Banking & Business Review

DH 25 April 2009

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SURVIVAL CH

‘Wait-and-watch’ becomes panic Private bankers are not going away MENA countries better off

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Vol. VI. No. 41 April 2009

Editor’s note

Editor K Raveendran

ravi@sterlingp.ae

consulting Editor Matein Khalid

matein@sterlingp.ae

Publisher & Managing Director Sankaranarayanan

sankar@sterlingp.ae

Director Finance Anandi Ramachandran

anandi@sterlingp.ae

Editorial Staff Writer Ambily Vijaykumar

ambily@sterlingp.ae

Contributing Editors Anand Vardhan Linda Benbow Vanit Sethi Manju Ramanan

linda@sterlingp.ae vanit@sterlingp.ae manju@sterlingp.ae

DESIGN Creative Director Harikumar PB

harikumarpb@gmail.com

Designer Ujwala Ranade

ujwalaranade2007@gmail.com

Sales and Marketing General Manager (Sales & Marketing) Radhika Natu

radhika@sterlingp.ae

Product Manager Vijayn G

vijay@sterlingp.ae

Senior Advertisement Executive Sanjana Antony

sanjana@sterlingp.ae

ACCOUNTS Biju varghese

biju@sterlingp.ae

Office Co-ordinator Daisy Orfrecio daisy@sterlingp.ae Circulation Supervisors Ibrahim A. Hameed Saleem K U

Never a straight line

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ith the aftershocks of the global financial tsunami beginning to be felt one after the other, survival techniques would soon be in full play. Every business, every institution and every individual needs to ready a plan so as to be able to come out of trouble as best as one can. The crisis is a fact of life, from which there is no easy escape for any one.

As far as Dubai goes, concerns of a deeper impact on various segments of its economy are becoming more pronounced with each passing day. Some efforts of inducing a stimulus have already been made, but any tangible effects of these moves are yet to be registered.

On the contrary, businesses are bracing up for a more extended period of instability. That’s why survival techniques are so very important.

So, the short term scenarios are indeed going to be painful. The latest assessment is that Dubai’s population itself will shrink by over 15 per cent in the course of a year, which cannot but have a bearing on the overall growth prospects. One of the biggest strengths of Dubai, no doubt, has been its high-profile market, which means the effect of a contraction in size will be quite real.

But the positive side of the story is that one short term or a couple of seasons do not make up the life of a place. Life does not move in a straight line; it has to have its ups and downs if it has to sound true. It is a law of nature that those who enjoy the boom ride must also be prepared to face the other side of the curve. So, there is nothing ‘out of the world’ in the current situation.

Printing Asiatic Printing Press L.L.C., PB 3522, Ajman, UAE. Tel. 06 743 4221, Fax: 06 743 4223www.asiaticpress.com, email: asiatic@eim.ae

K Raveendran

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CONTENTS 10 COVER STORIES

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Liquidity gap of Dh110 billion continues to keep funding out of reach

Job market players adopt measures to stay in contention

Where is all Survival the money? techniques

24 REAL ESTATE

‘Wait-and-watch’ becomes panic Dubai property market outlook continues to be bleak as funding options evaporate

28 Dubai

population seen falling 17 per cent 30 PRIVATE BANKS

Private bankers are not going away ‘Strategies of groups like Lombard Odier more relevant today’

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34 RISK MANAGEMENT

Banks must do better Financial crisis has revealed the vulnerability of banks to severe market shocks

36 MARKETS

Concerns at banks’ asset quality From a popular growth theme, Gulf markets turn to illiquid trade in a matter of weeks

37 ECONOMY

MENA countries better off

World Bank update forecasts rapid deterioration in financial and economic conditions

41 INTERNATIONAL

The $2.5 trillion repair job

Geithner’s plan to fix the financial system is good; now he needs to execute

44 TECHNOLOGY

Cyber criminals getting more innovative

TrendMicro report says underground economy flourishing in financial meltdown

April 2009

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Record $6.4 billion raised by PE managers in 2008

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iddle East private equity fund managers raised a record $6.4 billion in 2008, up more than 10 per cent over 2007 and more than double the amount raised in 2005, according to Gulf Venture Capital Association’s (GVCA) 2008 report on Private Equity & Venture Capital in the Middle East.

Large size funds are primarily responsible for this growth, with the average fund size in 2008 being $258 million, compared with $213 million in 2007 and just $177 million in 2006. This trend is driven by the need for more flexibility in structuring deals and the past success of large buyout transactions, according to the 2008 GVCA report, developed in cooperation with KPMG, and Zawya, and supported by Hawkamah.

Three regional funds have crossed the $1 billion mark, and as the report notes, the current economic downturn may make it more difficult for all but the most established fund managers to secure the successful closure of these larger funds.

Yet, there is also tremendous liquidity among regional funds, which are cash rich with $11 billion in capital under management yet to be deployed. The report notes that this ‘dry powder’, as it is called, gives private equity a strategic opportunity vis-à-vis target companies, given the limited scope of other funding sources available in the current environment. This liquidity results from both an increase in fundraising and a decrease in deals, with the number of private equity investments dropping by 22 per cent between 2007 and 2008, as

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well as the total investment size, which fell by 31 per cent.

The report found that over the past four years, Egypt, Saudi Arabia and the United Arab Emirates were the largest recipients of private equity funds, at 33 per cent, 15 per cent and 14 per cent respectively. The majority of funds are Middle East and North Africa (MENA) focused, with Turkey sometimes included as part of the region. Regional players are experiencing an increasing request for funds with a mandate that includes MENA, to expand and include South Asia, Southeast Asia and/or Africa.

The sectors of focus for portfolio acquisitions during 2008 were healthcare, transport, power & utilities and construction. Healthcare likely would remain a top recipient of private equity funds in the next few years.

In terms of fund strategies, more and more funds are seeking controlling stakes. While in 2005, only 3 per cent of transactions were control buyouts, by 2008, some 26 per cent of transactions volume and half of transactions values were control buyouts.

The report is optimistic about the future of private equity in the region, noting that as an asset class, it does not have a short-term investment horizon and so is well placed to weather the current crisis.

According to Imad Ghandour, Chairman of the GVCA Information & Statistics committee, the economic fundamentals of the region remain strong and are supported by aggressive fiscal policies. Governments’ reserves will continue to trickle down to the rest of the economy – sustaining corporate

profits and public investments, he said.

