysts seem to agree that the current trough is a short to medium term phenomenon while the long term outlook remains positive. The pace may have scaled down compared to the same time last year but is expected to slowly move up in the coming months ahead. Additionally, relatively lenient regulation and tax regimes will now be seen as a major draw as European and US business environments tighten under the pressure of the recession. “Companies are completely right to still believe in the opportunities of the emerging markets. To put into context, a recent Ernst & Young sponsored report highlighted that Brazil Russia, India and China will contribute 40 per cent of global economic growth between 2009 and 2020,” Mark Otty said.

FOCUS

Caught napping again S&P chief says ratings are about ‘default’ and not market value

redit rating agencies has always taken the flak for failing to warn about an impending crisis. Once the crisis actually sets in, they go to town proclaiming everything is bad and starts downgrading companies and realigning their positions with the prevailing the situation. This was the case with the Asian financial crisis and so is it with the current global meltdown. In both cases, the rating agencies were caught off-guard. This has often led to people criticizing the rating agencies, more for what they are not doing rather than what they are doing. It has also been observed that the rating agencies and their analysts often tend to reflect what their colleagues in the business say, each one endorsing the other, thus creating the impression that there is a consensus. But significantly, such ‘consensus’ invariably comes after the damage has already been done and the crisis stares starkly at everyone. When it comes to predicting something, the rating agencies appear to be as clueless as anybody else. This has been the case with the crisis in the regional property sector as well. When things were on a roll and the unprecedented boom showed no sign whatsoever of abating, the rating agencies were going gaga about the sector and related businesses and companies that were riding the wave. The talk about trouble started only after visible signs of a slowdown were already present. To make things difficult, the slowdown deteriorated too fast for anyone’s comfort, including that of the rating agencies.

In this context, it is interesting to see what the rating agencies have to say. In fact, Standard & Poor’s Managing Director Barry Hancock has answered some of these questions. In response to questions raised by gtnews.com, Barry clarifies that the role of the rating agencies is limited to default and not necessarily about market value, volatility in price or suitability of a product or asset as investment. “An S&P rating has an important

but limited role - it is an opinion about creditworthiness and the relative likelihood of a security defaulting, not about its market value, the volatility of its price or its suitability as an investment. While the performance of many of our ratings of recent US residential mortgage-backed security (RMBS) and collateralised debt obligations (CDOs) is worse than has been the case historically, much of the difficulty being experienced in the markets - such as the sig-

March 2009

“While the performance of many of our ratings of recent US residential mortgage-backed security (RMBS) and collateralised debt obligations (CDOs) is worse than has been the case historically, much of the difficulty being experienced in the markets - such as the significant markto-market write-downs taken by financial institutions - is due to declines in market value, not defaults” nificant mark-to-market write-downs taken by financial institutions - is due to declines in market value, not defaults”. He asserts that even considering that the widespread volatility in the market value of many structured securities and evaporation of their market liquidity, defaults, which is what ratings specifically address, have been limited to only 3 of the $3 trillion of US housing-related securities rated by S&P since January 2005. “That said, we recognise that a number of the assumptions we used in our analysis of many US RMBS and CDO ratings did not hold up. Put simply, we did not fully anticipate the extent of recent, unprecedented declines in the housing and mortgage markets. We have reflected on this, are committed to doing our part to enhance transparency and confidence in our ratings and the markets, and are making several changes in our business,” the S&P managing director acknowledged. When asked why should anyone believe what a credit rating agency says, he said that the acid test of S&P’s credibility was its track record. “The acid test of our credibility is our track record over time. S&P has been in this business for over 100 years and studies on ratings trends and performance have repeatedly confirmed that our ratings - both of corporate debt and structured securities - have been highly effective in informing the markets about deterioration and improvement in credit quality. Between 1978 and 2008, the average five-year default rate for investment grade structured securities is around 1 per cent; for speculative grade securities it is around 15 per cent. That is broadly comparable with the equivalent default rates for corporate bonds. Ratings have been,

March 2009

and we believe will continue to be, an important tool for investors and others looking for a common and transparent language for evaluating and comparing creditworthiness, across sectors and geographies”. He said S&P constantly learns from experience and has listened carefully to the many views that have been expressed about what it does. “We are focusing on two key efforts: first, we are making adjustments to our assumptions and analysis so that our current ratings reflect our best opinion of credit risk based on all information learned to date; second, we are taking concerted steps to improve our processes, enhance our transparency and restore market confidence in our rating opinions”. Barry also spoke his mind about the need for more stringent regulation of credit rating agencies. “We believe that sound, internationally consistent regulation of CRAs can benefit the market by helping support confidence in credit ratings. Sound regulation should focus on overseeing agencies’ policies and procedures that address the integrity and transparency of the analytical process. “At the same time, it should preserve the independence of ratings opinions and methodologies. Because of the global nature of ratings and the capital markets, any regulatory framework needs to be globally consistent and built on a set of standards commonly accepted by the market and regulators internationally, as the G20 governments proposed late last year. Such a consistent regime would help underpin investors’ confidence in the comparability, and hence usefulness, of ratings around the world. The global markets need the certainty of a coordinated,

consistent approach,” he said. gtnews asked Barry why was it that the credit rating agencies did not downgrade the US AAA rating. His response was that according to S&P’s expectations, the fiscal deterioration in the US will be temporary and the country’s other credit strengths will withstand current pressures. “The ratings on the US primarily reflect our opinion of the sovereign’s high-income, highly diversified, and exceptionally flexible economy. The ratings also reflect our view of its strong track record in terms of growth-enhancing policies, as well as the unique advantages coming from the US dollar’s role as the key international currency. In our opinion, these strengths continue to outweigh the US’s weakening current-year fiscal performance, growing risks in its financial sector, longer-term challenges associated with its entitlement programs, and the nation’s weak external position,” he said. On the issue of due diligence in terms of new instruments such as assetbacked securities and collateralized debt, both of which have turned bad, Barry pointed out the S&P has certain information requirements in order to rate a transaction and it relies on issuers and originators providing this information in good faith. “It is not, and never has been, our role to audit this information. Among the steps we have taken in recent months to further strengthen our ratings, we are seeking more information about the processes used by issuers and originators to assess the accuracy and integrity of their data and their fraud detection measures, so we can better understand their data quality capabilities. We will take this into account in our analysis,” he said.

ISLAMIC BONDS

Sukuk issues lose shine

Poor money market conditions exhaust resources

he credit crunch and its impact on the regional economies have led to a sharp fall in the issuance of sukuks. In 2008, the amount raised through sukuk issuance has fallen sharply by 54.5 per cent to S$15.1 billion, as compared to $33.1 billion in 2007. The credit crunch forced investors to step aside from the money markets, hence exhausting resources for suku-

ks as well, according to a report of the Global Investment House. Similarly, the US dollar dominance over sukuk market has weakened. The total amount of dollar dominated sukuk issued in 2008 was $1.5 billion, or 10.1 per cent of the total sukuk issuance, as compared to total dollar dominated sukuk of $13.9 billion in 2007 (41.2 per cent). Moreover, the number of dollar dominated issues

was 27 in 2007, as compared to 2008 where only five issues saw the light. Islamic financial industry has been gaining popularity in recent years. Around 300 financial institutions are working according to Islamic principles and they are scattered over 75 countries. Currently, GCC and Malaysia are the main centers for the Islamic industry. Excluding 2008, the Islamic financ-

March 2009

ing industry had been growing at a double digit over the last ten years. It is estimated that the Islamic financing assets are worth up to $700 billion. Part of this massive expansion of this market is due to the boom of the GCC economies. In addition, the industry had been witnessing a wide spread acceptance among Muslims, and non-Muslims alike. Nevertheless, the industry is still in its infancy, when compared to the total global financial sector. According to the report, with the recent crisis in the financial industry, voices calling to rely more on the Islamic principles are rising. Islamic financial institutions were impacted less than conventional institutions. The lesser impact was due to the restrictions that Islamic laws place on financial transactions. The toxic assets, which include mortgage backed securities (MBS) and credit default swap (CDS), are impressible in shariah. The year 2008 witnessed a decline in the amount of sukuk issuance, after years of massive growth. The amount raised from issuance decreased by 54.5 per cent in 2008 to $15.1 billion as compared to $33.1 billion in 2007. Despite that, the number of global sukuk issues increased from 129 in 2007 to reach 165 in 2008. As evident of the credit crunch effect on sukuks, issuances in the fourth quarter of 2008 were weak when compared with other quarters in the same year. In the first three quarters of last year, the number of sukuk issuances was 139 raising $14.3 billion, averaging $4.8 billion per quarter. On the other hand, the number of sukuk issuance in the fourth quarter of 2008 was 26, raising $0.8 billion. The Islamic bond market is still concentrated in the GCC region and Malaysia, in terms of dollar amount. GCC countries accounted for 55.5 per cent of the dollar amount issued, while Malaysia accounted for 36.3 per cent. Meanwhile, the number of sukuk issued by corporates slightly decreased from 97 in 2007 to reach 92, while the number of sovereign sukuks increased by more than double to reach 73 in 2008 from 32 in 2007.

March 2009

The number of sovereign issuances was driven primarily by Gambia, which is a low-income African country populated mostly by Muslims. Gambia had no sukuk issues in 2007, but started issuing Al Salaam sukuks, ending 2008 with 40 issues. The dollar amount raised from these issues was small when compared to the total sukuk market, but the high number of Gambian sukuks shows that there is an overwhelming demand for financial instruments that are in compliance with Shariâ&#x20AC;&#x2122;a, especially in the Muslim world. Out of 165 sukuk issued in 2008, 92 (55.8 per cent) were corporate issues, as compared to 97 out of 129 (75.2 per vcent corporate issues in 2007. Despite the decrease, corporate constituted a large piece of total amount issued. Corporate sukuk issues amounted to $13.3 billion, or 88.5 per cent of the total dollar amount, while sovereign sukuks were worth $1.7 billion, or 11.5 per cent in the same period. Some countries had no corporate sukuk issues, such as, Brunei which had 4 sovereign sukuk issues worth more than $95 million. On the other

tar and Indonesia. The largest drop in sukuk issuance was recorded by Kuwait that witnessed a decline by 77.2 per cent from $835 million, followed by Saudi Arabia with a fall of 67.2 per cent from $5.7 billion in 2007. The only country to experience a major increase in sukuk issuance was Indonesia with more than a six folds increase over 2007 ($92.8 million), while Qatar maintained almost the same level. In 2008, Malaysia was the largest market for sukuk raising $5.5billionfrom 54 issues; average issue raised $101.3 million. UAE was the second largest market raising $5.3 billion from 10 issues; average issue size was $530 million. Saudi Arabia was the only country to join the billion dollar sukuk club, along with UAE and Malaysia, raising $1.9 billion from 4 issues and averaging $468.3 million per issue. Other countries include Bahrain ($700 million), Indonesia ($663 million), Pakistan ($476 million), Qatar ($300.9 million), Kuwait ($190 million), and Brunei ($95 million). Sukuk structure comes in a variety of flavours. Most importantly, all these

In the backdrop of the financial crisis, voices calling to rely more on the Islamic principles are rising as Islamic financial institutions are impacted less than conventional institutions hand, corporate issues were dominating in some countries like Malaysia which had 54 corporate issues. Out of 73 sovereign sukuk issues, 24 sukuks were sold by the government of Bahrain which included the $350 million international, dollar dominated sukuk by the Central Bank of Bahrain. In the year 2008, ten countries had sukuk issuance, of which half were from the GCC countries. The composition of issuing countries was the same in 2007, except for Gambia which replaced Sudan. All countries experienced a fall in sukuk issuance in terms of dollar amount in 2008 except for Qa-

structures must conform to the Islamic principles, and the degree of popularity of any structure depends on its usability, and credibility. Many structures could be similar, but practitioners avoid the complex one. In addition, issuers always seek the less controversial structure, in order to attract as many investors as possible. The credibility of a structure plays a vital role because vast majority of prospective buyers of sukuk are interested in its compliance with shariah.

Dollar Dominance The domestic market witnessed an in-

crease in demand for sukuk as a tool for raising funds. Therefore, the dollar dominated sukuk declined relative to the total sukuk issuance in 2008 in terms of value and number of issues. The total amount of dollar dominated sukuk issued in 2008 was $1.5 billion, or 10.1 per cent of the total sukuk issuance, as compared to total dollar dominated sukuk of $13.9 billion in 2007 (41.2 per cent). Moreover, the number of dollar dominated issues was 27 in 2007, as compared to 2008 issues of only five, of which four were in the GCC countries. Only one government issued sovereign dollar dominated sukuk, and it was worth $350 million. The financial products created must be compliant with the Islamic teachings, and religious scholars are the ones who decide on the compliance of these financial products. In fact, every financial institution has its own board of Fatwa, which might hold different interpretations of the Islamic teachings. This difference could create variation in opinions â&#x20AC;&#x201C;sometimes conflicting- on the permissibility of some financial transactions. In other words, Islamic financ i a l

institutions depend on different scholars, who might embrace different interpretation of the Islamic financial laws. This variation among Islamic companies leads to a distraction in delivering the Islamic industry brand to consumers and investors alike, especially to the non Muslim world. The standardization of sukuk regulations will not only improve the brand image, but it will yield other benefits, the report said. The standardization would reduce cost and times faced by Islamic firms, and eliminate inconsistency. Efforts to lay out the foundation for standardized rules for the Islamic financing industry have been put in place. A major organization that is focused on improving and standardizing the industry is the Accounting and Auditing Organization for Islamic Financial Institutions (AAOIFI). Compliance with AAOIFI standards is optional, but they are required in some countries, such as, Bahrain and UAE. AAOIFI recognizes 14 sukuk structures that are in compliance with shariah. There are also other organizations that attempt to promote Islamic financing. However, the Islamic financing industry still lacks harmony among its players, as the disparities among Islamic financial institutions are still present. Thus, more work is still needed to attain the desired standardized marketplace, in order to eliminate confusion, enhance credibility, and improve efficiency. Because of its immaturity, the sukuk market still lacks the central information body, in which all the data can be publicly accessed. This includes the availability of indices that could represent the performance of the Islamic fixed income industry. A few indices were created a while back, but none of them was extensive

Issuers always seek the less controversial structure, in order to attract as many investors as possible as credibility of a structure plays a vital role because vast majority of prospective buyers of sukuk are interested in its compliance with shariah enough to cover the whole market. Key obstacles need to be resolved when deciding on creating an index to the sukuk market. Choosing what type of structure to be included is mind puzzling. Not all structures are agreed upon by scholars to be in compliance with Shariah. Thus, any index including these structures will be controversial. Nevertheless, the goal of the index is to provide a benchmark for investors when investing in sukuks. The report points out that sukuks are under the same macroeconomic environment as the conventional bonds. Despite being complaint with Islamic shariah Sukuks are still part of the global financial industry. Sukuk market is always linked with conventional bonds market. The pattern of widening spread in the conventional is also present in the sukuk world. Thus, yields of many sukuks have skyrocketed in this crisis. The increase in yields can be attributed to two main factors: credit premium, and liquidity premium. First of all, investors are concerned about the issuerâ&#x20AC;&#x2122;s ability to meet its financial obligations, since confidence has been lost due to the collapse of the major financial institutions that used to be credit trustworthy. This has resulted in higher credit risk premium in order to entice investors into purchasing risky assets.