“A sober market will offer better valuations, and hence better returns for private equity. Although the increased attention from international players that the region witnessed in 2007 may be disrupted, we expect the disruption to be temporary. As a matter of fact, we expect the robust economic performance of the region to attract additional allocation from international institutional investors over the medium term,” he said.

Although fundraising in the region has been strong, when compared with the total value of announced fund sizes, it is clear there have been delays in reaching target sizes. In fact, after excluding one major fundraising, only 16 per cent of the total amount announced in 2008 was actually raised in the same year, compared with 65 per cent in 2005.

Roughly half of the funds announced in 2006 have so far been raised, and approximately $11.7 billion of announced funds in 2006-8 have yet to make a close. The report suggests that this is because fund sizes are much larger, as well as recent constraints on liquidity.

While 2008 saw an increase in the total value of sale activity, which reached $3 billion, most of this was due to one major exit of $2.5 billion; excluding this one-off transaction, sale activity decreased by approximately 60 per cent, as did the number of exits, which dropped from 17 in 2007 to 11 in 2008. The report suggests that there will be fewer exits in the current economic climate, as funds won’t be able to achieve the returns traditionally targeted and exit options shrink, particularly with the sharp decline in regional IPOs. Trade sales were

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named as the most likely exit over the next couple years.

According to Ihsan Jawad, CEO of Zawya and board member of GVCA, private equity in the region is developing in many ways that are unique in comparison to the developed world.

Transparency remains a major barrier that hinders this mode of investment from becoming a strong component in the GCC financial system. More research efforts and collaboration is needed by all practitioners to elevate the current opacity of the private equity market, he said.

Of the 18 private equity fund managers interviewed for the report, most said they were established in the last five years. They expressed an expecta-

tion of consolidation in the industry, a decrease in investment, and lower portfolio company growth. This means portfolio companies will be held longer and fund managers will be increasingly active in managing their companies in order to add the maximum value.

Elaborating on the role of fund managers toward their portfolio companies given the current environment, Vikas Papriwal, Partner in KPMG’s Private Equity and Sovereign Wealth Funds practice, said, “With attractive exit options scarce at present, the focus for many private equity firms is now the workout of their existing portfolio – with operational improvements, debt restructuring and working capital management at the core. Discretionary

spending is being restricted, including expansionary capital expenditures, and business plan timelines are being reassessed, as entities look to weather the storm. However, no one doubts that opportunities will exist once we are over the worst.”

The GVCA report compiles comprehensive information and statistics about private equity funds and investments across the Middle East, and contains nine articles on current topics in the industry. The 125-page report also provides a detailed survey of 18 private equity fund managers regarding their views looking back at 2008 and ahead to 2009. There also is a special section dedicated to sovereign wealth fund strategies and investments.

Corporate alliances becoming popular

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lobalization and technological advances have made strategic alliances beneficial to companies looking to work together. Recent international AT Kearney research has found that industries which commonly use alliances as a means of collaboration for the good of all parties are: pharmaceuticals (18 per cent), high-tech (16 per cent) and energy (11 per cent). Other sectors with significant alliance activity include automotive (seven percent), banking (six percent) and transportation and travel (six per cent).

An alliance can take several forms from a contractual agreement to collaborate in any part of the value chain, to the shared ownership of a joint venture with a specific purpose/mission.

Regardless of the type of alliance it offers companies a way of reaping some of the potential benefits often sought in mergers. The decision of whether to work in a strategic alliance or a merger is based on careful analysis of the benefits and level of control sought through collaboration.

“Alliances, which are low-risk and

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low-control, are just one option companies should consider. They are reversible by their very nature and can take many different forms and serve a variety of purposes,” Dr Dirk Buchta, partner and managing director, A.T. Kearney, Middle East, said.

So far this region has already witnessed the first mergers in the real estate and banking sector. “We expect to see more strategic alliances, mergers and acquisitions to occur in the Middle East both within banking and other industries. The energy sector is one of the regional industries where we expect to see more alliances occurring either as a result of utilities companies aiming to achieve economies of scale, focusing on core business and outsourcing other areas into, for example joint ventures, or as an enabler to build up capabilities and knowhow,” said Dr Buchta.

The report from AT Kearney shows that alliances are very popular among companies in the same industry (60 per cent), with only 30 per cent of the surveyed alliances being between buyers and seller and even less so between players in non-related industries at just

10 per cent.

“The reason for this is likely that the value proposition is more straightforward to all parties when in the same industry, such as co-development of a new drug component,” Dr Buchta said.

“Whether it is a merger or a strategic alliance the success will be determined by the quality of the preparation as well as execution.”

A good starting point for any strategic alliance, merger or acquisition is to consider the benefits sought and then apply a unique set of criteria to evaluate the benefits from any close collaboration with another company, such as geographic footprint, access to skills and expertise, access to customers, economies of scale or scope as well as optimizing the risk portfolio.

“What distinguishes the winners from the losers of the current crisis will be the ability of companies to align their strategies to the new reality. This will, for any company, include considerations of how best to reap benefits from collaboration with other players, as well as the skills and capabilities to implement change,” Dr Buchta added.

New blending facility adds to Dubai’s tea assets

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he Dubai Tea Trading Centre (DTTC), a division of the Dubai Multi Commodities Centre (DMCC), unveiled its new centralised tea storage, blending and value addition services as part of its expansion plans to accommodate the growing activities of the centre.

The 23,731sqm facility in Jebel Ali Free Zone also includes office space for regional and international tea companies.

DTTC’s new facility offers services across the entire value chain of the tea industry ranging from storage, tea tasting, blending, packaging as well as networking opportunities leading to increased trade. The new facility also provides dedicated individual storage space, free storage for a limited period of time, and temperature-controlled blending and packing facilities for a wide range of teas under one roof.

“Tea is a truly global commodity – consumed among a wide array of peoples and cultures. It is fitting that Dubai, with its geographic advantage and world-class infrastructure, is perfectly placed to become an important hub for international tea trade,” said Ahmed Bin Sulayem, Executive Chairman, DMCC. “DTTC has already made significant contribution to growing the tea trade. This new facility – a one-stop solution for the tea industry - will further boost tea traded through the emirate, contributing to the ongoing diversification of the emirate’s dynamic economy.”

DTTC’s success is demonstrated by Dubai’s encouraging tea growth, which is evident from the growing tea trade. In 2008, Dubai’s total tea trade reached 148.6 million kilos, compared to 144.6 million kilos in 2007. In the same period, 5.92 million kilos of multi-origin teas were transacted through the DTTC, representing an annual growth of 15 per cent.