March 2009

WEALTH

No excitement yet Sovereign wealth funds think it’s too early for bargain hunting

overeign wealth funds are adopting a very cautious approach to the current market, expecting better value to materialize later during the year, a survey of senior executives from some of the world’s leading SWFs has revealed. The funds covered in the survey had total assets of over $5 trillion, accounted for over 50 per cent of the collective global funds currently held by the SWF asset class. The research, conducted by Financial Dynamics International (FD), a member of FTI Consulting Inc, focused on current SWF attitudes towards valuations, investment strategies and where they see regional investment opportunities. The funds indicated they are still waiting to see the bottom of the market before committing to further substantial investments. Abu Dhabi accounts for the largest sovereign wealth funds in operation, with estimated assets worth $800 billion last year, but the value of the holdings has come down substantially in the aftermath of the continuing global financial crisis. Current estimates of their assets vary, but most reasonable assessments now put the value at around $500 billion. The survey showed that SWFs are primarily interested in acquiring minority equity stakes in listed companies, with no desire to take management control, have board representation or act as ‘activist’ investors. They are particularly cautious with regard to supporting further bail-outs of distressed companies.

March 2009

Abu Dhabi accounts for the largest sovereign wealth funds in operation, with estimated assets worth $800 billion last year, but the value of the holdings has come down substantially in the aftermath of the continuing global financial crisis

Extent of fall in forward PE from Five-year high

Current 12 months forward PE versus five years 25 0

-10

-20

-30

5 0

-40

Central & South America North America

High

Western Europe

AsPac

-50

Central & South America

Nort America

Western Europe

AsPac

Current

The executives who were interviewed as part of the survey said they considered Brazil, China and areas of Central America as the most attractive regions for investment. Western European markets are also seen as offering the most compelling value with PE ratios of publicly listed companies down more than 40 per cent from their peak, and markets trading at the lowest absolute price earnings ratios of under 10.0x. The survey showed SWF investment decisions on average are made on a minimum of a five year investment perspective, with dividend yield being as critical an investment criterion as capital growth. In the short term some SWFs are seeing their cash in-flows diverted from their global portfolios to invest in their home countries/regions to add stability and economic stimulus to local markets. “Our research confirms that whilst

Sovereign Wealth Funds are currently adopting a very cautious investment approach to world markets, they are clearly poised to re-enter the global equity markets in the not too distant future with compelling valuation propositions beginning to present themselves across North American and Western European equity markets. Our research has also determined that contrary to widespread perceptions, Sovereign Wealth Funds are primarily genuine long term passive investors who have no agenda to exercise management control or behave in an activist way,” Charles Watson, FD’s Group CEO, said. Whilst a number of key SWF investments have been made over the last 18 months and SWFs are still interested in broadening their portfolios, the findings showed that this particular class of investor is keeping a watchful eye on global markets, waiting for the right time to make deep value investments.

Do you anticipate increasing significantly your investment in equity markets in the second half of the year ? Yes

10%

70%

Undecided/No comment

30%

Are you currently actively investing in the equity market ? Yes

10%

70%

Undecided/No comment

30%

March 2009

“The bottom has yet to come,” said one SWF executive. “Obama’s first 100 days may see bear markets rally but the entire financial system and capital market has been stressed to the point of collapse and now needs time to adjust. We are behaving in a very cautious manner at present. We are convinced there will better value in markets later this year.” “We are ready to re-enter the market in a major way – but not for several months given that we are sure prices are only heading down. Valuations of the assets we are targeting are certainly more attractive but we still feel they have further to go during 2009. Our view is that valuations may bottom out towards the end of this year,” the executives said. The interviews indicated that SWFs are conservative with regards to participating in further bail-outs of companies in financial difficulties given that a number of such funds are currently sitting on major capital losses from previous investments. “Having supported some of the earlier capital raising of distressed banks, we are not planning to make any follow-on investments of a similar nature. We see the real opportunities as being investing in well managed sound companies whose shares are trading at all time lows, rather than

March 2009

putting good money into failed companies,” one of them pointed out. Some funds are actually reducing their exposure to the listed market. At least one adopted this strategy as early as 18 months ago, having noticed early warning signs in market excesses. Another executive commented that corporate governance and management quality were also very important issues in the current market conditions: “Investors will now turn to value a company using a holistic valuation method, including corporate governance and measures of a reliable management team with good checks and balances, for example.” It was also noted by several interviewees that when determining ‘value’ within prospective investments, the sustainability of and growth prospects of dividend streams was as critical as capital growth prospects. “Yield is as critical to us as growth. Sustainability of dividend payments is therefore a critical area we focus our analysis on.” The SWFs stated without exception that their preferred option for investing was through minority participation via capital injection, with no SWF stating a desire or intention to control or manage investee companies, indicating their passive investment style. The majority also iterated that they had

no desire to have board representation within their investments. “If we don’t like an investment, it is not our intention to then intervene with management and try and change things. Rather, we will exit the investment. It is a serious misconception that we are active or strategic investors. Our sole objective is to invest across a very broad range of assets and geographies to create long term value.” Those who are investing in the current market are all clear on one thing – they are not looking to take operational control of their investments. Full 100 per cent acquisitions and majority stakes are not on the agenda, and have not historically been of particular interest to SWFs regardless. “We definitely are not interested in seeking board representation. We have no interest in controlling assets,” said one of the funds surveyed. “We do not want seats on the board. We are traditional long term investors”. It was also noted that in the current market conditions, debt for equity swaps are increasingly being seen as an opportunity to enter investments in an efficient manner. “We are increasingly interested in seeing how it might be possible to secure a cheap entry into an investment by either buying the debt or structuring some form of convertible in-

strument – but our intentions in doing so is purely to create value, not to seek any form of control.” SWFs see themselves as passive and therefore fundamentally very different from hedge funds or private equity investors. “It is very unfortunate that we get tarred with the same brush as “alternative assets” such as hedge funds and private equity. In complete contrast to these asset classes, we are passive investors. Our normal form of investment is buying minority shareholdings in tradable liquid assets … We do not seek to engage in confrontational situations or exert influence … If we don’t like management’s strategy, or the strategy changes, we sell.” The majority of SWFs interviewed confirmed that Asia and South America are the two regions SWFs deem to be the most attractive for a combination of qualitative and quantitative reasons. Regarding the latter region, Mexico and Brazil were cited as the two most attractive countries. It was also stated by several of the survey’s participants that North America and Western Europe clearly present the most compelling value proposition. A quantitative financial analysis of the top 800 companies in major markets across the world (Central & South America; North America; Western Europe; and Asia Pacific) indicates deepest value in North America and Western Europe. By measuring the current Price/ Earnings ratios of the major companies in these geographies and comparing current P/E valuations to market highs, FD found: • The greatest discounts compared to recent market highs currently exist in North America and Asia-Pacific • Asia-Pacific companies have fallen from considerable highs (25.1x to 13.2x) but the market is still comparatively ‘expensive’, due to continuing belief in the more positive fundamentals of the region Industry categories including ‘Media & Entertainment’, ‘Mining’ and ‘Steel & Other Metals’ are consistently showing the largest top to bottom falls across all geographies

However, these industries aside, the opportunities in each geography are very diverse According to FD, the survey was carried out to identify which markets still held the best value for investors. The findings showed that actually despite market conditions, Western Europe and North America were identified as the best investment regions in financial terms. Although the data revealed Asia

at unprecedented valuations. We really feel we are starting to see some genuine value in the more mature markets.” However, the speed with which SWFs will re-enter this market will be moderated by two things: firstly a genuine sense of caution prevails with regard to fears that continuing negative sentiment will drive equity markets lower – and secondly, some SWFs are seeing cash sources diverted by the need to

Findings of the survey showed wealth funds are keeping a watchful eye on global markets, waiting for the right time to make deep value investments to have one of the two deepest discount areas alongside North America, its actual PE is the highest and therefore it is on a total basis, the most expensive option currently for investors. The majority of the SWFs interviewed in the survey confirmed that it was only a matter of time before they started to commit significant funds again to the North American and Western European markets. “There are clearly some phenomenal value opportunities in Europe and the US. There are many high quality companies trading

support local financial stimulus packages in their own regions/countries. “A proportion of our free cash holdings have been diverted to supporting local investments – meaning that our international investment activities have been temporarily put on hold. Although the objectives of our fund are solely international, we are slowing down our overseas activities whilst we firstly wait for market conditions around the world to stabilize – and secondly we have seen funds diverted to support a variety of local stimulus packages”, it was stated.

March 2009

MARKETS

Ripe for long-term value seekers Markets continue to be weighed by adverse economic conditions

ith no encouraging news on the economic front and further deepening of global financial crisis, GCC market continued their downward journey in the first month of 2009. According to Global Investment House, that UAE markets are ripe for the long term value-seekers, at the same time confidence building exercise by the government authorities are in the right direction to boost investorâ&#x20AC;&#x2122;s morale. January was no different than what was seen in the last quarter of 2008. The markets continue to be weighed down by adverse economic developments. Though governments in the re-

March 2009

gion have been taking steps in the right direction to support the economy and market; these have proved to be insufficient to improve the market sentiments. For the fourth quarter of 2008, the profitability of the companies has declined; however the decline has been less than what was expected by the market. But, it is very early to draw any conclusion as most of the companies are yet to declare their results, according to the investment bank. Among its GCC peers, UAE markets declined the least during the month of January 2009. Reflecting the trend, the market barometer NBAD general Index ended the month with a loss of 4.2 per cent on a month to month basis to

close the month at 5,703.79 points. According to the investment bankâ&#x20AC;&#x2122;s GCC market review, the only market which managed to end the month in green was Saudi Arabia with a marginal month to month gain of 0.1 per cent. Qatar market declined the most in January-2009 with Global DSM Index ending the month at 396.02 points, showing a decline of 23.2 per cent. Among other markets, Kuwait market was down 12.8 per cent for the month. In fact the decline in Kuwait market was much steeper during the month; however the market recovered to some extent during the last week of the month on the news about bailout package proposed by Kuwait government.

The review referred to the Dh50 billion liquidity injection plan of the UAE Central Bank to maintain economic growth in the country as a positive development. Local banks are committed to finance vital public sector projects in the UAE as well as the local companies that enjoy strong balance sheets and that were old clients for these banks. During the month, the Central Bank cut its benchmark repurchase, or lending rate, by 50 basis points to 1 per cent in an effort to boost liquidity in the country. The review feels that this 50 basis points cut should further reduce the cost of the liquidity supporting facilities implemented by the Central Bank to support banks. Also lower cost of funds will ultimately reduce customer loans, interest rates, and would further enhance sustained development prospects. The month of January witnessed an erosion of $7.9 billion or a decline of 6 per cent in market capitalization on a month to month basis, with the overall capitalization reaching $124.1 billion. The market breadth continued to remain negative as collective figures of both the markets show that there were 49 decliners and 34 advancers while in case of 47 stocks the prices remained unchanged. Out of the total market volume of 5.7 billion shares, about 77 per cent of the volume was accounted by the decliners. Among the volume movers, the stock of Dubai Financial Market (DFM) accounted for the highest volume (15 per cent of the total market volume) whereas the stock of Emaar Properties accounted for the highest value traded (19.5 per cent of the total market value) for the month. The stock of DFM ended the month with a loss of 30.4 per cent to reach Dh0.87per share while Emaar Properties declined by 13.3 per cent to Dh1.96 per share. Trading activity in terms of value as well as volume traded increased by 34.5 per cent and 58.4 per cent respectively. About 5.7 billion shares worth $2.4 billion exchanged hands, on both the exchanges, as compared to 3.6 billion shares worth $1.8 billion which traded in the preceding month.

The only market which managed to end the month in green was Saudi Arabia with a marginal month to month gain of 0.1 per cent Though on the back of very low volume of 495 shares, the stock of Kuwaitbased Grand Real Estate Projects defied the market trend and posted a gain of 88 per cent for the month. Among the other prominent gainers for the month were Abu Dhabi Aviation (38.7 per cent), Ras Al Khaimah Cement (35.8 per cent), Methaq Takaful Insurance (28.8 per cent and Commercial Bank International (26.1 per cent). Among the major decliners for the month were Global Investment House (-51.8 per cent, Ekttitab Holding (-49.6 per cent), Arabtec Holding (-48. Per cent), National Bank of Ras Al Khaimah (-47.4 per cent), and Bank of Sharjah (-46.6 per cent).

The first round of results for the year 2008 were encouraging, with Abu Dhabi Aviation’s net profit rising by 53.2 per cent to Dh116.3 million, Abu Dhabi Ship Building witnessing a four-fold jump in its net profit to reach Dh103.2 million and Dana Gas reporting a profit growth of 8.1 per cent to Dh120 million. Gulf Navigation Holding’s profit grew by 27.7 per cent to Dh148.2 million, Al Dar Properties reported a profit growth of 77.5 per cent to Dh3.4 billion while Etisalat’s profit grew by 18.7 per cent to Dh8.7b billion. First Gulf Bank’s profit rose by 50 per cent to Dh3 billion while Gulf Medical Projects registered a profit growth of 4.8 per cent to Dh73.6 million.

March 2009

INTERNATIONAL

Practical to be tactical It is highly rewarding to remember that trees don’t grow to the sky By Marshall Kaplan and William Mann

or much of the period between 1982 and 2000, ‘buy and hold’ investors enjoyed the benefits of a secular bull market characterized by strong economic growth and rising profits. Many investors took advantage of emerging trends, such as the ‘graying of America’ and the technology boom, believing that the growth trajectory of pharmaceutical companies and semiconductor manufacturers would continue into the future with no end in sight. Indeed, the equities of such companies were known as ‘ruler stocks’, popular with investors for their predictable, straight-line growth. But trees don’t grow to the sky. In

March 2009

the late 1990s, expiring patents, competition from generic drugs and a paucity in the new-product pipelines came together to drag down the pharmaceutical stocks. Technology stocks soared atop the ubiquity of the personal computer, the emergence of the World Wide Web and the transformation of telecommunications via the cell phone. Then they started a long period of underperformance with the bursting of the tech bubble in March 2000, which came as a result of excess capacity and faulty assumptions about the potential returns on technology investments. IS THIS TIME DIFFERENT? With the technology and pharma stocks, investors were at least able to ride an identifiable long-term trend. In 2009, such

trends are hard to find as severe capital constraints, a weak housing sector and forecasts for declines in real GDP make earnings visibility impossible. What is clear to us is that investors are discounting a wide range of potential outcomes. Some wonder if the economy will slip into a deeper recession, while others question whether the government bailout of financial firms will ultimately lead to a new round of inflation. In either case, it doesn’t appear that investors’ conviction levels are very high. In fact, a look at the VIX, which measures volatility and fear in the marketplace, reveals that the index is still well above its 10-year average. Moreover, last year, the S&P 500 rose or declined by 5 per cent or more on 13 days. Before 2008,