Sanjay Sethi, Head of the DTTC, said the new facility is a milestone for the Centre as well as the global tea trade. As Dubai is neither a producer nor a significant consumer of tea, it is well positioned to offer integrated services across the tea industry. “We have already seen immense interest from international tea traders to avail these new facilities. We are confident that the new Centre will attract more tea traders and boost the volumes of tea traded through Dubai,” he added.

The new Centre has the capacity to store up to 5000 metric tonnes of bulk teas at any given time. In addition, up to 2400 metric tonnes of CTC teas and leaf teas can be blended per month. DTTC’s new facility also has the capacity to pack up to 250 metric tones of tea in tea bags every month and up to 900 metric tones of loose tea in retail format per month. These comprehensive services are expected to further help boost the volume of tea traded through Dubai.

In addition to providing market infrastructure, DTTC also enables tea traders to access finance through the services of the Global Multi Commodity Receipt (GMR).

The DTTC presently stocks teas from 13 producing countries, including Kenya, India, Sri Lanka, Indonesia, Malawi, Rwanda, Tanzania, Zimbabwe, Ethiopia, Vietnam, Nepal, China and Iran. In keeping with its mandate to further increase the tea trade in and through Dubai, the DTTC also facilitates sales with buyers in the GCC countries, Iran, Iraq, Jordan, Morocco, Pakistan, Afghanistan and the CIS countries and has plans to expand its services to other Middle East and European markets.

Crisis helps bring more regulatory coordination

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he global financial crisis has triggered a deeper and more comprehensive scrutiny of banks by regulators working hard to maintain the stability of their financial systems, according to Gulf Finance House (GFH).

Even in jurisdictions such as Bahrain, which have shown considerable resilience in the face of the current turmoil, financial institutions and the Central Bank of Bahrain (CBB) are working much more closely to monitor the effects of the crisis, which continues to unfold and evolve, said Dr Ala’a Al-Yousuf, Chief Economist at GFH. “The Islamic finance industry, of which GFH is a prominent player, avoided the mess of the subprime crisis, thanks to its strong, asset-backed business models, which are rooted in Islamic principles,” said Dr Al-Yousuf during a session on ‘The supervision of Islamic banking and the role of the CBB’.

The ban on interest, speculation, trading debt and complex structured products prevented Islamic financial institutions (IFIs) from investing in the assets that turned toxic for conventional banks.

The concept of sharing of risks and profits has also meant that IFIs were inherently more conservative than their conventional counterparts.

“What the current crisis has done is to test the Islamic financial system and reveal its strengths, which are inherent, as well as its vulnerabilities, which stem from its linkages with the global economy and conventional financial system,” said Dr Al-Yousuf.

However, banks based in Bahrain, including the GFH, have so far shown considerable resilience, he noted.

While regulators around the world have been injecting huge amounts of money to bail out some of the world’s largest banks, the CBB has not deemed it necessary to make a similar intervention, despite months of turmoil in the international financial markets.

“This speaks well of the fundamental strength of the banking system in Bahrain, for which some of the credit must go to the regulator for its effective oversight and supervision of its licensees as well as to the banks for implementing effective risk management practices,” said Dr Al-Yousuf.

While the ongoing financial crisis has shattered the light-touch regulation model, regulators around the world now need to develop a formula which strikes the right balance between regulatory oversight and corporate freedom, said Dr Al-Yousuf.

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Changing market dynamics in Dubai real estate

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hanging market dynamics in the UAE’s real estate sector enabling Dubai’s residential renters to upgrade their accommodation or find larger homes at more attractive price points, according to Landmark Properties.

“What we are seeing now in Dubai is a shift benefitting and protecting the

Leasing Rates, March 2009 Project Palm Jumeirah Dubai Marina

100- 50 52 - 90 75- 00

mark Advisory, the research and analysis division of Landmark Properties, forecasts for leasing rates are expected to fall 25 per cent on average for both villas and apartments from a peak in 2008.

Landmark Advisory published leasing price maps in March to guide tenants on approximately what they

APARTMENTS

Studio

1 Bed

2 Bed

3 Bed

4 Bed

140- 60

185- 50

300-380

185-350

300-380

85 - 150

140- 50

190- 50

140-250

190-250

200 - 230

170-190

200-230

The Greens 55 - 75 80 - 90

120 -140 170 -190

The Views

70 - 85 80 - 125

150 -160 175 - 210

175-210

JLT

50 - 75 65 - 120

80 - 150

130 -200

130-200

JBR

75 - 90 100 - 20

130 - 60

170-200

210 - 280

170-200

210-280

Source: Landmark Advisory

rights of the tenant community. Tenants are having an easier time finding larger units for the same rate they currently pay, or choosing to move to more affluent areas. We’re also seeing many pay the same rent, but with an increased number of cheques,” explained Charles Neil, CEO, Landmark Advisory.

“Landmark Properties Consultants are now advising tenants on how to maximise their rental budgets through a variety of ways –from advising on areas where rent is softening to helping reduce tenants commutes by finding properties closer to work. The Consultants are suggesting many ways to get more value for their clients’ given budget,” he added.

Rental property continues to come down in price, as landlords look to find stable, securely-employed tenants for their properties. According to Land-

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should be paying for rent in certain areas. These maps are accessible both

on the Landmark Advisory website, www.landmark-advisory.com, as well as Landmark Properties website, www.landmark-dubai.com.

A studio in JLT that was going for Dh90,000 in the market last year, is now approximately Dh50-55,000 in today’s market. Looking at a Grade A one-bedroom apartment in Dubai Marina last year was about Dh150, 000, while today the same unit is going for around Dh100, 000.

“We urge our clients to reference these maps as we have rates for both apartments and villas on our site,” says Neil. “Tenants have greater freedom of choice and negotiating power than previously experienced in this market over the last 3-4 years. There are clear money-saving opportunities in the market and clients should leverage this chance to take advantage of the time.”

Building owners can also benefit from this rental flexibility, says Landmark Properties. Landlords can secure long-term rentals with guaranteed income if both parties are mutually satisfied. Landmark Properties also recently announced their Property Management division, offering landlords direct services to maximise freehold returns.

Secure salaries, easy payroll Smart Pay, the industry-leading electronic wage payment solution from UAE Exchange “Smart Pay is a niche product, which successfully addresses a critical area in the labour-oriented market of UAE. The product infuses greater reliability to payroll management, and has been a major success in UAE with many major companies forming part of our clientele. As yet another innovative product from UAE Exchange, Smart Pay has established itself as the leading payroll solution in the market.”