N the last time investors witnessed a 5 per cent one-day move was in 2002. BE READY TO ACT: Even if there are no identifiable long-term strategies, investors should be prepared to act on tactical opportunities that arise as a result of the gap between fundamentals and perceptions, as well as due to changing economic conditions. For example, as oil prices decline, earnings estimates for oil service and equipment companies could be vulnerable, warranting potential action within the energy portion of portfolios. Still, in a two-month period, there were three double-digit rallies in the sector. Further, sentiment shifts on infrastructure companies, based on the ultimate composition of the fiscal stimulus package, could create opportunities in these stocks. While a great deal of deleveraging has already taken place, hedge funds may still engage in forced selling from time to time, driving prices of individual stocks to unusually attractive levels. Often, these inefficiencies are quickly corrected, so anyone who hopes to benefit from them must act swiftly. Our stock market forecast calls for modest gains in the S&P 500 this year, recognizing that head fakes may be in store in either direction as the economy attempts to regain its footing. After all, when the NASDAQ declined to 1,114.11 from 5,048.62 between March 2000 and October 2002, there were four rallies in excess of 20 per cent—two of them greater than 40 per cent—presenting some very profitable tactical opportunities for the most nimble investors. While the days of ruler stocks may have passed, the ability to capitalize on the missteps of others—combined with a strategy focused on identifying companies with strong balance sheets and attractive fundamentals—could prove to be a rewarding strategy in 2009. The ability to be nimble is also likely to be necessary in global investing this year. Opportunities will arise in individual markets and in playing off the variations in various regional markets. While we are not increasing our risk exposures at this time, we believe that the returns from global markets will be less homogeneous in 2009 than in 2008. CHINA’S NEAR-TERM OPPOR-

S TUNITY: In our view, the near-term prospects for China appear quite good. We believe that a first-quarter rally, supported by significant fiscal and monetary stimulus packages, is likely to offer investors the potential for solid returns. However, on a slightly longerterm basis, the tug-of-war between the stimulus and the local impact of a pronounced global economic downturn is likely to act as a headwind to performance. Until this is resolved and until signs of a weaker dollar emerge, the China call remains tactical rather than strategic. Across the longer term, we would prefer to wait for signs of a more defined economic recovery before investing in China. LOOKING SOUTH: Our Latin American strategist Geoff Dennis says that the region offers multiple opportunities. True, he expects a first-quarter pullback driven by poor fourth-quarter

W MIXED SIGNALS IN THEUK. Trading at just 8.5 times I/B/E/S consensus earnings estimates for 2009, the equity market appears attractive, relative both to other regions and to its history. In addition, with a corporate sector that derives 70 per cent of earnings overseas, sterling’s nearly 30 per cent slide versus the dollar and 20 per cent downside against the euro during the last six months could stand it in good stead. With that said, the market continues to concentrate on further dislocations in the banking sector, the UK’s high level of consumer and government indebtedness and the likely severe economic downturn. In addition, while the pound’s slide may benefit companies that derive revenues overseas, for nonsterling investors the currency is a drag on performance. At the first signs that these issues are receding, we believe there will be good prospects for eq-

Some wonder if the economy will slip into a deeper recession, while others question whether the government bailout of financial firms will ultimately lead to a new round of inflation profits and weak global macroeconomic data. But Dennis expects a rally later on, anticipating an upturn in the US and global economies. He favors the prospects for Brazil, which he expects to be supported by an improving domestic economy, a slow, steady rebound in commodity prices and a strengthening currency.

uity market gains. Strategist Jonathan Stubbs’ year-end target of 4600 for the FTSE 100 index implies a double-digit upside from the current level. The writers are Equity Strategists with Smith Barney Private Client Investment Strategy

March 2009

ISLAMIC FINANCE

Unlocking potentials By Gérard Al-Fil

“W

eiji” is the Chinese word for crisis, which literally means “risky chance”. From the Chinese point of view, every crisis contains a chance for reconstruction and renewal. So where are the potentials nowadays, during a globalized and severe recession? According to Dr. Nasser H. Saidi, chief economist, Dubai International Financial Centre Authority (DIFCA), the high currency reserves of Arabian Gulf states are a chance to support global liquidity and boost Islamic Finance as a genuine banking alternative for the future. “The GCC states have amassed reserves of $3.3 trillion during the oil price rally in recent years”, he said on the occasion of the tenth anniversary of the Dow Jones Islamic Market (DJIM) Indexes in Dubai. “But the debt market is still in its infant stage in this part of the world.” Dr Saidi also said that the decline in the issuance of interest-free bonds in line with Islamic law (Shari’ah) does not signal a major setback for the industry. He points out that apprehension and pessimism are rife in every corner of the financial markets, and not just the Islamic world. “With the investors’ risk aversion still on the rise, they shy away from all sorts of financing, whether conventional or Islamic,” said Dr Saidi. The DJ Citigroup Sukuk Index declined by 3.65 per cent in February.

March 2009

Potential number 1: Islamic Financial Institutions But transforming liquidity into supportive cushions is exactly what happens in the Gulf. The government of Dubai announced a US$20 billion bond program in order to refinance outstanding debt. Investors hailed this initiative by sending the Dow Jones DFM Titans 10 Index, which measures the 10 biggest capitalized firms listed on the Dubai Financial

Market, up 4.47 per cent in February (based on the close of trading on February 24). The Dow Jones DFM Titans 10 Index was topped only by the Dow Jones JS Pakistan Islamic Index (7.40 per cent higher), followed by the DJIM Taiwan Index (gaining 3.43 per cent, outperforming its conventional counterpart by 2.23 per cent). The UAE and Pakistan are important centers in Islamic finance, which is at this time a $1 trillion market worldwide.

Transforming liquidity into supportive cushions is exactly what happens in the Gulf. The government of Dubai announced a $20 billion bond programme in order to refinance outstanding debt

“Islamic Financial Institutions (IFIs), by nature do not bear toxic assets, act conservatively and continue to unlock financial potential by giving corporations and the middle class in poor countries tools of faith-based investment,” Dr Saidi explains. However, many IFIs postponed their expansion plans to Europe and East Asia. They have instead put their regional focus on the Middle East. “Operations abroad are delayed, but not cancelled”, confirms Al Afshar, Senior Vice President and Head of Institutional and Investment Banking Division at Al Hilal Bank in Abu Dhabi, another important Islamic finance center. Potential number 2: Sustainable Investment Dr Saidi also stresses that 40 per cent of world economic production now comes from emerging markets. In February 2009, the 10 best performing

This unique crisis offers unique chances for courageous investors to re allocate capital to ‘green’ real estate companies, and to selected innovative producers of renewable energy, especially in Asia

indexes of the DJIM Index family were based in non-industrialized nations or regions. For the month, the DJIM U.S. Titans 50 Index (off 4.65 per cent), the DJIM Europe Titans 25 Index (down 7.48 per cent) and the DJIM Japan Index (12.95 per cent lower) posted above average losses. This came despite a market rally on February 24 triggered by US president Obama and Fed-Chief Bernanke remarking that an economic recovery might occur at the end of 2009. But what all markets have in common is that they have not yet unlocked the full potential of sustainable investments. “This unique crisis offers unique chances for courageous investors to re-allocate capital to ‘green’ real estate companies, and to selected innovative producers of renewable energy, especially in Asia”, says Burkhard Varnholt, Chief Investment Officer of Swiss private bank Sarasin. Dow Jones Indexes offers the DJIM Sustainability Index (off 7.00 per cent in February), a benchmark which combines Islamic and sustainable investment principles. Among the sector indexes, the DJIM Consumer Services Index lost the least amount (down 2.45 per cent), while the DJIM Utilities Index plummeted the most (down 10.32 per cent). In order to unlock their true investment potential, fund managers should (and will) rethink their traditional asset allocation, according to Varnholt, which he calls a probable painful process. We see this happening even now around the globe. Former General Electric-CEO Jack Welch seems to agree, and he expresses the “Weiji” of 2009 even clearer: “The biggest danger in the postfinancial crisis era is to miss the next rebound of the global economy.” Gérard Al-Fil is a financial journalist in Dubai. He works as a Middle Eastern correspondent for the Swiss financial website moneycab.com, for Dubaibased portal AME Info, for the Swiss banking magazine ‘Schweizer Bank’ and for the German weekly ‘Euro am Sonntag’.

March 2009

TECHNOLOGY

Offshoring

India advantage intact Despite financial crisis, US anti-offshoring rhetoric and Satyam fiasco, outsourcing to India remains a compelling proposition

lthough the global downturn has raised questions about vendors’ financial health and India’s underlying economic conditions, as also the anti-offshoring rhetoric from the United States during the presidential campaign, offshoring remains as viable a cost-reduction option as ever for glo-

March 2009

bal companies, and the environment for outsourcing in India continues to be favourable, according to a report by management consultants AT Kearney. The report, authored by Arjun Sethi, partner in the New York office of AT Kearnery; Ken Lee, partner in the Cambridge office; Uday Singh, a principal in the New York office and

Randy Burt, consultant in the Chicago office, says that despite currency fluctuations, declining growth in the Indian economy, changing Indian labour rates and the recent accounting scandal at Satyam, the environment for outsourcing in India is actually quite favourable. “The Satyam accounting scandal is

clearly a grave situation, especially considering that company’s scope in the industry, but we do not believe it is symptomatic of the outsourcing industry in general. It does, however, underline the need for buyers to increase the rigour of their due diligence when it comes to their potential suppliers’ financial stability and viability,” they say. The report points out how the current financial crisis finally put the brakes on years-long growth in the Indian outsourcing industry. This was spurred in large part by troubles in the financial services industry, which makes up approximately 30 per cent of Indian information technology outsourcing (ITO) and business process outsourcing (BPO) and is the catalyst

for past outsourcing industry growth. Consolidation in financial services (such as Bank of America’s acquisition of Merrill Lynch and Wells Fargo’s purchase of Wachovia) will place new pressures on vendor margins, as the newly merged companies aim to eliminate redundancies and lower costs for both new and existing outsourcing contracts, the authors feel. At the same time, they argue that for US companies, this changing environment offers increased buying power in creating new and revising existing outsourcing contracts. Companies that carefully choose solid vendors and negotiate the right deals can find the significant savings their shareholders are looking for. According to the report, two major macroeconomic changes are occurring in India, leaving a major impact on the offshoring industry. First, the robust growth of the Indian economy has slowed down. Asian Development Bank has estimated that India’s economy grew 9 per cent in 2007, but growth is expected to drop to 7 per cent in 2008 and 6.5 per cent in 2009. This has affected the labour markets, as fewer workers are leaving their existing jobs. Vendors are reporting that BPO attrition rates have dropped from highs of 60 per cent to roughly 20 per cent. As a result of these lower-than-normal attrition rates, several Indian providers have announced wage freezes for 2009, underscoring the push by vendors to reduce costs, the report notes. The second major change has been the rise of the dollar and the Japanese yen against every major currency, including the euro, the British pound and the Indian rupee. While on one hand this has meant cheaper labour costs in India in comparison with the dollar, it has also meant reduced revenues for BPO and ITO organizations that do business with Europe. While low interest rates could weaken the dollar again in 2009 and create another see-saw year for currency values, US companies should be in a position of strength when it comes to negotiation, the authors argue. The report notes that in the context of slowing demand and the chang-

“The Satyam accounting scandal is clearly a grave situation, especially considering that company’s scope in the industry, but we do not believe it is symptomatic of the outsourcing industry in general” ing US political environment, vendors are facing higher risk and more intense competition. To manage their risk, many vendors are diversifying. Full-service vendors are trying to limit overexposure to problems in major industries by pursuing new business in secondary areas of focus. Domain specialists are placing less focus on expanding existing accounts and more on attracting new clients in different areas. Industry consolidation is likely to accelerate in 2009 as vendors try to improve economies of scale and ITO and BPO organizations that are critical to winning larger deals. “We have also seen many vendors acting more aggressively when it comes to structuring deals. Suppliers are becoming increasingly flexible about contractual and financial terms, accepting lower margins on deals in an effort to secure new business and exploring creative ways to restructure existing contracts. Beyond price, suppliers are showing more willingness to share both the capital costs and the risks associated with project startup and transition; these are compelling incentives for companies given current capital constraints,” the report says. With virtually all companies facing budget constraints, outsourcing and offshoring are obvious options for savings. Taking into account the changing economic environment in India and the risks involved, there are several im-

March 2009

portant actions for companies as they consider offshoring opportunities, the authors say. Due to weakened demand and the currency effects, vendors are becoming more flexible about pricing. Buyers should capitalize on this, both when it comes to pricing on existing contracts and new business, they advise. They feel that the constrained capital environment and increased vendor flexibility should allow companies to structure offshore arrangements in new ways, thus limiting the significant up-front investments of traditional agreements. Larger, established vendors with diversified customer bases will be the more attractive options in this environment. Companies exploring opportunities to expand their existing offshore relationships can also take advantage of vendors’ recent capacity improvements. “We have seen vendors either waive portions of the start-up costs or agree to amortize such costs over the life of the contract Limiting capital costs can make off-shoring a more attractive option. Leading companies are analyzing their current footprint to limit risk of overconcentration (with one country or vendor) and are re-examining

March 2009

their disaster recovery capabilities and contract obligations after the Mumbai attacks of November. Most clients we work with insist they will only consider tier 1 vendors as potential suppliers, and many operating officers have even begun the search for alternative contractors outside of India,” they said. According to the report, in terms of operating models, the major change being seen among companies that are planning to out-source is an accelerated movement away from captive organizations. Given capital constraints and the relatively strong balance sheets of tier 1 suppliers, companies are generally more reluctant to set up new captive organizations and many are moving to sell existing captives. Citigroup sold off its Citigroup Global Services unit to Tata Consultancy Services in October 2008, and WNS purchased insurance group Aviva’s offshore captive organization in July 2008, the report points out in this context. “Outsourcing is at a crossroads—its growth is slowing but its importance is still strong. Economic conditions are certainly making the environment riskier, and IT and business process managers are paying increased attention to the stability and safety of their offshoring interests. At the same time, considering

the economic conditions and the maturation of the outsourcing industry in general, offshoring will be an even more critical arena for cost-conscious companies trying to save their imperiled profit margins. Despite the risks, the chances for savings through outsourcing in India are as great as ever,” the authors say. The report refers to the renewed ‘America First’ push in the US administration and says offshoring could be the target of widespread criticism, particularly in the face of rising US unemployment. According to the authors, while President Barack Obama was an outspoken critic of moving jobs offshore during his campaign, much of the rhetoric focused on manufacturing, Some have speculated that the new administration may enforce labour and environmental regulations in existing agreements more aggressively, but that should affect manufacturing more than the ITO or BPO industries. But they point out that senior advisors have assured the business community that Obama is a free trader who understands the interdependencies of the global economy, although they do stress that the Obama administration’s proposed tax incentives to create new jobs at home could have an impact on offshoring. Alternatives to India, such as home sourcing or moving low-cost tier 2 suppliers to US locations, may deserve closer study in this environment. The report stresses that as the United States continues to spend the $700 billion from the Troubled Assets Relief Program (TARP) for the banking industry, it seems possible that conditions placed upon TARP recipients could diminish the overall attractiveness of offshoring. However, this should not keep companies from pursuing options to operate more efficiently. TARP recipients such as Citigroup, JP Morgan, AIG and Bank of America have already begun pursuing staff reductions in the United States or moving work offshore—for example, Citigroup expects to triple its workforce in the Philippines. The important point is that potential regulatory changes in the financial services industry and beyond have not kept companies from taking advantage of offshoring, the authors say.

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06 5737737 06 5566169 06 5433300 06 5432006

March 2009

Yasmeen Alabid       Manager RAK Aisha Ahmed Ghareib      Manager Fujairah MohdAli Hassan Mohd Al Bloushi Manager  Dibba Rania Yousef Manager Contact Centre Ahmed Abdo Manager Eissa Al Suwaidi Eirvin Knox Ala’a Eraiqat Thirry Bardury Deepak Khullar Seumas Gallacher Zaki Hamadani Sultan Al Mahmoud Abdirizak Ali Alok Kakar Robert Price Walter Pompliano Howard Gaunt Jasim Al Darmaki Arup Mukhopadhyay Ahmed Barakat Yaser Mansour Simon Copleston

06 7442111 07 2335500 09 2224324 09-2446700 800-2030

Chairman CEO Deputy Chief Executive Officer Head Operations & IT Chief Financial Officer Head - Investment Banking Head - legal & Special Assets Head - Human Resources Head - Internal Audit Head - Corporate Finance Division Head - Credit Head - Financial Institution & Intl. Division Head - Business Banking Head - Government Relations Head - Retail Banking Head - Wealth Management Head - Corporate Communications, Director of Chairman’s Executive Office & Senior Vice President General Counsel & Board Secretary

Tel 02 6343000 Fax 02 6342222

Established on 20th May 1997 as a Public Joint Stock Company through the Amiri Decree No. 9 of 1997. The bank commenced commercial operations on 11th November 1998, and was formally inaugurated by His Highness Sheikh Abdulla Bin Zayed Ak Nahyan, UAE Minister of Information and Culture on 18th April 1999. All contracts, operations and transactions are carried out in accordance with Islamic Shari’a principles. Branches Abu Dhabi Main 02 6168118 Aref Ismail Al Khouri Manager Mushref 02 4455177 Ezzeldin Nagdy Manager Madinat Zayed 02 6100821 Mohamed Yousef Manager Khalidiya Ladies Abu Baker Omar Manager Sheikha Al Suwaidi Manager Khalifa Street 02 6100590 Omar Aqel Manager Al Ain Sinaiya 03 7211777 Omar M. Basheer Manager Clock Tower Branch 03 7076444 Ali Abdullah Al Manager Dhaheri Al Jimi Mall Branch 03 7633500 Ahmed Abdullah Manager Al Boloshi

March 2009

04 2611116 04 3973333 04 4033400

Fujairah Fujairah 09 2222711 Fahad Al Shaer Manager Dibba 02 6100920 Ali Mohammed Manager Ras Al Khaimah 07 2284448 Saif Hamdan Alkeem Manager Sharjah 06 5075100 Ali Essa Alshaqoosh Manager

Al Ahli Bank of Kuwait - Dubai Head Office: Kuwait Regional Head Office: Dubai Tel 04 2681118 Opposite Hamarain Centre, Deira Fax 04 2684445 P.O.Box 1719, Dubai, E-mail: infodubai@ahlibank.ae Website: www.ahlibank.ae Management & Senior Personnel: Vikram Pradhan General Manager, UAE Vijay Shah Head of Trade Finance & Operations Hiranand Motwani Manager Treasury Krishna Kumar Manager Retail Operations

American Express Bank Ltd

Abu Dhabi Islamic Bank Head Office: Abu Dhabi Najda Street, P.O. Box 313, Abu Dhabi UAE Email: customerservice@adib.ae Website : www.e-adib.com

Dubai Al Twar Ibrahim Alqasser Manager Opposite Deira City Center Hashim Al Zarooni Manager Shk. Zayed Rd. Mohamed Hussein Zainal Manager

Representative Office, Suite 509 Tel: 04 3975000; Fax: 04 3976986 The Business Centre, Khalid Bin Al Waleed Street, Bur Dubai P.O. Box 3304, Dubai. Prabir A. Biswas Director & Chief Representative Sumit.K.Roy Director-financial institution group John A. Smetanka Head-wealth management-subcontinent and global NRI

Arab African International Bank Head Office: Cairo, Egypt. Regional Head Office Dubai Tel: 04 3937773 ART Tower, Al Mina Street, Opp. Ports & Customs Bldg., Bur Dubai P.O. Box 1049, Dubai Fax: 04 3937774 Swift ARAIAEAD, E-mail: aaibdxb@emirates.net.ae Web: www.aaib.com History: Established 1964 as the first Arab joint venture bank Hemant Jethwani General Manager UAE Dubai Branch: Key Executive Alaa Sobhy Head of syndication and assert trade Abu Dhabi Tel: 02 6323400; Fax: 02-6216009 Arab Monetary Fund Bldg, Corniche Street, P.O. Box 928, Abu Dhabi Key Executive Hani Hassan Branch Manager

Arab Bank Head Office Jordan – Amman Tel: 04 2950845; Fax: 04 2024369 P.O.Box 950544, 950545 Amman 11195 Website: www.arabbank.ae History: The Arab Bank Group is one of the principal financial institutions in the Arab world and ranks among the leading international banks in terms of equity, earnings and assets. Established in 1930 in Jerusalem. The Arab Bank Group is

owned by about 4,000 shareholders from all over the world, mainly Arab countires. The Group has a diversified network of over 350 branches worldwide. Abdul Majeed Shoman Chairman Abdel Hamid Shoman Deputy Chairman & Chief Executive Officer U.A.E Area Management Mohammad A . Azab Senior Vice President - Dubai Saed Jarallah Senior Vice President â&#x20AC;&#x201C; Abu Dhabi Aladin Al-Khatib Treasury Head Hatem Kurdieh Corporate Banking Head Tareq HajHasan Retail Banking Head Mohammad Mattar Central Operations Unit Manager Hani Hirzallah Regional Manager Human Resources /Gulf Region Tareq Ibrahim Head of Human Resources Ammar Al Khayyat Financial Controllar Ghassan Nimer IT Center Regional Manager Jihad Ghoury Legal Counsel Sanjay Malhotra Global Head of Marketing & Product Develeopment Nasser Maghtheh Senior Auditor Anan Al Khatib Premises & Pruchasing Officer (Engineer) Suleiman Malhas U.A.E Branches Audit Centre Manager Dubai Al Ittihad Street Mohammed Azab

04 2950845

Branch Manager

Mir Asif Ali Mgr - Treasury Dept Saidi Zoubir Head of Business Dev. Dept. Tareq Sâ&#x20AC;&#x2122;adi Al Darras Mgr - Credit Risk Management Issam Abugisseisa Legal Advisor Abu Dhabi Main, Sh. Hamdan Street Noora Ebrahim Manager -Sales & Services Souk Branch Al Masaood Building - Khalifa Street, Abu Dhabi Nasser Rashed Al Ali Manager

Dubai Arbift Tower, Baniyas Street, Deira Adel Mohd. Khalfan Manager Al Bagh

04 2220151

Sharjah King Faisal Street Fatima Al Muani Manager

06 5744888 06 5747766

04 2282071

04 2221231

Arab Banking Corporation

Abu Dhabi Al Naser Street Nasser Serries Branch Manager

02 6392225

Abu Dhabi Office Office, 10th Floor, Abu Dhabi Trade Centre, Abu Dhabi Mall P.O.Box 6689, Abu Dhabi Mohamed El Calamawy Chief Representative

Al Ain Colock Tower roundabout, Al Ain Street Maen Jarrar Branch Manager Sharjah Al Arooba Street Maher Al Debis Branch Manager

03 7641328

Ajman Rashid Bin Humaid Street Modhar Kherfan Branch Manager

06 7422431

Ras Al Khaimah Oman Street, Al Nakheel Ali Zatar Branch Manager

07 2288437

Fujairah Sheik Zayed Street Abdel Hamid Qamhieyah Branch Manager Call Centre Within UAE Outside UAE

09 2222050 800 40 43 009714 2953889

Arab Bank for Investment and Foreign Trade Abu Dhabi Tel 02 6721900 Regional Head Office, Sh. Hamdan Street, Tourist Club Area Fax 02 6785271 P.O. Box 46733, Abu Dhabi Telex 22455 ARBIFT EM Email: arbiftho@emirates.net.ae Website: www.arbift.com History: Established in 1976 in Abu Dhabi Registered as a Puvlic Joint Stock Company Management & Personnel Ibrahim N. R. Lootah General Manager 02 6952286 Hassan S. Kishko Head of Finance 02 6721299 M.A. Majid Siddiqui Head of HR & Admin 02 6728785 Khalid Mohammed Bin Amir Head of Operations 02 6776109 Najib Taleb Nasser Head of Commercial Banking Ahmed Majid Lootah Head of Retail Banking 02 6743801 M. Santosh Babu Senior Manager IT 02 6722975 Izzeldin Al Siddiq Salem Mgr - Inspection & Internal Audit 02 6780592 Osman Hamid Suliman Mgr - Banking Relations Dept 02 6787380

02 6275087

Al Ain 03 7655133 Mohd. Sultan Al-Darmaki Bldg., 1st Floor, Old Passport Office Road. Hussain Marzouqul Manager 03 7656482

Deira Mohammed Elayyan Branch Manager

06 5618999

02 6721600 02 6723763 02 6720886 02-6791642 02 6721900 02 6780423 02 6269500

02 6447666 Fax 02 6444429

Arab Emirates Investment Bank PJSC Head Office: Cairo Egypt Regional Office: Dubai ART Tower, Al Mina Road, Opposite Maritime City, Bur Dubai P.O Box 1049 Dubai SWIFT: ARAIAEAD E-mail: aaibdxb@eim.ae Web: www.aaib.com

Tel: 04 3937773 Fax: 04 3937774

Management-UAE Hemant Jethwani General Manager Alaa Sobhy Head of Syndication and Asset Trade Mahendran Raman Head of Operations and Liabilities Abu Dhabi Branch Tel: 02 6323400 Fax: 02 6216009 Arab Monetary Fund Bldg., Corniche P.O Box 928, Abu Dhabi

BLOM Bank France SA Dubai Tel 04 2284655 Al Maktoum Street, Deira Dubai, P.O. Box 4370 Fax 04 2236260 email: info@blomfrance.ae www: www.blombank.ae Bassem Ariss Regional Manager 04 2222355 Samir Hobeika Branch Manager 04 2214648 Michel Germanof Manager Corporate Credit UAE 04 2242067 Mohammad M Ansari Treasurer 04 2224812 Sharjah PO Box 5803, Al Buheira Tower, Al Buheira Corniche Tel 06 5736100 Fax 06 5736080 Mokhtar Kassem Branch Manager

March 2009

Bank Muscat Dubai Representative Office Dubai Creek Tower, Baniyas Road, Deira P.O. Box 29969, Dubai Lawrence P. Monteiro Chief Representative

Tel 04 2222267 Fax 04 2210115

BBK BSC Dubai-Representative Office Dubai Creek Tower Office 18A, Baniyas Road, Deira PO Box 31115 Website History: Established on 16th March, 1971

04 2210560 Tel 04 2210560 / 70 Fax 04 2210260 www.bbkonline.com

Murad Ali Murad Karim Bucheery Sh. Rashed Al Khalifa

Chairman CEO & GM Deputy General Manager

Dubai ReP-Office: Head of Representative Office Rajiv Kapoor Al-Alwan

CK Jaidev Relationship Manager & Loan Syndications Wafa Relationship Manager & Loan Syndications

Bank of Baroda Dubai Zonal Office: Sheikh Rashid Bldg. Ali Bin Abu Talib Street, Bur Dubai, P.O.Box 3162, Dubai Tel: 04 3531628 E-mail: cc.gcc@bankofbaroda-uae.ae Fax: 04 3530839 UAE Website: www.bankofbarodauae.ae History: Established in 1908, July 20 Nationalized on July 19, 1969 Senior Management & Personnel – Baroda Corporate Centre, Mumbai, India. Dr. A.K. Khandelwal Chairman & Managing Director Mr. V. Santhanavanam Executive Director Mr. S.C. Gupta Executive Director Zonal Office, Dubai: Ashok K. Gupta L.J. Asthana J.K.Jais P.M. Bondarde Sujeet Bhale Rajesh Jain

Chief Executive, (GCC operations) Senior Manager (Credit) Senior Manager (Inspection) Senior Manager (Credit) Senior Manager (Syndication) Senior Manager (Internal Auditor)

04 3538093 04 3531628 04 3531628 04 3531628 04 3531628 04 3531517

Abu Dhabi: Al Halami Centre, Sheikh Hamdan Street 02 6330244/ 6322000 K. Venkateshwarlu Chief Manager 02 6344302 K.Shridhar Senior Manager (Credit) R.G. Shanker Senior Manager (Operations) Al Ain: Clock Tower, Round about, Planning Street Sarabjeet Singh Senior Branch Manager Vijay Kumar Goel Senior Manager (Operations) Dubai:

March 2009

03 7519880 03 7659554

Sheikh Rashid Bldg.Ali Bin Abu Talib Street, Bur Dubai, 04 3531955 Vinod Malhotra Asst. General Manager 04 3534516 Shekhar Tripathi Senior Manager (Operations) 04 3530166 M.K. Patel Senior Manager (Credit) 04 3534080 Beena Desai Manager (India Desk) 04 3537586 Retail banking Shoppe, Dubai Mr. Saravana kumar 04 3534390 Mr Ketan Dave 04 3540041 Mr Vinay Rathi 04 3540340 Deira Kuwaiti Bldg., Al Rigga, Baniyas Street, Deira Rajiv K. Garg Chief Manager Yuvraj Singh Senior Manager (Operations) P.K. Gambhir Senior Manager (Credit) R.K. Madaan Manager

042287949 04 2286516 04 2286216 04 2292181 04 2292181

Ras Al Khaimah: Al Qasimi Bldg, Oman Street, Al Nakheel P.K.Bhargav Senior Branch Manager

07 2229293 07 2229293

Sharjah Al Mina Road 06 5684231/ 5686232 M.S. Chouhan Asst. General Manager 06 5683273 D. Pathania Senior Manager (Credit) 06 5684231 D. Guha Senior Manager (Operations) 06 5686232 Bank of New York Representative office Suite 402, The Blue Tower, Sh. Khalifa Bin Zayed Street P.O.Box 727, Abu Dhabi Hani Kablawi Managing Director

Tel 02 6263008 Fax 02 6263308

Bank of Sharjah Sharjah Head Office – Al Hosn Avenue Tel 06 5694411 P.O. Box 1394, Sharjah Fax 06 5694422 E-mail: bankshj@emirates.net.ae History: Established on 22nd December 1973 with Banque Paribas, Paris Ahmed Abdulla Al Noman Chairman Varouj Nerguizian General Manager Mario Tohme Deputy General Manager Fadi Ghosn Deputy General Manager Ali Burheimah Commercial Manager Mohammed Asghar Senior Operations Manager Fares Saade Senior Manager Michel Germanos Risk Manager Jayakumar Menon Finance Manager Berj Tossounian Credit Manager - Sharjah Wahide Assaad    IT Manager Jihad Aoun    Investment Manager Samer Hamed    Audit & Control Manager Abu Dhabi Tel 02 6795555 Al Mina Street, P.O.Box 27391 Fax 02 6795843 Ramzi Saba Senior Manager Mazen El Attar Operations Manager- Abu Dhab Anni Barsoum Credit Manager - Abu Dhabi Dubai Tel 04 2827278 Al Gharoud Street, PO Box 27141 Fax 04 2827270 Nadim Melki Senior Manager Toufic Youakim Credit Manager - Dubai Fadi Haddad Operations Manager - Dubai Al Ain 03 7517171 Khalifa Street, PO Box 84287 Fax 03 75170770 George Dib Branch Manager

Rida Higazi

Barclays Capital Dubai International Financial Centre, Level 9, West Wing, The Gate Building, Sheikh Zayed Road, Dubai Nicholas Hegarthy Managing Director, Head of Middle East & North Africa