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AE Exchange’s Smart Pay, an industry-leading electronic wage payment solution seeking to improve the salary disbursal system of companies in UAE, and complying with the directive of the UAE Ministry of Labour, is steadily gaining popularity.

Smart Pay is the first exchange house payroll solution product in the UAE market, which aims to empower the average salary earner through organized salary payments, bringing benefits of consistent, timely, secure, and convenient salary pickup through the wide-networked branches of UAE Exchange.

Smart Pay attributes its increasing popularity to its inbuilt features, which benefit both the employer and the employee, especially in the construction industry, where the workers are flung widely across the construction sites and labour camps, making the logistics management difficult for the employer, and accessibility of payment centres difficult for the worker.

Smart Pay is a unique offering from UAE Exchange, the leading global remittance brand based in UAE with nearly

three decades of outstanding growth indices. UAE Exchange has operations spreading across five continents with a network of over 410 direct offices spanning from N. America to the Pacific.

It provides a wide range of products and services, positively influencing the lives of people through reliable and comprehensive remittance solutions.

UAE Exchange has more than 6,000 personnel deployed across the globe consisting of nearly 40 nationalities. It has a strong network in UAE with over 75 branches.

“Smart Pay is a niche product, which successfully addresses a critical area in the labour-oriented market of UAE. The product infuses greater reliability to payroll management, and has been a major success in UAE with many major companies forming part of our clientele.

As yet another innovative product from UAE Exchange, Smart Pay has established itself as the leading payroll solution in the market,” says Y. Sudhir Kumar Shetty, COO - Global Operations of UAE Exchange.

Company sources said the employer saves on man-hours, the huge paperwork

Y. Sudhir Kumar Shetty, COO - Global Operations of UAE Exchange

involved in the monthly salary disbursal, and logistics management by transferring the onus to UAE Exchange which, by virtue of its network and technology strength, handles the volume effectively. Hi-tech in-house systems ensure prompt and accurate delivery. Specially trained multinational staff for disbursal of salaries at the wide-networked UAE Exchange branches and various camp sites ensure the convenience of the employees, they pointed out. Smart Pay benefits hundreds of thousands of workers and companies in UAE. Smart Pay caters to the payroll management need of more than 1,000 corporates in the UAE market today, and disburses over 150,000 salaries every month across the country. Company sources indicated that the product plans to establish itself in other labour-oriented markets as well, based on the local market environment, and promises to transform into one of the frontrunners in the product portfolio of UAE Exchange. Further, Smart Pay Card, and cash dispensing machines are to be launched soon, which would elevate the product to a new level of convenience, they disclosed.

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PROPERTY COVER STORY

WHERE IS ALL THE MONEY? Liquidity gap of Dh110 billion continues to keep funding out of reach

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By K Raveendran

T

he announcement about the UAE central bank subscribing to $10 billion of the $20 billion Dubai bond sale plan did create euphoria in the market, but as weeks pass without any qualitative change happening in the liquidity situation, that excitement is surely waning.

The probability of bank loans being sanctioned, whether for personal purposes or for business needs, continues to be low as banks and financial institutions refuse to budge from their position that any new loan request turned down means another possible reason for discomfort avoided. Some of the Abu Dhabi banks, armed with fresh funding from the government, are seen to be more active with their loan offers, but most Dubai banks continue to be overcautious. The steeply hiked salary levels required for qualifying for a loan have not been relaxed, and the new stringent criteria has played large segments of the population outside the banks’ loan business.

ADCB is leading the charge in this respect and is aggressively pursuing its loan business in Dubai, while the other Abu Dhabi banks are said to be concentrating on employees of oil companies and other established businesses, which are relatively less exposed to the troubles brought by the financial meltdown. But no one is daring to touch the problem areas of real estate and financial sectors and the related services sectors.

Card marketing companies with multiple bank clients have undergone major downsizing as most Dubai banks have simply pulled out from the new issuance market and restricted the operations to the bare minimum. Small and medium enterprises (SMEs) continue to suffer as most banks shun any exposure to them in this troubled times. Small businesses are among the worst affected as the credit crunch impairs their operations badly. “SMEs are getting squeezed from both sides,” acknowledges Marios Maratheftis, Regional Head of Research, Middle East, North Africa and Pakistan

Some of the Abu Dhabi banks, armed with fresh funding from the government, are seen to be getting more active with their loan offers, but most Dubai banks continue to be overcautious of Standard Chartered Bank.

Bankers are unanimous in their view that the liquidity with their banks needs a sea of improvement. The Central Bank Governor has himself gone on record that there is a shortfall of about Dh110 billion in the required liquidity level in the UAE market. Loans with the banks currently exceed deposits by Dh110 billion and this gap needs to be bridged, Sultan Nasser Al Suwaidi told reporters at a GCC banking conference in Bahrain. According to central bank rules, banks are supposed to hold at least 100 per cent of their outstanding loans as deposits and their current lendings exceed deposits by up to 13 per cent.

Although Suweidi indicated that an economic stimulus plan was on the drawing board, he did not disclose the details. “The current situation requires a stimulus plan for banks and the economy in view of this ‘gap’ which could be bridged in collaboration with the Ministry of Finance,” the governor was reported as saying. But he disclosed

that the government has not decided on buying up bank portfolios, although there will be “some arrangement” to help lenders.

“Buying up bank portfolios is still for the government to decide” not the central bank, he said. “There is not only one solution for the whole thing, it’s not only cash injection that you need to do, so you need to do maybe multiple things, like they did in the United States, in the UK,” he said.

Although it has been weeks since Dubai announced the $10 billion subscription by the central bank, there has no further word on how this money is to be deployed. Nasser Bin Hassan al-Shaikh, Director General of the Department of Finance, who announced the central bank subscription, has only indicated that no decision has yet been taken on which companies were to be assisted with funding from the plan.

“There has been no disclosure or official mention of the specific companies that will benefit from this funding.

Such information will be made available once the funding structure has been approved by the Department of Finance,” said a statement from the department. ‘‘The bond programme subscribed by the UAE Central Bank is targeted at supporting all affiliated entities, whether fully or partially owned or affiliated in any capacity with the government of Dubai during this period of unprecedented challenges to the global economy,’’ the statement added.