Deputy Branch Manager

Bank Saderat Iran Dubai Regional Office, Al Maktoum Street, P.O. Box 4182

Tel 04-6035555 Fax 04 2229951

Dr.Hamid Borhani                 Regional Manager Abdul Reza Shabahangi         Assistant Regional Manager Mohammad Yousefi Peyhani       Assistant Regional Manager Majid Tavasoli                            H.R. & Organization Dept. Manager Gholamreza Joulaie               Credit Facility Dept. Manager Rahim Erfan Moghaddam        Account Dept. Manager Mehran Arzhang                        Letter of Credit Dept. Manager                Majid Mirnasiri                          Recovery Dept. Manager Hamdi Reza Khalajzadeh         Dealing Dept. Manager Hojatollah Malek Mohammadi    IT Dept. Manager Mansoor Sedaghat Motlagh        Service Dept. Manager  Mohsen Hossein Hosseinpour   Manager of Al Maktoum Branch Gholamreza Ebadi Fard          Manager of Murshid Bazar Branch Saeed Mirzaian Tafti         Manager of Sheikh Zayed Rd. Branch Ferdos Zolfagharian            Manager of Bur Dubai Branch Seifollah Farzan Mehr      Manager of Sharjah Branch Jalil Vosooghi                            Manager of Ajman  Branch Ali Abasteh                       Manager of Abu Dhabi Branch Peyman Sabri                 Manager of Al Ain Branch

Banque Du Caire Abu Dhabi Regional Head Office (02) 6225880 P.O. Box 533, Abu Dhabi Telefax 02-6225881 History: Established on 8th May, 1952 On July 1, 1960 the Amman Branch became independent under the title of Cairo Amman Bank. In July, 1961 the Bank was nationalized. On November 2, 1962 the Lebanese branches were absorbed by Banque Misr-Liban S.A.L On October 1, 1979 fo3rmer branches in Saudi Arabia have been saudized and a new bank was formed under the name of Saudi Cairo Bank. Mohamed kamal Al Deen Barakat Chairman                     Ahmad Sherif Rehab Regional Manager   Abu Dhabi - UAE PO Box 533 Tel:        02-6272525 Abu Dhabi Branch  Mohamad Kamal Farid (Acting Manager) Tel:         02-6273000 Dubai Branch    Labib Abdul Ghaffar Tel:         04-2715175 Sharjah Branch      Tareq Hafez Tel:         06-5739379 Ras Al Khaima      Mohamad Abdul Ghani (Acting Manager) Tel:         07-2332245 Al Ain                          Abdul Hamid  Saeed Tel:         03-7511104

Barclays Bank PLC Dubai Emaar Business Park, Building No. 4, Sheikh Zayed Road P.O. Box: 1891, Dubai Website www.barclays.com Saleem Sheikh Africa Mark Petchell Amin Habib Faizen Mitha Farrukh Zain Florence Goodman David Inglesfield ing Callum Watts-Reham Clients

Tel: 04 3626888 Fax: 04 3663133

Regional Managing Director, Middle East & North Group Country Managing Director Director - Corporate Banking Regional Treasurer Head of Trade Sales Head of Corporate Afffairs & Public Relations Location Manager - International & Premier BankDirector, Market Manager, Gulf - Barclays Private

BLC Bank (France) S.A. Head Office 17-19 Avenue Montaigne 75008 Paris, France Mr. Andre Tyan General Manager

Tel 33 1 56 52 11 00 Fax 33 1 56 52 11 11

Regional Office Dubai Al Maidan Tower, Al Maktoum St. Tel 04 2222291 P.O. Box 4207, Dubai Fax 04 2283935 E-mail: blcdxbrm@emirates.net.ae Melhem Dagher Administration & Operations Manager Dubai Al Maidan Tower, Al Maktoum St. P.O. Box 4207, Dubai Hamze Abdul Sater Branch Manager Abu Dhabi Mohd. Joan Al Badi Bldg., Hamdan St. P.O. Box 3771 Ghassan Haddad Acting Regional Manager Samir Rached Acting Branch Manager

Tel 04 2222291 Fax 04 2279861

Tel 02 6220055 Fax 02 6222055

Sharjah Al Salam Bldg., Al Mina St. P.O. Box 854 Victor Khoriaty Branch Manager

Tel 06 5724561 Fax 06 5727843

Ras-Al-Khaimah Sheikh Ahmad Bin Saker Al Quasimi Bldg., Al Montaser St. P.O. Box 771 Abd El Hajj Branch Manager

Tel 07 2286222 Fax 07 2275067

BNP Paribas Abd Ahmad Al Hajj Branch Manager Abu Dhabi Khalifa Street, P.O. Box, 2742, Abu Dhabi Marc Checri General Manager

Tel 02 6130400 Fax 02 6268638

Central Bank of the U.A.E Abu Dhabi Tel 02 6652220/6915555 Head Office, Al Bateen Area, Bainoona Street Fax 02 6668483/6668621 P.O.Box: 854, Abu Dhabi, www.cbuae.gov.ae E-mail: sultan_rashid@cbuae.gov.ae Swift: CBAU AE AA Reuters dealing code: CBEM History Established in 1980 as a central bank of the United Arab Emirates by a federal decree. Central bank took over the activity of the United Arab Emirates currency board which was established in 1973. Management & Personnel H.E. Sultan Bin Nasser Al-Suwaidi Governor H.E. Mohd. Ali Bin Zayed Al Falasi Deputy Governor Board of Directors H.E. Mohd. Eid M. Jasim Al-Meraikhi H.E. Jumaa Al-Majid H.E. Sultan Bin Nasser Al-Suwaidi

Chairman Vice Chairman Governor

March 2009

Members Ali Al-Sayed Abdulla, Jamal Nasser Lootah, Khalifa Nasser Bin Huwaileel, Saeed Rashid Al Yateem Al Muhairy Executive Directors Saeed Abdulla Al Hamiz nation Dept. Rashid Mohamed Al Fandi Saif Hadef Al Shamesi Salem Ahmed Al-Hammadi Abdulla Hamad Al-Zaabi Jamal Ebrahim Al Mutawaa

Executive Director-Banking Supervision & ExamiExecutive Director - Banking Operations Dept. Executive Director - Treasury Department Executive Director - Research & Statistics Department Executive Director - Internal Audit Department Executive Director - Administration Department

Economic Advisors Abed Alla Osama Malki, Mohammed Zeitouni Bechri Portfolio Managers Mohammed Abdulla Mohammed, Brian Gardner Anti-Money Laundering & Suspicious Cases Unit Abdul Rahim Mohamed Al Awadi Asst. Executive Director General Secretariat & Legal Affairs Division Salem Said Al Kubaisi

Senior Manager

Financial Control Department Hassan Ibrahim Al Hamar

Senior Manager

Clearstream Banking

Personnel Division Ali Ghurair Al Romaithi

Senior Manager

Correspondent Banking Division Sultan Rashed Al-Sakeb

Senior Manager

Public Relations Division Abdul Raheem Abdullah

Manager

Information Technology Division/ UAE Switch Division Khalifa Al Dhaheri Dubai P.O. Box 448 Omar Al Qaizi Manager-in-Charge

Senior Manager Tel: 04 3939777 Fax: 04 3937802

Sharjah Tel: 06 5592592 Old Airport Road, Opp. Immigration Bldg., P.O. Box 645, Sharjah Fax: 06 5593977 Zakaria Abdul Aziz Al Suwaidi Senior Manager Ras Al Khaimah Al Nakheel, Oman Street, P.O. Box 5000 Salem Jasem Al Baker Asst. Executive Director

Tel: 07 2284444 Fax: 07 2284646

Fujairah P.O. Box 768, Fujairah Ali Mubarak Saeed Abbad Senior Manager

Tel: 09 2224040 Fax: 09 2226805

Al Ain Ali Ibn Abee Taleb Street, Oud Al Touba P.O. Box 1414 Ajlan Ahmed Al Qubaisi Asst. Executive Director

Tel: 03 656656 Fax: 03 664777

Citibank N.A (UAE Branches) Date of Establishment 1964 Nationality USA Legal Status Commercial Banking Services (F) Regional Head Office Oud Metha Towers

March 2009

P.O Box 749, Dubai – UAE Tel: 04- 3245000 Telex: 023 6738736 Cable: CITIBAEM Swift: CITIAEAD Reuters: N/A Email: karim.seifeddine@citi.com Website: www.citibank.ae Auditors: KPMG Domestic Branches: Al Wasl Road Branch (Main Branch) Tel: 04 3245000 Oud Metha Road, P.O Box 749 Dubai Branch (Next to Burjuman) Tel: Abu Dhabi Branch Tel: 02 6982206 Al Salam Street, Next to Lulu Center Fax: 02 6726381 P.O Box 999, Abu Dhabi Sharjah Branch Tel: 06 5072101 Beside Sharjah Emigration, Fax: 06 5723378 Opposite Civil Court. Sharjah Al Ain Branch Tel: 03 7641090 Sh. Zayed Street Fax: 03 7663887 Broad of Directors: N/A General Management: Mohammed E. Al- Shroogi, MD for the Middle East and Chief Executive Officer, UAE Sanjoy Sen, Country Business Manager Global Consumer Group - U.A.E Mohammed Azab, Chief Officer, UAE Offices, Citi Private Bank

Dubai Tel 04 3310644 City Tower 2, Sheikh Zayed Road Fax 04 3316973 Website: www.clearstream.com Robert Tabet Vice President Middle East & North Africa

Commercial Bank International Dubai Tel 04 2275265 Head Office Dubai  Al Riqqa Street Deira , P.O  Box 4449                       Tel : 04  2275265   Website : www.cbiuae.com   Hamad Al Mutawaa H.E. Humaid Al Qatami Abdulla Rashid Omran

Fax : 04 2279038

Mohammed Saadeh Abdulla Amer Jasem Hesham Abdulla Ahmed Mustafa Tahoun Ramanthan Murgappan Zainab Nour Aldin Yousef Haddad Bashir Haji Mohd A.D.Abooty K.E Mammoo Faris Saddi Yousef Al Marshoudi Tariq Selaij Ameena Bin Kaali Ahmed Al Junaibi Abdulla Ali Almadhani Mohammed Ishaq Ahmed Darwish Alyia Al Mulla Ahmed Bin Masood

Head of GBG 04 2126500 Head of HR & Admin 04 2126466 Head of Branches & Services 04 6020615 Head of Internal Audit & compliance Division 04  2126603 Senior Manpower planning & Recruitment Manager 04 2126444 Employee Relations Manager 04 2126 442 Planning & Development Manager 04 2126190 Chief Dealer 04 2126214 Head Of Operations & Finance 04 2126291 Accounts Manager 04 2126215 Chief information Officer 04 2060700 Dubai Branch Manager 04-2275265 Bur Dubai Manager 04-3559577 Sheikh Zayed Branch Manager 04 3405555 Abu Dhabi Branch Manager 02-6913111 Al Ain Branch Manager 03 7669994 RAK  Branch Manager (AL Manar Mall) 07 2274777 RAK  Branch Manager (Nakhel Branch) 07 2227555 Sharjah Branch Manager 06 512100

Chairman   Deputy Chairman   Managing Director and Board Member 04  2242104

Fujairah Branch Manager Dubai Main Branch (Al Riqqa Street) Yousef Al Marshaudi Branch manager Bur Dubai Tariq Sulaij Branch manager Sheikh Zayed Road Ameena Mhd. Bin Kaadi Branch manager Abu Dhabi Ahmed Sulaim Al Junaibi Branch Manager AL AIN Abdulla Ali Branch manager Ras Al Khaimah Khaled Al Mannai Branch Manager (Manar Mall) Ahmed Yousef A. Darwish Branch Manager (Nakeel Branch) Sharjah Aliya Al Mulla Branch manager

09 2011777 04 2126101 04 3555511 04 3405555 02 6264400 03 7669994 07 2274777 07 2227555 06 5687666

Commercial Bank of Dubai Main Branch , Al Ittihad Street, Port Saeed, Dubai Ibrahim Salama Branch Manager 04 212 1000 Dubai Branch, Mankhool Street, Dubai Amer Al Shamali Branch Manager 04 352 3355 AL Maktoum Branch, Abu Baker Al Siddique Street Ahmed Al Aboodi Branch Manager 04 268 3555 Deira Branch, Baniyas Street Mohammad Al-Sayed Al-Hashemi Branch Manager 04 225 3222 Baniyas Square Branch, Al Maktoum Hospital Street Mohd. Al Lawati Branch Manager 04 228 9000 Jebel Ali Branch, Jebel Ali Free Zone Mohammed Abdulla Mardood Branch Manager 04 881 8882 Jumeirah Branch, Jumeirah Beach Road Areffa Al Hashimi Branch Manager 04 344 1438 Sheikh Zayed Road Branch, Ghaya Towers, Sheikh Zayed Road Maher Marzouqi Branch Manager 04 334 777 Al Garhoud Branch, Al Haj Saleh Bin Lahej Building, Al Garhoud Street-Deira Ali Salman Branch Manager 04 282 6444 Al Qusais Branch ,Al Nahda Street Abdullah Lootah Branch Manager 04 261 5000 Souq Al Wasl Branch, Souq Al Wasl Street Taher Mohammed Branch Manager 04 227 6111 Al Aweer Branch, Central Fruit and Vegetable Market, Al Aweer Ibrahim Al Ramsi Branch Manager 04 320 1222 Naturalization and Residence , Administration – Dubai Branch Adel Abdul Aziz Branch Manager 04 398 5000 Mr. Jamal Saleh Assistant General Manager, Head of Risk Management Abu Dhabi Branch, Corniche Street Wael Ahmed Mahfouz Branch Manager 02 626 8400 Musaffah Branch , Al Firdoos Building, Mussaffah Area M/3 Zahir M. Suaiman Branch Manager 02 555 5510 Khalidiya Branch, Khalidiya street Sultan Ali Al Assiry Branch Manager 02 667 9929 AL Ain Branch, Al Takhtit Street, Clock Tower Khalid Abdel Hadi Branch Manager 03 766 7800 Sharjah Branch, Immigration Road Abdul Aziz AL Ansari Branch Manager 06 574 0666 Ajman Branch, Shk.Humaid Abdul Aziz Street Marwan Ebrahim Mohammed Branch Manager 06 745 6668 Ras Al Khaimah Branch, Al Nakheel Area, Oman Street Ebrahim Ahmed Al Zaabi Branch Manager 07 228 6266 Fujairah Branch , Al Gurfa Road, Near Al Mibkhar Roundabout Abdullah Al Suwaidi Branch Manager 09 222 5111 H.E. Ahmed Humaid Al Tayer Chairman H.E. Saeed Ahmed Ghobash Deputy Chairman H.E. Saeed Mohd Al Ghandi Deputy Chairman Mr. Abdul Wahed Al Rostamani Director

Mr. Abdul Rehman Saif Al Ghurair Director Mr. Saeed Mohd Al Mulla Director Mr. Khaled Juma Al Majid Director Mr. Omar Abdulla Al Futtaim Director Mr. Peter Baltussen Chief Executive Mr. Yaqoob Yousuf Hassan Deputy Chief Executive Mr. Ibrahim Abdulla General Manager, Administration & Finance Mr. Mahmoud Hadi General Manager, Central Operations Mr. Faisal Galadari General Manager, Business group Mr. Ahmed Shaheen General Manager, Credit Group Mr. Abdul Rahim Al Nimer General Manager, Financial Services Mr. Stephen Davies Deputy General Manager, Corporate Banking Mr. Moukarram Att asi Deputy General Manager, Asset Management Mr. Thomas Smith Deputy General Manager, Head of Retail Mr. John Tuke Deputy General Manager, Treasury & ALM Mr. V.P Bhatia Assistant General Manager, Treasury Mr. Masood Azhar Assistant General Manager, SPD Mr. Amir Afzal Assistant General Manager, IT Mr. Adel Al Sammak Assistant General Manager, Corporate Banking Mr. Kanan Iyer Assistant General Manager – Internal Audit Mr. Clive Harrison Assistant General Manager – HR Mr. Alan Kerr Assistant General Manager, Corporate Banking Mr. Alan Hill Assistant General Manager, Treasury & Investment

Coutts & Co.

Representative Office - Dubai Tel 04 2217007 Twin Towers, Baniyas Street, Deira Fax 04 2217006 P.O. Box 42220 Sarah Deaves CEO Sandra Shaw General Manager Martin Bond Private Banker

Calyon Corporate & Investment Bank

(Previously Crédit Agricole Indosuez & Crédit Lyonnais)   Dubai World Trade Centre, Level 32                            Tel:      04 3314211 P.O.Box: 9256                                                            Fax:     04 3313201 Website: www.calyon.com Amr Alkabbani                         Regional Manager – Gulf      04 3317316 Ludovic Bernard-Maissa          Regional COO                                                                                       Eric Fromaget                          Head of Private Banking         04 3321300 Sebastian Van der List            Head of Corporate Banking – UAE      04 3315836 Naeem Khan                            Trade Finance          04 3291055 Albert Mondjian                       Head of Investment Banking – MEA    04 4284803   Abu Dhabi Al Muhairy Centre, Level 5              Tel:      02 6351100 Block C, Sheikh Zayed the First Street          Fax:     02 6344995 P.O.Box: 4725 Ghazi Abdul Fattah                  Branch Manager           02 6351991

Credit Suisse Abu Dhabi Dhabi Tower, 4th floor, Sheikh Hamdan Street P.O.Box 47060 Jean-Marc Suter Director

Tel 02 6275048 Fax 02 6274109

Dubai P.O. Box 33660 04 3620000 The Gate bldg, 9th Floor Fax 04 3620001 Dubai International Finance Centre ( DIFC), Dubai

March 2009

Head of Regional Office

Beat Naegell

Deutsche Bank A G Abu Dhabi P.O.Box 52333 E-mail: jens.moeller@db.com Jens Moeller Representative

Tel 02 6333122 Fax 02 6322044

Dubai P.O. Box: 50490 Emirates Towers, Level 27b Fax 04 3199560 Karl French Director Tel : 04 3199514 Private Wealth Management - Asia Nadeem Masud Director Tel : 04 3199524 Global Markets Harris Irfan Vice President Tel : 04 3199520 Global Equities & Derivatives Rohit Johri Vice President Tel : 04 3199522 Private Wealth Management - Asia

Dresdner Bank AG Dubai Representative Office Burjuman Business Towers, 10th Floor, Office 1011 Bur Dubai, P.O. Box: 25654 Tel 04 3596444 Fax 04 3596116 E-mail: RepDubai@Dresdner-Bank.com Bashar A. Barakat

Tel 04 3328989 Fax 04 3290071

History: Established in September 2002 Chief Executive Officer

Dubai Islamic Bank Head Office Al Maktoum Street, Dubai Tel 04 2953000 P.O. Box 1080, Dubai Fax 04 2954111 Website: www.alislami.co.ae History: Established March 12, 1975 Dr. Mohammed Khalfan Bin- Kharbash Chairman Butti Khalifah Bin Darish Al- Falasi CEO Saad Mohammed Abdul Razzaq Deputy CEO Mohd. Saeed Al Sharif Executive Vice President-Finance Arif Ahmed Al Koheji Executive Vice President-Investment Banking Abdullah Ali Al Hamli Executive Vice President - Business Services Ahmed Mohammed Fadel Legal Consultant and Board Secretary Branches Deira Main Branch Al Souk

March 2009

El Nilein Bank Abu Dhabi P.O.Box 46013 Tel 02 6269995 Fax 02 6275551 Abdulla Mahmoud Awad Manager Tel 02 6720934 Mohamed Osman Salih Deputy Manager 02 6761916 Murlidhar G. Ramchandani Chief Accountant & Dealer 02-6729300 Ahmed Hillali Ahmed Head Investment Dept. & Credit 02-6729300

Dubai Main Branch, Baniyas Road, Deira Tel 04 2256900 P.O. Box 2923, Dubai Fax 04 2267718

Dubai Bank

Ziad Makkawi

04-3437777 04 3907777 04 3971717 04 3429955 04 3406000 06 7466555 06 5726444 06 5584455 06 8826682 09 2370080 02 6346600 02 6677119 02 6450555 02 5825511 03 7644111 03 7515155 07 2284888 09 2221550

Emirates Bank International

Chief Representative Regional Head GCC & Yemen

Main Office Sheikh Zayed Road, Near Dubai World Trade Centre P.O. Box 65555, Dubai E-mail: info@dubaibank.ae Website: www.dubaibank.ae

Sheikh Zayed Rd Nad Al Shiba Bur Dubai Jumeirah Ladies Branch Al Barsha Ajman Sharjah Wasit Road Al Dhaid Khorfakan Abu Dhabi Khalidiah Ladies Branch Al Salam Bani Yas Al Ain Al Ain Mall Ras Al Kheimah Fujairah

04 2959999 04 2233300

Branches Abu Dhabi Hameed Sheikh Manager Al Ain Ghanim Al Hajeri Manager Al Maktoum Ali Malallah Manager Al Quoz Mohd. Abdulla Manager Baniyas Square Sherif Al Ulama Manager Bander Talib Fareed Aquilli Manager Dubai Main Branch Amal Al Qamzi Manager Fujairah Yousif Al Marshoudi Manager Internet City Balakrishnan Nair Manager Galleria Farida Al Balooshi Manager IBN Gardens Hamdan Mohd. Abdulla Manager Jebel Ali Free Zone Abdul Rahman Ibrahim Manager Karama Muna Al Falahi Manager Karama Shopping Complex Nawal Al Khader Manager

02 6455151 03 7510055/77

09 2222114/110 04 3910840/1

04 8844689 04 8815551

Mankhool Abdul Rahim Abdulla Manager Qiyadah Fatima Al Midfa Manager Ghusais Fatima Al Midfa Manager Ramoul Ibrahim Hassan Manager Ras Al Khaimah 07 2272333 Khalifa Bin Kalban Manager Satwa Mohamed Bilal Manager Sharjah Industrial Area 06 5345577 Mohamed Al Shouq Manager Sharjah 06 5733300 Mahmoud Saif Manager Souk Samia Al Aqady Manager Umm Suqueim Nazia Kalban Manager Tower Saif Al Mansoori Manager World Trade Centre Abdulla Sulaij Al Falasi Manager Najdah 02 6771919 Butti Al Assiri Manager

Emirates Industrial Bank Abu Dhabi - Head Office Tel 02 6339700 P.O. Box 2722, Abu Dhabi Fax 02 6319191/6326397 E-mail: indbank@emirates.net.ae Dubai Tel 04 2211300 Arbift Tower, Deira P.O. Box 5454, Dubai Fax 04 2232320 E-mail: eibdubai@emirates.net.ae Website: www.emiratesindustrialbank.net Senior Management Personnel/Branch ManagerMohamed Abdulbaki Mohamed General Manager Ahmed Mohamed Bakhit Khalfan Deputy General Manager Abdullah Rashed Omran Dubai Branch Manager Khalifa Al Falasi Acting Projects Division Manager Ali Ahmed Al Essa Development Services Division Manager Nasser Haji Malek Administration Manager Essa A. Bu Al Rougha Internal Audit Manager Mohamed Moneir Makled Finance Manager Salem Abu Baker Salem Acting Loans Division Manager

Emirates Islamic Bank P.O. Box: 6564, 2nd & 3rd Floor, Al Gurg Tower 1 Tel: 04 3160330 Plot 372 - Riggat Al Buteen, Deira, Dubai. Fax: 04 2272172 www.emiratesislamicbank.ae Ebrahim Fayez Al Shamsi CEO 04 3160330 Abdulla Showaiter (General manager – corporate and investment banking) Faisal Aqil General manager – retail banking Ahmed Fayez Alshamsi chief financial officer Syed Imran Bashir          Head of marketing and product development Samih Mohd Qadri Awadalla        head of branches Nasir Ahmed Khan                       head of consumer finance Zahir Mulla                                head of operations IMB (Main Branch) P.O. Box: 6564, Al Gurg Tower 2, Riggat Al Buteen, Dubai. BUD (Bur Dubai) P.O. Box: 6564, Khalid Bin Walid Road, Dubai.

DFR (Diyafa) P.O. Box: 6564, Diyafa Road, Dubai. RIQ (Riqqa) P.O. Box: 6564, Omar Bin Al Khattab Street, Dubai. ADC (Abu Dhabi) P.O. Box: 46077, Sheikh Rashid Bin Saeed Al Maktoum Street, Abu Dbahi. ROS (Ras Al-Khaima) P.O. Box: 5198, 191 Oman Street, Al Nakeel, Ras Al Khaima. Fuj (Fujairah) P.O. Box: 1472, Sheikh Hamad Bin Abdulla Street, Fujairah. AJS (Al Ain) P.O. Box: 15095, Jawazat Street, Al Ain. QFS (Umm Al-Qaiwain) P.O. Box: 315, King Faisal Road, Umm Al Qaiwain. SBA (Sharjah) P.O. Box: 5169, Al Arooba Bank Street, Sharjah.

Finance House P.J.S.C. Mr. Mohammed Abdullah Jumaa Al Qubaisi

Chairman

Mr. Abdul Hamid Umer Taylor General Manager 02 6194998 Mr. T.K. Raman Chief Operating Officer 02 6194889 Mr. Mohammed Wassim Khayata Executive VP – Strategic Planning 02 6194445 Mr. Ramesh S. Mahalingam Chief Investments & Financial Officer 02 6194601 Mrs. Shagufta Farid Khan Head of Internal Audit 02 6194223 Ms. Lina Abdul Hamid I. El Araj Manager – General Services 02 6194702 Mr. Tarek Soubra Vice President – Central Operations 02 6194362 Ms. Maha Al Jamal Senior Manager – Marketing 02 6194893

First Gulf Bank Abu Dhabi Tel 02 6816666 Head Office, Sh. Zayed Second Street, Khalidiya P.O. Box 6316, Abu Dhabi Website: www.fbg.ae History: Established in 1979 Shareholder Equity of over AED 10 billion Senior Management Abdulhamid Mohammed Saeed Managing Director 02 6920502 Andre’ Sayegh Chief Executive Officer 02 6920506 Amit Wanchoo Head of Retail Banking Group Arif Shaikh Chief Credit & Risk Officer George Abraham Head of Corporate Banking Gopi Krishna Madhavan Head of Human Resources Hana Al Rostamani Strategic Planning Head Karim Karoui Head of Business Planning & Financial Control Nadeem A. Siddiqui Head of International Business Shafiqur Rehman Adhami SR. VP, CB FI\SYN\MNC\OIL & Energy Sector Zafar Habib Khan Chief Investment Officer Zulfiquar Ali Sulaiman Business Support Director

Habib Bank A.G. Zurich Head Office: Zurich, Switzerland Zonal Office: Dubai Tel 04 2214535 Baniyas Square Deira, P.O. Box 3306 Fax 04 2284211 E-mail: hbzcad@habibbank.com Website: www.habibbank.com History: Established in 1967 Reza S. Habib Joint President Arif Lakhani Chief Executive Vice President 04 2229985 Asad Habib Senior EVP Afzal Memon Senior EVP Shariq Ali Senior EVP Deira Mains 04 2214535 Najibullah Khan Branch Manager Farrukh Iqbal Deputy Branch Manager Corporate 04 3513777 Awais Hasan Branch Manager Sharjeel Vijdani Deputy Branch Manager Al Fahidi Street 04 3534545 Zain Ghazali Branch Manager Abdul Basheer Deputy Branch Manager

March 2009

Jebel Ali Nisar Chowdhary Branch Manager Ifthikhar Memon Deputy Branch Manager Sh.Zayed Branch Zia Abbas Mirza Branch Manager Kashif Aijaz Dodhy Deputy Branch Manager Abu Dhabi Sh. Hamdan Imamat Naqvi Area Manager Farhan Bakhshy Branch Manager Al Falah Syed Akhtar Hussain Branch Manager Raid Saleem Ansari Deputy Branch Manager Sharjah Al Boorj Avenue Younus Warsi Area Manager Kausarullah Khan Branch Manager

04 8812828 04 3313999

02 6346888 02 6422600 06 5730004

Abu Dhabi Tel 02 6224688 Main Branch, Corniche Road, P.O.Box 897, Abu Dhabi Fax 02 6225620 E-mail: hbl2003m@emirates.net.ae History: Established on August 25, 1941Nationalised on January 1, 1974 On June 1974 absorbed Habib Bank Ltd. On June 30, 1975 absorbed Standard Bank Ltd., Karachi Aman Aziz Siddiqi EVP/RGM 04 3597753 Mohammad Tanvir HR. Manager 04 3592292 Fouad Farrukh GRM 04 3592214 Sh. Abdul Basit AVP/CAD Manager 04 3592539 M. Amin Usman AVP/Treasury 04 3591893 Ahmed Faraz Faruqi VP/Head ICU 04 3592517 Nadeem Zia VP/Head FINCON 04 3592292 Syed Ali Gohar VP/IT/Head 04 3592820 Abdul Shahid Khan VP/Head Cops 04 3591874 Abu Dhabi Sh. Zayed Road, 2nd Street Mushtaq H. Shah Service Manager 02 6344557 Abu Dhabi Main Branch M. Saadat Cheema VP/Chief Manager 02 6224655 Al Ain 03 7642555 Abdul Jalil Al Fahim Bldg. Adbul Hameed Khan AVP/Senior Manager 03 7642555 Dubai Regional Office Sahibzada M. Taimur SVP/Corporate Manager 04 3596922 Sameera Mohammad Service Manager 04 3592016 Sheikh Zayed Road, Kalantar Tower Khalid Bin Shaheen SVP/Director 04 3431421 Mahdi Hassan Business Development Manager 04 3438081 Isar-Ul-Haq Service Manager 04 3438081 Deira Branch, Creek Road Zulfiqar Ahmad Bhatti Service Manager 04 2253292 Sharjah 06 5682552 / 5683473 Al Boorj Avenue Assad Ali Shaikh AVP/Branch Manager 06 5695122 Dhaid & Dibba 06 8822249 Near Al Dhaid Police Station 06 8822249 Abdul Sattar Badi Service Manager 06 8822249

HDFC Bank

March 2009

Fax 04 3967010 Tel 04 3966991

HSBC Bank Middle East Ltd

Habib Bank limited

Representative Office: Dubai

Juma Al Majid Bldg., Opp Bur Juman Centre P O Box 64546, Email: hdfcbank@emirates.net.ae Faisal Saeed Cheif Representative