Market observers had suggested that the effectiveness of the $10 billion infusion would depend on how the money is deployed. Morgan Stanley, for instance, estimated that if the bond issue receipts were placed with the local banks, the gap

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‘2010 would be the recovery year’

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Shayne Nelson

e believe that 2010 would be recovery year for the UAE, GCC, Asia and Africa, although it would take much longer for the UK, US and Eurozone to recover from the current global meltdown,” Standard Chartered officials told a media roundtable.

“It’s a global crisis, but it is not a crisis that has originated in Asia, Africa or the Middle East. Structurally, economy here is much stronger than most economies,” said Shayne Nelson, Regional Chief Executive Officer, Middle East & North Africa, Standard Chartered Bank.

He said that the crisis in the Dubai real estate market could not be compared to the property market crash of Singapore, which took almost a decade to recover. The Dubai situation has aspects that are strong in the medium term, which should make a recovery

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within a comparatively short period reasonable.

The fact that speculators are out of the market bodes well for Dubai property sector as it brings in the much-needed moderation, Nelson and Marios Maratheftis, Regional Head of Research, Middle East, North Africa and Pakistan, pointed out.

They noted that the unprecedented property boom had all the resources being concentrated into real estate and related sectors, thus leading to the neglect of the real economy. Irrational growth rates are giving way to more sustainable levels and the importance of the quality of growth, rather than the quantity of growth, is being recognized.

The UAE is one of the wealthiest countries in the world and it should not just be looking at strong growth but at quality of growth, a sustainable growth. After all, the UAE is a net lender to the world and the economy continues to be strong.

The Standard Chartered executives observed that the region, with its strong fundamentals, would be quick to recover and at the same time should aim at a “good quality, sustainable” growth instead of a high growth.

Unlike last year, which saw growth in credit zoom to almost 50 per cent for the UAE in June, a growth of 10-15 per cent is desirable in the present situation.

Maratheftis estimated that the

Marios Maratheftis

country’s 2009 inflation will be twothree per cent. “The key drivers of inflation in 2008 – liquidity, cost of housing and cost of food, are not expected to push it this year. I do not think inflation would be the focus of attention.

The risk of deflation, which we stand exposed to in case credit crunch gets severe and labour market deteriorates further, is there but it s unlikely to happen,” he said.

“I think two-three per cent is a healthy inflation for economy to have.

Now is an opportunity to reassess to ensure we have lower but sustainable rates of growth,” he pointed out.

He said the downside in the real estate is in fact positive for the economy as funds and human resources that were being directed to the real estate primarily can now be used for other productive sectors of the economy as well.

in loan-deposit ratio would come down from 13 per cent to 8 per cent.

“The effect on individual banks may be even more significant if these deposits were to be placed exclusively within Dubai based financial institutions,” said Mohamed Jaber, GCC economist with Morgan Stanley. But he added that the potential systemic risk of depositing those funds in domestic banks may deter the government from doing so.

“Given the debt refinancing needs of Dubai’s public entities, it is highly probable that the government will need to withdraw the majority of these funds over the next 12 months. This may indeed prove to be systemically risky if these funds were deposited within domestic financial institutions,” he said.

“Based on this, we believe that the funds will most likely be held outside domestic banks, with little net impact on domestic liquidity.”

Although the central bank had established a Dh50 billion emergency funding facility to help the banks tide over the liquidity crisis, this has not helped significantly as the banks did not find it a very attractive option. In the first place the facility was offered at a rate that the banks were not comfortable with and on top of that the banks were reluctant to draw on the facility as they feared their rating would be adversely affected.

According to Shayne Nelson, Standard Chartered bank’s Regional CEO, Middle East and North Africa, the banks were reluctant to use this option because of the worries that their credit rating would be negatively impacted.

He said there was a mismatch between the nature of the liquidity available with the banks and the nature of the loan requirements.

“Short-term funds cannot serve the purpose as they bring in unhealthy liquidity, which cannot be relied on for the long term,” Shayne Nelson pointed out. According to him, this can be overcome with the introduction of a permanent repo system.

If the Central Bank establishes a permanent mechanism for repo and reverse repo, banks can sell their bonds and securities to the Central Bank against their fund requirements and buy them back at a future date. This would offer banks a permanent platform for their liquidity needs, he said.

Though an auction system was introduced for certificates of deposit (CDs) in the last quarter of 2007, it is not active now.

By establishing a permanent repo system, banks will have access to funding ‘on tap’ and if this can be run on different tenures of one, three or six months, banks will have a permanent arrangement on which to fall back for their liquidity needs, he pointed out.

Card marketing companies with multiple bank clients have undergone major downsizing as most Dubai banks have simply pulled out from the new issuance market and restricted the operations to the bare minimum

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COVER STORY

SURVIVAL TECHNIQUES Job market players adopt various measures to stay in contention

By Ambily Vijaykumar

C

onservative estimates put the number of residence visas being cancelled in Dubai as close to two thousand daily.

The figures for January this year were reportedly 86 per cent more than the same period in 2008- a stark reminder of Dubai’s fall from favour with expatriate jobseekers.

The Dubai Department of Interior Naturalization and Residency, however, clarifies that it is issuing more visas than it is cancelling. In fact, the number of visas issued outstripped the number of visas cancelled by more than 30,000 in the beginning of this year.

The increase in the number of cancellations of visas is a reminder of the extent of the impact of the global economic

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crisis on the regional market. Professionals largely in the construction, real estate and banking sectors have been shown the door by companies trying to minimize the monetary impact of the financial tsunami that struck last year.

As the top boss at a leading recruitment agency in the Middle East puts it, organizations laying-off people are in many ways ‘shrinking to greatness’.

That greatness is being achieved by ‘trimming’ the workforce, decelerating the hiring process and also by being very choosy when it comes to recruiting people.

If in 2008, both job-seekers and employers rode the tide of a market boom, the same market has ebbed and has left many stranded now. So what will hap-

pen of them?

Recruiters say that this crisis has in fact given the market an opportunity to reassess itself. Both employers and employees will now look at long-term prospects. They are also unequivocal that with increased competition only the best will survive these times.

But how does one define ‘the best’?

“A candidate who is very well qualified and can multi-task,” says Rabea Ataya, CEO of Bayt.com. That does not mean that there is an opportunity for each one of them. It is a shrinking market and so the competition is stiff.

In 2008 job seekers were flocking to Dubai and employers were blindly filling in the blanks without assessing requirements or capabilities. Both are

paying a price today. There are now reports that Dubai is fast losing favour as the preferred job destination.

Recruiters are split in their reaction to these reports. Some do not attach any credibility to them. “The amount of talent seeking to be in Dubai is higher than ever before, despite the crisis,” says Rabea. With Dubai being plugged into the global economy more than any other emirate, the impact of any global development is bound to be felt here more, they say.

Those who differ say that Dubai’s rhythm of growth will now be considerably curtailed. “Instead of going at 200 kmph, it will now come down to around 30 kmph,” says Dr Hussein Al Baidany of Gulf Human Resources De-

Organizations are in many ways ‘shrinking to greatness’ by ‘trimming’ the workforce, decelerating hiring process and also by being very choosy when it comes to recruiting velopment in Abu Dhabi.

For job-seekers though, the options have significantly narrowed. The share of the job market pie is getting smaller with leading recruiters registering a doubling of applications they received this year in comparison to 2008. Recruiters however say that is not necessarily a reflection of large scale

unemployment, but of the prevailing uncertainty in the market. People who have jobs are also flocking to test the market.

In terms of the business for recruiters, being able to facilitate a growth in the job market this year has hence become more challenging and ambitious.

The situation has been worsened by

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It’s a waiting game ‘A correction after extremely rapid growth is natural’

Siobhan O’Reilly

B

usiness Aid Centre (BAC), a leading recruitment agency of the region, has no expectations of an unrealistic growth that was characterized by 2007 or 2008. The company is instead falling back on the ‘strong relationship’ it has cultivated with clients over the last 30 years to back the business this year.

The job market in general is ‘less buoyant’, says Siobhan O’Reilly, Recruitment Manager at BAC. “The market is experiencing a correction after a period of extremely rapid growth. This is a natural development but involves a difficult process of adjustment by companies as they look to reduce costs,” she adds. The adjustment has meant that there are larger redundancies in some sectors and fewer opportunities in others.

Competition has heightened and with it the power of bargaining has shifted from the candidate to the client. The employer, who was until last year rolling out the red carpet to candidates, is calling the shots now. As a result the rapid wage inflation that had become a common feature in the market has been reigned in.

This is not to say that worthy candidates are not being paid well, but the bargaining power of job-seekers has been greatly reduced. In the current economic climate, candidates will have to settle for lesser pay packages and more responsibilities in a new job. Those working will also have to settle for a cut if their company takes the step to scale down expenses. Re-

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cruiters in the UAE say that in times like these, it is better to accept a pay cut than lose the job.

Dubai’s breakneck growth over the last few years had made it vulnerable, say recruiters, because the growth was unsustainable over a long period. The bubble had to crash, because it was largely built on real estate and construction sector.

The market at the moment is experiencing a correction that was long due. This had led to job losses across the sector with the Dubai job market taking a severe hit.

“Dubai was experiencing the fastest growth rates, so the correction has been felt most acutely here. This will have an effect on the UAE as a whole, but the general picture in Abu Dhabi remains positive,” says O’Reilly.

The other places in the Middle East that are faring better include Qatar and Saudi Arabia. Another reality staring the region in the face is the large number of people who are leaving. In Dubai this situation is more acute than in the rest of the UAE, because the emirate employed the largest number of its workforce in the construction and real estate sectors.

“This is not simply a local or a regional problem, but an extension of the global economic difficulties. The regional economic picture still looks more positive than the recessionary situation in the USA and Europe,” adds O’Reilly.

By a positive picture, the recruiter means that there is no total freeze on employment opportunities. While organisations might not be creating new posts by the day, they are hiring new staff or looking to replace employees who leave.

This has resulted in the onus shifting to the candidate to prove credentials.

“Companies are going to be more selective regarding current and potential staff. Individuals who are highly productive and flexible will always be well-placed. Potential employees will be required to really demonstrate the value they can bring to an organisation,” O’Reilly informs.

Companies are looking for value for

money when it comes to hiring talent.

They will now be more judicious in selecting employees. Qualified candidates with a consistent track record will get preference over the rest. With cost-cutting being the order of the day, candidates who can multi-task will find themselves in a better position to get a job or switch companies.

Candidates are also willing to change tracks. Certain sectors that have narrowed down recruitments to the bare minimum will force many candidates to look for other options. But BAC does not believe that this option will work well.

“It is much harder to switch professions or industries when there is no skills shortage in that area. The current situation is therefore likely to make such a move more challenging,” O’Reilly explains.

Despite the gloom in two of the largest sectors in the economy, BAC believes there are sectors that offer scope for growth this year. This includes the FMCG, health and pharmaceuticals sectors. For the remaining sectors it is a matter of time before they start picking up. By extension that means that the badly affected sectors will have to wait for the market to bounce back.

When will that happen? “It is very difficult to say as there are so many factors to consider. The price of oil is obviously an important factor, but the general international financial climate will have an impact regionally. Another factor is when the real estate market improves and projects start moving again. The steep decline in construction costs will ultimately start to make some projects viable again,” argues O’Reilly.

Till then recruiters, candidates and employers will have to go through the waiting game. Recruiters are also hopeful that once the market gets back on track, it will open up new sectors for growth and with it a definite possibility of the job market revival in the UAE. Ambily Vijaykumar

the severe beating several key sectors have taken in the financial turmoil and hence have virtually frozen further intake of manpower.

Banks in the US and Europe that triggered the financial crisis, as also their counterparts in the rest of the world, are fighting for survival. Recruitments in the financial sector in Dubai that has had a more than comfortable leaning towards the real estate sector have almost ground to a halt.

Development majors in the country have been plagued by lay-offs, with several big budget projects being either cancelled or postponed. Recruiters also say that the cropping is happening on the lower and middle end of the job market. The top brass has been relatively left unharmed.

The logic behind that being in a situation like this, experience and consistency are most valued. This has, however, not stopped the many who have survived the axing from looking for greener pastures.

People are trying to ‘cover uncertainties’ by finding out what else is on offer in the market. So if it is their turn next, they are not caught unawares. Recruiters say they don’t encourage people to switch jobs unless they see the writing on the wall.

Many people in Dubai have a similar story to tell. They have reached a dead end with commitments still on hand and are now running from pillar to post in search of an opportunity that could help them either repay an outstanding loan or pay for their rent or children’s education. So has the situation now become a matter of survival for people in the region?

“One of the issues that is plaguing the Gulf is the high amount of indebtedness people are going through, thanks to the practices of the boom days with regard to car loans, personal loans, credit cards and the likes,” says Boyden Middle East Managing Director Magdy El Zein. In several cases,

that is forcing people to even switch professions, and in many cases even to lower their salary expectations that do not justify either their qualification or experience.