Tel 04 3966991

Head Office: Jersey, Channel Island Middle East Management Office, Dubai Internet City Tel: 04 3904722 Fax: 04 3906607 HSBC Bldg., Dubai Internet City, P.O. Box: 66, Dubai, UAE Web: www.hsbc.ae UAE Web: www.uae.hsbc.com Youssef Nasr Chairman David Hodgkinson Director Ken Matheson Regional Chief Operating Officer Abu Dhabi 02 6332200/6152215 Al Ain 03 7641812 Dubai 04 3535000 Deira 04 2227161 Fujeirah 09 2222221 Jebel Ali 04 8846133 Ras Al Khaimah 07 2333544 Sharjah 06 5537222

IndusInd Bank Dubai Representative Office Tel 04 3978803 203, Safa Commercial Bldg. Fax 04 3978805 Opp. Bur Juman Centre, P.O. Box: 111873, Dubai. E-mail: ibldubai@indusind.ae Pradeep Gupta Vice President & Chief Representative 04 3978804

ING Asia Private Bank Ltd Dubai Representative Office Tel 04 4277100 602, Level 6, Building 4 Fax 04 4257801 Burj Dubai Square Sheikh Zayed Road P.O Box 4296, Dubai â&#x20AC;&#x201C; UAE Suresh Nanda Managing Director & Head Eric Lorentz Managing Director Varun Bukshi Executive Director Melwyn Dias Executive Director B.R. Subramanian P.G. Bhaskar Ranjit Paul Piyush Bhandari Nitin Bhatnagar Rishi Chauhan Asad Dadarkar Ashraf Al Yamani

Director Director Director Director Director Director Director Director

InvestBank Sharjah Tel 06 5694440 Al Boorj Avenue, P.O. Box 1885 Fax 06-5694442 E-mail: sharjah@invest-bank.com Website: www.invest-bank.com History: Established on 2nd February 1975 as Investment Bank for Trade & Finance On July 1, 1995 name changed to Investbank. Sami Farhat General Manager

Qasim Kazmi AGM. Operations & Treasury Taleb Zaarour Senior Manager-ADM & Legal Athar Anis Manager, Credit Risk Bassam Hollmerus Chief Dealer Sajjad H. Holimerus Trade Finance Madhu Pilakazhi Financial Controller Ghassan Accari Personnel Manager Vinay Gupta IT Manager Dubai Sheikh Zayed Road Dubai Al Maktoum Street Al Ain Al Ghaba Street Abu Dhabi Sh. Khalifa street Abu Dhabi Mussaffa Area Sharjah Industrial Area

Dubai Customer Service Centres Community Centre at Arabian Ranches, Dubai Dubai Healthcare City (Behind Wafi City)

04 3213131 04 2285551 03 7644446 02 6794594 02 5555336 06 5420333

Janata Bank Abu Dhabi Obied Sayah Al-Mansuri Building Tel No 02-6331400 Electra Road, Post Box No. 2630 Fax : 02-6348749 Email jbadas@emirates.net.ae Mr. Md. Masuduzzaman Chief Executive 02-6344543 Mr. Md. Chaynul Haque IT Manager/SPO 02-6340881 Mr. Md. Ramjan Bahar System Administrator/PO 02-6340881 Abu Dhabi Mr. Mohamudul Hoque Manager 0 2-6344542 Dubai Mr. Md. Abdul Awal Manager Mohammad Saleh Al-Gurg Building 0 4-2281442 Al-Borj Street, P.O. Box 3342 Mr. Md. Mizanur Rahman Manager Sharjah Saqer Bin Rashid Al Quassim Building Al Suwaiheen Street, P.O. Box- 5303 0 6-5687032 Mr. Md. Mizanur Rahman Manager Al Ain Branch Mr. Md Shahadat Hossain Manager Sk. Khalifa Bin Mohd. Al-Nahyan Building, Main Market Centre, Main Street, P.O. Box- 1107 0 3-7513425

Lloyds TSB Bank plc Dubai Main Branch Al Wasl Road, Opp. Safa Park Tel 04 3422000 P.O. Box: 3766, Dubai, UAE Fax 04 3422660 E-mail: information@lloydstsb.ae Website: www.lloydstsb.ae Vivek Vohra Head of Corporate Origination Giles Cunningham Regional Manager, UAE & Gulf States 04 3023267 Bert de Ruiter Managing Director 04 3023267 Steve Williams Consumer Banking Director 04 3023267 Jon Mortell Head of Corporate Banking 04 3023266 Suresh Jadhwani Treasury Manager 04 3023256 Tim Goddard Head of Operations and IT 04 3023250 Derek Vaz Head of Finance and Planning 04 3023330 Caroline Ridley HR Manager 04 3023270 Steve Snowdonâ&#x20AC;Ż Head of Middle Office Alex de Melo Head of Treasury Trading Edson Suppo Head of Treasury Strategy & Risk Claire Thomas Head of Human Resources

Tel 04 3023318 Fax 04 3618035 Tel 04 3023349 Fax 04 3624805

Man Investments Middle East Limited Representative Office Dubai Tel 04 3604999 Level 5, West Wing, The Gate, Dubai Internaional Financial Centre Fax 04 3604900 P.O. Box: 73221, Dubai Website: www.maninvestments.com E-mail: ManDubai@maninvestments.com Patrik Merville Chief Executive Officer Kamlesh Bhatia Deputy Chief Executive Officer

Mashreqbank Dubai Tel 04 2223333 Head Office, Omar Bin Al Khatab Street, Deira Fax 04 2226061 P.O. Box 1250, Dubai History: Established on 1st May, 1967 as Bank of Oman Limited. On October 1st 1993 name was changed to MashreqBank PSC. bdullah Al Ghurair President and Chairman Abdul Aziz Al Ghurair CEO Ali Raza Khan Head of Corporate Affairs Douglas Beckett Head of Retail Banking Omar Bouhadiba Head of Investment and Corporate Banking Nabeel Waheed Head of Treasury and Capital Markets Nigel Morgan Head of Audit Review & Compliance Majid Husain Head of Financial Institutions Somnath Menon Head of Operations & Technology Kantic DasGupta Head of Risk Management Alexander Sinclair Head of Technology Mubashar Khokhar CEO of Badr Al Islami Ebrahim Kazi Head of Marketing and Corporate Communications Saad Hakim Events and Public Relations Manager Al Khaleej Street, Deira 04 2717771 Souq Al Kabir Branch 04 2264176 Hor Al Anz, Deira 04 2623100 Jumeirah Branch 04 3441600 Jebel Ali 04 8815355 Khor Branch 04 3534000 Bur Juman Centre 04 3527103 Al Riqa, Deira 04 2229131 Al Aweer 04 3333727 Abu Dhabi 02 6274300 Main Branch, Khalifa Street Musaffa 02 5555051 Zayed the 2nd Street 02 6334021 Al Salam Street 02 6786500 Al Mushrif 02 4432424 Baniyas 02 5821100 Muroor 02 4481858 Khalidiya 02 6665757 Al Ain 03 7667700 Al Ain Main Street Ali Ibn Abi Tailb St. 03 7669968 Ajman 06 7422440 Shk Humaid Bin Abdul Aziz Street, Near Ajman Museum Fujairah 09 2221100 Sh. Hamad Street Ras Al Khaimah 07 2361644 King Faisal Street.

March 2009

Al Nakheel RAK Sharjah Main Bank Street, Rolla King Abdul Aziz Street Dhaid Main Street, Sh. Arsan Hameed Bldg., Dhaid Dibba Kalba Kalba City Khorfakkan Umm Al Quwain King Faisal Street, Next to New Souk

07 2281695 06 5684366 06 5730883 06 8822899 09 2444230 09 2777430 09 2385295 06 7666948

Merill Lynch International & Co.C.V Representative Office Dubai (04) 3975555 Business Center Building, Khalid Bin Walid Street P.O. Box 3911, Dubai Telefax Executive Director

04-3975252 Mones Bazzy

NATIXIS Dubai Branch DIFC Gate Village Building No. 8, 5th Floor P.O Box 33770 Email: natixis@emirates.net.ae Website: www.natixis.fr Philippe Petitgas CEO

Tel 04 7026777 Fax 04 7026820

National Bank of Abu Dhabi Head Office: Abu Dhabi 02 - 6111111 One NBAD Tower, Khalifa St., P.O. Box 4, Abu Dhabi Telex 22266/7 MASRIP EM History: Established in 1968 H.E. KHALIFA MOHAMED AL KINDI Chairman H.E. DR. JAUAN SALEM AL DHAHIRI Deputy Chairman MICHAEL H. TOMALIN Chief Executive ABDULLA MOHAMMED SALEH ABDULRAHEEM GM & Chief Operating Officer SAIF ALI MOHAMED MUNAKHAS AL SHEHHI GM Domestic Banking Division QAMBER ALI AL MULLA GM International Banking Division ABHIJIT CHOUDHURY GM & Chief Risk Officer JOHN GARRETT GM & Chief Audit & Compliance Officer Abu Dhabi Main Branch 02 - 6111111 Khalidiya 02 - 6666800 Dept. of Social Services & Commercial Buildings 02 - 6346673 ADCO 02 - 6672642 ADMA 02 - 6263225 ADNOC 02 - 6669143 Abu Dhabi Municipality 02 - 6744749 NPCC 02 - 5549282 ZADCO 02 - 6768821 HILTON 02 - 6812280 Abu Dhabi International Airport 02 - 5757303 Sheikh Rashed Bin Saeed Al Maktoum Road 02 - 6419800 Abu Dhabi Mall 02 - 6452200 Arabian Gulf Road 02 - 4478878 Baniyas 02 - 5831625 Bateen 02 - 6658332 Between The Two Bridges Area 02 - 5589446 Corniche 02 - 6220300

March 2009

Dalma Island TAMM Das Island Liwa Madinat Zayed Government Complex Al Mirfaa Al Ruwais Al Muroor Mussafah Dept. of Social Services & Commercial Buildings (Mussafah) Mussafah Municipality Industrial City of Abu Dhabi Al Salam St. Al Shahama New Al Shahama Abu Dhabi Municipality-Shahama Sweihan Marina Mall Al Etihad Emirates Palace National Exhibition Centre Mina Road

02 - 8781240 02 - 8945528 02 - 8731099 02 - 8822388 02 - 8846146 02 - 8945428 02 - 8836506 02 - 8776343 02 - 4481918 02 - 5553357 02 - 5520681 02 - 5540300 02 - 5501125 02 - 6442900 02 - 5632411 02 - 5635695 02 - 5631385 03 - 7347919 02 - 6816002 02 - 6111111 02 - 6908900 02 - 4494996 02 - 6767665

Al Alin Al Ain Clock Tower Al Ain Al Ain Cement Factory Al Ain International Airport Al Ain Defence Al Sanaiya Al Hayer Al Ain Mall

03 - 7642400 03 - 7516900 03 - 7828060 03 - 7855511 03 - 7688824 03 - 7213222 02 - 7322400 03 - 7519900

Ajman Ajman

06 - 7422996

Dubai Deira Dubai Side Jebel Ali Sh. Zayed Road Al Qusais Jumeirah Mall of the Emirates

04 - 2226141 04 - 3599111 04 - 8815655 04 - 3433311 04 - 2674176 04 - 3499001 04 - 3413888

Fujairah Fujairah Dibba

09 - 2222458 09 - 2444223

Ras Al Khaimah Al Nakheel Ras Al Khaimah

07 - 2281753 07 - 2334333

Sharjah Al Bourj Avenue Sharjah Al Falah Camp Office Al Dhaid Khorfakkan Kalba

06 - 5695500 06 - 5721111 06 - 5385969 06 - 8822929 09 - 2385250 09 - 2772112

Umm Al Quwain Umm Al Quwain

06 - 7660033

National Bank of Bahrain Abu Dhabi Khalaf Bin Ahmed Al Otaiba Building, Sh. Hamdan Street P.O.Box 46080 Email: nbbbr96@emirates.net.ae Website: www.nbbonline.com Farouk Khalaf Ingersoll Ramalingam

UAE Country Manager Manager Credit

Tel 02 6335288 Fax 02 6333783

02 6335299 02 6311248

National Bank of Dubai Dubai Tel 04 2222111 Head Office Baniyas Street, Deira Fax 04 2283000 P.O. Box 777 Email: contactus@nbd.co.ae Website: www.nbd.com History: Established in1963 as National Bank of Dubai Limited. In 1994 name was changed to National Bank of Dubai. R. Douglas Dowie Joyshil Mitter Alex Richardson Leslic Rice Abdul Shakoor Tahlak Ghanim Bin Zaal Ali Al Najjar Suvo Sarkar Rajesh Thaper Faranak Foroughi Husam Al Sayad G. Krishnamoorthy Sue Evans Alan M. Smith A. Chandran Walid El Masri Rashmi Malik Abdul Fattah Sharaf Mohamed Al Neaimi Ali Kaitoob P.S. Sastry Hesham Qassimi

CEO CFO COO CRO CM - Intl. CM - Business Development CM - Liability Head of Retail Head Of Corporate Head of TPO Head of HR Treasurer Head of IS&T Head of Group Audit Head of BPQM Head of Corp Comm Head of Strategy GM NFS GM Aqarat Head of Dist. Retail SM CEO’s Office Divisional Manager Corporate Banking

Abu Dhabi P.O. Box: 386 Ajman P.O. Box: 712 Ajman Archives Al Mizhar Al Ain P.O. Box: 16122 Burjuman Centre Bullion Convention Centre Branch Dubai Central Fruit & Vgtbl. Mkt Branch Al Awir Dubai International Airport Dubai International Airport Pay Office Dubai Internation Airport Dubai Internation Airport Dubai Internation Airport Dubai Internation Airport Dubai Internation Airport Dubai Media City Pay Office Deira City Centre Dubai Airline Centre

Tel : 02 6394555 Tel : 06 7456555 Tel : 06 7444606 Tel : 04 2641221 Tel : 03 7644345 Tel : 04 3555222 Tel : 04 2284757 Tel : 04 3320808 Tel : 04 3333880 Tel : 04 2200404 Tel : 04 2164946 Tel : 04 2162450 Tel : 04 2166995 Tel : 04 2162452 Tel : 04 2162434 Tel : 04 2162740 Tel : 04 3902007 Tel : 04 2951555 Tel : 04 2952555

Fax : 02 6346767 Fax : 06 7456060 Fax : 06 7425883 Fax : 04 2640569 Fax : 03 7668515 Fax : 04 3554455 Fax : 04 2289090 Fax : 04 3320908 Fax : 04 3333870 Fax : 04 2244614 Fax : 04 2244614 Fax : 04 2244614 Fax : 04 2244614 Fax : 04 2244614 Fax : 04 2244614 Fax : 04 2244614 Fax : 04 3908855 Fax : 04 2951525 Fax : 04 2955655

Dubai Airport Free Zone Dubai Courts Dubai Media City Pay Office Emirates Tower Fahidi Emirates Tower Emirates Tower Fahidi Direct Banking Fujairah Branch P.O. Box: 1744 Hamriya Hatta Ibn Battuta Mall Branch Ittihad Road Jumeirah Branch Jebel Ali Main Office Maktoom Branch Malleq Emirates Branch Muhaissnah Branch Nadd Al Shiba Oud Metha Branch (Ex-Gulf Tower Branch) Ras Al Kaimah P.O. Box : 1932 Rashidiya Souk Madinat Jumeirah Branch Sh. Zayed Road (Saeed Tower) Sharjah P.O. Box : 21850 Umm Al Quwain P.O. Box : 22 Emirates Tower Umm Suqeim