Though recruiters say they are being flooded with applications from candidates, employers have changed their recruitment strategies. In times

Recruiters say that with Dubai being plugged into the global economy more than any other emirate, the impact of any global development to be felt here will also be more

when everyone is trying to cut cost, prospective employers are opting to sift through applications available with various recruitment agencies and select a candidate rather than advertise for the post.

“A vast majority of my clients are using the database search to look for a talent pool,” says Rabea Ataya.

Bayt says there has been a decrease in employers advertising for positions.

The reason being offered is that in the process of ‘rationalizing’ their staff, employers do not wish to advertise for a post that has been left vacant because someone has been laid off.

Moreover, employers felt that the database access is a far more confidential way to assess what they want. This many recruiters believe has resulted in the balance of power shifting from the candidate to the client.

“The positive aspect to this change has been an end to the rapid wage inflation that was prevalent in the region until recently,” says Cliff Single of recruitment agency BAC. Till last year, candidates could bargain for very high wages since oppor-

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tunities were abundant and clients were on the lookout to either poach from their competitors or to pay any price to retain talent. That has surely been curtailed now.

A large part of the employment still being generated is through the need to fill up vacant posts rather than new posts being created due to any company expansion. Companies are looking for ‘value for money’ and hence candidate requirements have also become very specific.

The question being asked now is ‘what can a potential employee bring to an organisation’ rather than ‘what an organisation can offer to an employee’, says Cliff Single of BAC. Real estate, finance, construction, basically sectors that require huge capital injection, are the ones that are not faring well currently, largely diminishing the recruitment possibilities in these sectors. Alternatively recruiters are voting for the FMCG (fast moving consumer goods), health and pharmaceutical industry as well as insurance and some professional services like the legal sector and the debt collection

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companies to do well in these times.

“Trading, especially since in the Gulf wealth is held by historically trading families, as well as manufacturing in countries like Saudi will continue to do well,” says Magdy El Zein of Boyden.

“The oil and natural gas sector represents the most critical sector of the country. There have always been calculated steps of expansion and production in this sector unlike the real estate and construction sector which registered a meteoric growth in the boom times. I can safely say that the oil and natural gas sector has so far not been as badly affected as the other sectors,” says Dr Al Baidany of GHRDC. The shrinkage in the job market can be assessed by the fact that all recruiters say keeping up to their recruitment figures of 2008 will be a challenge. Hence they are advocating flexibility and far greater commitment as the key traits for people to stay in the market.

Even relocating to another country if a good opportunity comes ones, way might not be a bad idea at this time, they say. Despite recession being a global phenomenon, recruiters say some

countries in the Middle East have been less affected by the sudden dip in the market since their exposure to the critically affected sectors has been the least.

Saudi Arabia, Kuwait, Libya, Morocco, Lebanon, Qatar and Abu Dhabi get the recruiters’ votes in terms of job market performance this year.

Most recruiters are giving the market a couple more years to get back on track, but say the new market will be unlike the ‘boom years’ market of 2007-08. For Dubai in particular, they are unable to put a time-frame on when the present market will bottom. But with construction costs falling, they say it will be a matter of time before some projects become viable again for the emirate that has a huge stake in the real estate and construction sector that has seen massive retrenchment.

Interestingly none of the recruiters we spoke to said they have been hit by lay-offs. Their way of cutting cost has not been to reduce staff size but expenses. Anything that is not generating revenue is not required, they say; a principle that most companies are living by today.

Time to manage expectations ‘It is also a good time to be enterprising’

R

ecession is a time when you work hard and earn less. It is the time to manage expectations: a reality that Boyden Middle East, a recruiter that exclusively deals in executive level recruitment, is advocating all candidates to internalize.

The recruitment industry, Boyden says, is not as ‘dynamic’ as last year.

But that is also a relative assessment.

“Countries which have been affected severely by the downturn in certain industry sectors are struggling as compared to other countries that were not advanced in developing that industry sector. So if you take countries like Kuwait and Saudi, where there is a widespread growth range of industry sectors, they are less affected as compared to countries where there is a high amount of concentration on a couple of sectors such as the financial markets and property development,” says Managing Director Magdy El Zein.

Generally, the pace of recruitment is slow but it still exits. Considering that Boyden caters to a very small segment of the talent pool, “the demand is still there”. Breakneck speed at which new construction projects were being launched all over the UAE ensured that 2008 remained ‘buzzy’ for Boyden. Now things are back to the ‘normal ways’ where people are trying to manage what they already have.

With the construction and banking sectors being hit badly, recruitments in these fields have come to a naught.

The demand is largely for technical divisions and middle level positions in firms that are still recruiting.

Widespread uncertainty in the global market is also forcing people to take a more hands-on approach. People are playing it by the day. “If a given week is fine like the previous week, the coming week too will be good,” says Magdy.

Sectors that need a huge capital injection are lying low at the moment.

These include financial services in in-

Magdy El Zein

While several researchers have predicted that the market recovery will be on the lines of a ‘V’, Boyden says it will be a ‘U’ instead vestment banking, automotives, and property development and even retail.

Boyden predicts that when the upturn in the market happens there will be a demand for a completely different skill set as far as the financial industry is concerned.

“That will be a huge advantage, because it will open the doors for more multi-faceted talent to enter the job market, since they will be entrusted with the responsibility of implementing the new financial services model,” says Madgy.

Predicting the exact time for the market to bounce back is the difficulty.

While several researchers have predicted that the market recovery will be on the lines of a ‘V’, Boyden says it will be a ‘U’ instead. “We are going to stay at the bottom for a while. Again this is the first time that we have a world-wide crisis of this proportion.

It is difficult to predict anything right now. You need a crystal ball to do that and nobody has that,” Magdy says. The picking up of the market, the recruiter says, will happen only in the first half of 2010 and that will be very slow.

On the contrary, trading, insurance, professional services like debt collection and the legal sector continue to flourish in the current market. But even the sectors that have not been badly hit will not be recruiting heavily.

The loss of jobs is happening in the lower rung of the hierarchy, claims Boyden. It is only in dire situations when a company is shutting down or when a senior manager is retiring or when the company feels that one executive can do the job of two is the axe falling on the top management. This, however, is the ‘last resort,’ according to the recruiter.

Like most recruiters Boyden has seen a surge in the number of applicants over the last few months. They attribute it to ‘the need to cover uncertainty’ for candidates rather than a reflection of massive retrenchment.