Tel : 04 2995550 Tel : 04 3366702 Tel : 04 3030400 Tel : 04 3300133 Tel : 04 3535575 Tel : 04 3530308 Tel : 04 2823400 Tel : 04 3532840 Tel : 09 2233335 Tel : 04 2663189 Tel : 04 8523183 Tel : 04 3685499 Tel : 04 2955600 Tel : 04 3420202 Tel : 04 8816087 Tel : 04 2222111 Tel : 04 2281141 Tel : 04 3410777 Tel : 04 2544545 Tel : 04 3363939 Tel : 04 3370222 Tel : 07 2279888 Tel : 04 2859523 Tel : 04 3686130 Tel : 04 3313183 Tel : 06 5738888 Tel : 06 7656154 Tel : 06 7656152 Tel : 04 3485222

Fax : 04 2995557 Fax : 04 3353906 Fax : 04 3908855 Fax : 04 3300155 Fax : 04 3535575 Fax : 04 3534601 Fax : 04 2823640 Fax : 04 3531443 Fax : 09 2233336 Fax : 04 2690103 Fax : 04 8521051 Fax : 04 3685501 Fax : 04 2955611 Fax : 04 3421112 Fax : 04 8816961 Fax : 04 2283000 Fax : 04 2235456 Fax : 04 3410707 Fax : 04 2544646 Fax : 04 3363788 Fax : 04 3366145 Fax : 07 2279889 Fax : 04 2854847 Fax : 04 3686195 Fax : 04 3310629 Fax : 06 5733000 Fax : 06 7655151 Fax : 04 3300155 Fax : 04 3482535

National Bank of Oman Abu Dhabi Bin Sagar Towers, Najda Street Tel 02 6348111 / 6323456 P.O. Box 3822 Fax 02 6325027 Ravi S. Khot Country Manager 02 6393028 Salim Al Khanjri Manager - Operations 02 6392535 Minhajuddin Niazi Manager - Consumer Banking & Business Development 02 6326560 K.K. Gambhir Manager - Corporate Banking 02 6394922

National Bank of Umm Al Qaiwain History: Established in 1982 24/7 Call Centre Number: 600 56 56 56 E-mail: nbuq@nbq.ae Website: www.nbq.ae Sh. Nasser Bin Rashid Al-Moalla Mohamed Abdel Rahim Al Mulla Umm Al Qaiwain Branch NBQ Building, King Faisal Street P.O.Box 800, Umm Al Qaiwain Falaj Al Mualla Branch NBQ Building, Shaikh Zayed Street P.O.Box 11074 Falaj Al Mualla Dubai Branches NBQ Building, Khalid Bin Al Waleed Street P.O. Box 9715 Dubai  Deira Branch Opposite Dubai Police Head Quaiter Al Ittihad Street, P.O. Box 8898 Deira, Abu Dhabi Branch Hamdan Bin Mohammed Street (# 5) P.O. Box 3915 Abu Dhabi  Mussafah Branch P.O. Box 9770 Abu Dhabi

Managing Director General Manager Tel: 06 7066666 Fax: 06 706 6677 Tel: 06 8824447 Fax: 06 8824445 Tel: 04 3976655 Fax: 04 3975382 Tel: 04 2651222 Fax: 04 2651333 Tel: 02 6775100 Fax: 02 6779644 Tel: 02 5555088 Fax: 02 5553559

March 2009

Al Ain Branch Oud Al Touba Street Al Mandoos Roundabout P.O. Box 17888 Al Ain Sharjah Branch King Faisal Street, P.O.Box 23000 Sharjah NBQ Kiosk Sharjah Mega Mall P.O.Box 23000 Sharjah Ajman Branches City Center Branch Ajman City Center P.O.Box 4133 Ajman Masfout Branch NBQ Building Main Street P.O.Box 12550 Masfout, Ajman Fujairah Branch Fujairah Insurance Co. Building Hamad Bin Abdulla Road P.O.Box 1444 Fujairah Ras Al Khaimah Branch Corniche Al Qawasim Road P.O.Box 32253 Ras Al Khaimah

Tel: 03 3751300 Fax: 03 7513500 Tel: 06 5742000 Fax: 06 5742200 Fax: 06 5742200

Tel: 06 7436000 Fax: 06 7436060 Tel: 04 8523377 Fax: 04 8523093 Tel: 09 2232100 Fax: 09 2232220 Tel: 07 2366444 Fax: 07 2364470

Philippine National Bank Dubai Representative Office Room 108, Al Nakheel Bldg., Zabeel Road, Karama Tel 04 3365940 P.O. Box 52357, Dubai, UAE Fax 04 3374474 E-mail: pnbdxb@emirates.net.ae Amroussi Tillah Rasul First Vice President & Regional Representative

Rafidain Bank

Abu Dhabi Al Nasser Street, Glass Bldg. P.O.Box 2727, Abu Dhabi Salah Mahid Branch Manager

Tel 02 6335882 / 3 Fax 6326996

Dubai Representative Office API World Tower, Suite 1002, Shk. Zayed Road, P.O. Box: 3614. Umaima Zaman senior manager Ashwani.k.Dewitt senior manager Global Private Banking Ashish Anand Chief Representative

Tel 04 3313196 Telefax 04 3313960

RAK Bank Ras Al Khaimah Head Office, Oman Street, Al Nakheel Tel 07 2281127 P.O. Box 5300 Fax 07 2283238 E-mail: nbrakho@emirates.net.ae; www.rakbank.ae History: Established in 1976 as The National Bank of Ras Al Khaimah. In 2003, name was changed to RAKBANK H.E. Sheikh Omar Bin Saqr Al Qasimi H.E. Sheikh Salim Bin Sultan-Al-Qasimi Mr. Hamad Abdulaziz Al Sagar Mr. Essa Ahmed Abu Shuraija Al Neaimi Mr. Majid Saif Al Ghurair

March 2009

Director Director General Manager Head of Personal Banking Head of Corporate Banking Chief Operating Officer Head of Internal Controls Head of Credit Head of Treasury Chief Internal Auditor Head of Human Resources Head of Finance Tel : 04-2248000 Tel : 04-2248000 Tel : 04-2248000 Tel : 04-2248000 Tel : 04-2248000 Tel : 04-2248000 Tel : 04-2248000 Tel : 04-2248000 Tel : 04-7058444 Tel : 04-3685890 Tel : 06-5746888 Tel : 06-5132666 Tel : 09-2778707 Tel : 09-2371900 Tel : 03-7644222 Tel : 02-6448227 Tel : 02-6666658 Tel : 07-2333744 Tel : 07-2666833 Tel : 07-2448822 Tel : 04-8525999 Tel : 07-2662434 Tel : 07-2351147 Tel : 07-2281127

Sharjah Islamic Bank

Royal Bank of Canada

Mr. Ali Samir Al Shihabi Mr. Yousuf Obaid Essa Mr. Graham Honeybill Mr. Ian Hodges Mr. Anil Sukhia Mr. Steve O Hanlon Mr. Geoff Harman Mr. Jose Braganza Mr. Malcolm D’Souza Mr. Nigel Summersall Mrs. Susan Gardner Mr. Venkat Raghavan Dubai Deira Maktoum Branch Deira Souk Branch Umm Hurair Branch (Bur Dubai) Sultan Business Center ( Dubai Main Branch) Sheikh Zayed Road Branch Emaar Business Park Branch Marina Diamond Branch Al Quoz Branch Al Qusais Branch Ibn Battuta Mall Branch Sharjah Sharjah Main Branch Sharjah Industrial Area Kalba Branch Khorafakkan Branch Al Ain Al Ain Branch Abu Dhabi Abu Dhabi-Tourist Club Branch Khalidiya Branch Ras Al Khaimah RAK Town Branch Sha’am Branch Badr Branch Al Mannei Branch Al Rams Branch Al Dhait Branch Al Nakheel Branch

Chairman Director Director Director Director

Mohammed Abdalla Chief Executive Officer Ahmed Saad ibrahim Chief Operating Officer Mohammed Rizwan Chief Risk Officer Saeed M Ahmed Al Amiri Head, Investment Group Ossama Salah El Din Head, Retail Banking G . Ramkirshinan Head of Coroprate Banking Group Hussam A. Abu Aisheh SVP-Chief Internal Audit Mohammed Ishaq Chief Dealer Mohamed Azmeer Head of Credit Division Eman Jasim Sajwani Head of Human Resources Group Myron Britto Head, nformation Technology Div.-CIO Sufyan Maysara Head of Shariaa Supervision Divison Branches Main Branch - Al Brooj Avenue Mohammed Yousif King Faisal Street Branch Abdul Salam Al Ali Ladies Branch Laila Ali Salem American Unversity Branch Mohd Mousa Ali Al Dhaid Branch Khalid M. Ajmani Industrial Area Branch Waleed Abdul Qadir Sharjah Expo Branch Jassim Al Awadi Sharjah Buhaira Branch Osama Ahmed AlSalman Khorfakhan Branch Yousif M. Abdullah Dibba Branch Ali Al-Abdouli

06-5115116 06-5115118 06-5115172 06-5115000 06-5115339 06-5115111 06-5115153 06-5115151 06-5115319 06-5115170 06-5115444 06-5115213 06-5115121 06-5746805 06-5746807 06-5585789 06-8829414 06-5397623 06-5992502 N/A 09-2387490 09-2442601

Kalba Branch Fujairah Branch Dubai Branch Sheikh Zayed Branch Al Twar Branch Abu Dhabi Branch Al Ain Branch

Abdullah Bin Hikal Nawal Mohamed AlMaghribi Mohamed Ibrahim Alghufili Maisoon Zainudin Maha AlBanna Thomas P.Y. Majid Shaâ&#x20AC;&#x2122;abaan

09-2774204 09-2244339 04-2698322 04-3217543 04-2638335 02-6224166 03-7513200

Shuaa Capital PSC Head Office Tel: 04 3303600/ 04 3199778 Emirates Towers Hotel, Level 7 Fax: 04 3303550 P.O. Box: 31045, Dubai, UAE. Website: www.shuaacapital.com Iyad Duwaji CEO Abeer Ayash Marketing and PR coordinator

Societe Generale Dubai DIFC Gate Village, Bldg. 6, 4th Floor Tel.: 04 4257500 Sheikh Zayed Road, Dubai Fax: 04 3653170 Website: www.socgen.com Alain L. Tave Chief Regional Representative

Standard Bank Plc - Dubai Branch (DIFC) Dubai Emirates Tower, Office-16 B Tel 04 3300011 P.O. Box 504904 Fax 04 3300169 Website: www.standardbank.com Jeffrey Rhodes General Manager 04 3300164 Kate Lunjevich Head of Compliance & Operations

Standard Chartered Bank Head Office: United Kingdom Dubai Main Branch Tel 04 3520455 Head Office: Al Fardan Building, Fax 04 3526679 Mankhool Road, Bur Dubai P.O. Box: 999, Dubai - United Arab Emirates www.standardchartered.com/ae/ Phone Banking: +9714 3138888 (24 hours) Dubai Branch P. O. Box 999, Al Mankool Road, Dubai , UAE 04-3599550 Deira Branch P. O. Box 1125, Al Nasr Square, Dubai, 04-5085300 Gold Souq Branch P. O. Box 64555, Gold Souq, Dubai , UAE 04-2262699 Jebel Ali Branch P. O. Box 16920 , Jebel Ali, Dubai , UAE 04-5085200 Sharjah Branch P. O. Box 5, Al Boorj Avenue, Sharjah , UAE 06-5916100 Hamdhan Branch P. O. Box 240,Al Fardan Tower ,Abu Dhabi, UAE 02-6165600 Istiqlal Branch P. O. Box 241, Istiqlal Street, Abu Dhabi UAE 02-6165400 Al Ain Branch P. O. Box 1240, Near Clock Tower, Al Ain, UAE 03-7056800 Dragon Mart Branch P. O. Box 4166, Dragon Mart mall, Dubai, UAE 04-5085260 Emaar Business Park Branch P. O. Box 103669,Building 3 ,Dubai , UAE 04-5085255 Wealth Management Center P.O Box 999, Jumeira Beach Road, Dubai UAE 04-5085706

The Housing Bank for Trade & Finance Abu Dhabi P.O. Box 44768 Muhanad Habashneh Representative

Tel 02 6268855/6270280 Fax 02 6271771

Union de Banques Arabes et Francaises UBAF Dubai Creek Tower, Baniyas Road, Deira Tel 04 2284080 P.O. Box 29885 Fax 04 2284070 Hamed Hassouna Chief Representative GCC & Yemen

UBS AG Abu Dhabi ADNIC Bldg., 5th Floor, Sh. Khalifa Street P.O.Box 3744 Website: www.ubs.com Roger Leitner Senior Representative Dubai Creek Tower, Office 17A, Baniyas Road, Deira Peter Schaer Senior Representative DIFC Gate Village, Bldg. No. 6, 5th Floor Sheikh Zayed Road P.O Box 506542 Per Larsson Senior Representative

Tel 02 6275024 Fax 02 6272752

04 2240044 04 2220006 Tel.: 04 3657150 Fax: 04 3657191

Union National Bank Abu Dhabi Head Office, Salam Street, P.O.Box 3865, Abu Dhabi Website: www.unb.ae History: Established as a Public Joint Stock Company in 1982 Nahyan Bin Mubarak Al Nahyan Chairman Mohammad Nasr Abdeen Chief Executive Officer Abu Dhabi Corniche City Centre Najda Hazzaa Khalidiya Adgas Booth Musaffah Shahama Baneyas Al Dhafra/Madinat Zayed Al Muroor Al Ain Sh. Khalifa Street Al Jimi Dubai Main Branch, Deira Al Maktoum Street Khalid Bin Al Waleed Road Al Bustan Jebel Ali Sheikh Zayed Road/Jumeira Rashidiya

March 2009

Tel 02 6741600 Fax 02 6786080

02 632 1600 02 627 3471 02 632 4981 02 641 2288 02 635 2511 02 627 0611 02 555 9111 02 563 4600 02 582 1886 08 884 8484 02 444 8384 03 7644551 03 7626240 04 2211188 04 2232266 04 3516444 04 2636388 04 8810999 04 3329911 04 2857686

Ajman Central - Emirates Post Fujairah Ras Al Khaimah Sharjah King Abdul Aziz

06 7425552 09 2222747 07 2286600 06 5686141 06 5746161

United Arab Bank

General Manager Dy. General Manager Asst. GM-Corporate & Retail Asst. GM-Admin. & Finance

06 5733900 06 5733900 06 5733900 06 5733900

United Bank Limited Dubai Gargosh Bldg, Khalid Bin Waleed Street

March 2009

Fax 04 3514525

Wachovia Bank National Assoc.

General Management & H.O. Tel 06 5733900 Sh. Abdulla Bin Salim Al Qassimi Building, Al Qasimia St., Sharjah Fax 06 5733906 E-Mail Address uarbae@emirates.net.ae Website www.uab.ae History: Established 1975 Bertrand Giraud Awni Alami Gibert Hie Arif Premdjee

P.O. Box 1367, Dubai Email: ublgmuae@emirates.net.ae Website: www.ubl.com.pk Wajahat Husain Head of Middle East Maruf Ahmed General Manager UAE

Tel 04 3552020

Representative Office Dubai The Atrium Centre, Khalid Bin Waleed Street, Bur Dubai 04 3556244 P.O. Box 53089 Fax 3557117 Head Office: USA J.Kennedy Thompson Chairman & Chief Executive Officer Michael P. Heavener International Division Dubai Branch: Chafic Haddad Vice President & Regional Manager Carol Hampson Customer Services Representative

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1/12/09

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