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Another interesting trend that the recruiter has noticed with regard to candidates is their willingness to switch professions. “People are doing that because they are in a desperate situation and when they know that within their sector and specialty, they are not going to find anything they will definitely switch and that is aggravated by the fact that in their home country, things are no better. In the past people used to go back home and do something, now they cannot do that either,” Madgy explains.

Has this desperate situation led to candidates compromising on packages and benefits to keep a job? According to Boyden, there are two aspects to this.

Firstly, the quality of talent who were unwilling to move to the Middle East till a year back are making their way in now. Even with a predicted growth rate of only one or two per cent, the region has managed to attract a variety of job seekers. So in a scenario where people are faced with either a pay reduction or job loss, accepting the reduction is prudent in these times since the employer has a large talent pool to choose from. The second aspect is employers are looking at more cost effective ways of running their organizations.

“Employers are going back and cutting down on benefits totally or partially. And that is what you do in the time of a recession. We have heard cases when they have reduced housing allowances and are not ready to pay allowances in advance,” says Magdy.

Is Boyden also engaged in largescale cost-cutting?

“No we are not. We have instead decided not to spend unnecessarily.

Anything that is not generating revenue is not required. If we have to spend some money attending a conference where we can build good contacts, then we make it a point to go there. We spend only when we are sure there is a good chance for us to grow,” Magdy elaborates.

A conservative approach is what

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all businesses are also employing and this is also what is narrowing a candidate’s options when it comes to deciding the nature of the job ones wants to do. Places like Abu Dhabi that have traditionally had a less aggressive approach will take a cue from the Dubai crash and continue to be restrained in their approach. Those notwithstanding, governments in Abu Dhabi, Saudi Arabia and Kuwait have announced massive infrastructure projects. “Even if it is delayed by a few months, these projects will be on track,” says Magdy.

Infrastructure development hence offers ample room for recruitment this year. It will take more on the part of the candidates to sell themselves in the fiercely competitive market. Apart from being flexible and less demanding, people with jobs will have to learn to be happy with what they have. Candidates need to live with no bonuses and less or no perks.

Boyden recommends that for those who have their finances in place and

can back themselves up for about a year or two, this is a very good time to be enterprising. Care needs to be given though to the fact that banks are not very willing to finance small ventures.

“Pick and chose a good sector, a sector that is viable. Do you research properly and make sure that it is something that will work in the market now. And be ready to put twenty four hours of the day into it,” Magdy suggests.

Talking of business, Boyden had a ten per cent lower performance in 2008 as compared to 2007. But the company says that keeping up to last year’s performance would be ‘ambitious’ this year. The prediction is that oil prices that have fallen to the $40 a barrel mark will rationalize and scale to about $60 a barrel. This Boyden says will open up the possibility for Gulf states to be generous with their investment spending; a situation that will trigger more opportunities in the job market.

Ambily Vijaykumar

Talent still looks at Dubai as land of opportunities More global talent seeking out the emirate, says Bayt.com CEO

T

he CEO of Bayt.com, one of the largest recruiters in the Middle East, says that in the last four months, he has hired four Stanford graduates.

Despite graduating from the university himself, he was unable to hire talent from there for a very long time: the reason being graduates from the university demanded sky-high salaries till recently.

But that has changed: a scenario that he says is reflective of two aspects. Firstly, shrinking of the Europe and US job market and secondly, the emergence of the Middle East as a preferred job destination.

Talent that was not considering the region a year back is now lapping up opportunities that the area is providing.

Despite the crash in the real estate, construction and banking sectors, the UAE in general and Dubai in particular have become a hot favorite with aspirants, claims Rabea Ataya, CEO of the online job portal.

“The amount of global talent seeking to be in Dubai is higher than it has ever been, even now, despite the crisis. It is a global crisis and people still perceive Dubai as a land of opportunities. When you look at what is happening in other parts of the world, particularly those who are abroad are looking at Dubai and thinking that it is a good place to be in. Now whether or not there are enough jobs to absorb them remains to be seen,” says Rabea. The proof of the growth of interest in the Middle East as a job market is in the doubling of registrations on Bayt.com, he says. This doubling has happened in the last six months.

The flip side to the story is that there is massive retrenchment in the real estate, construction and banking sectors, which has lead to an increase in the number of people looking out for a

Rabea Ataya

job. Bayt believes that for those who are on the lookout for great talent, this is a great time to be recruiting. But there is increased competition considering that there are limited opportunities and far greater talent vying for them. The existing global scenario has left room only for talented individuals who are flexible and who employers believe will serve their long-term interests.

That is contrary to the picture a year back when both employers and job seekers were spoilt for choice. The result was that both of them were moving so quickly in an already speeding market, that none of them could be as selective as they would have wanted to be. So employers ended up recruiting talent that did not serve their larger interest and candidates ended up skipping jobs for higher remuneration.

“Both have reassessed now. Candidates are far more interested in longerterm prospects and employers are also interested in far greater talent,” says Ataya. An attempt at finding that talent is the virtual job fair organized by the

portal every year. Into its fifth year this time, the event has already seen close to 100,000 job seekers using the platform to look for opportunities. The VJF this year organized in the last week of March assumed more significance in the light of increased global unemployment.

With an opportunity for employers to “reduce expenses by 50 per cent” by not having to organize their individual job fairs and a chance for job seekers to reach out to more companies, events like these have become a means to bridge the gap between demand and supply of talent.

This talent, Ataya says, is still looking at Dubai as a land of opportunities. “One of the interesting things about this place is that it still has the lowest entry barriers for entrepreneurial ventures and these ventures while they might not automatically hire a great amount of people they are able to create real employment that is sustainable. And so it is no longer about a particular company hiring thousands of people, but I see more and more people coming in and opening smaller ventures across every industry and looking at Dubai as what it has always been, a place to service the rest of the region.”

Confidence in the emirate is also based on “the ability of its broad based economy to take a hit much more effectively,” argues Ataya. Layoff numbers especially in the construction sector are, however, adding up every day. “That is because the sector employed the maximum number of people. The numbers will obviously reflect that,” he adds.

Dubai’s massive investments in the construction sector are also blamed for the severe hit the emirate’s job market has taken. Unlike the rest of the country, Dubai was never playing it safe.

Ataya comes to Dubai’s defense. “The driving engines of the UAE economy

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have always been Dubai and Abu Dhabi in their own separate ways. Dubai tends to be the more internationalized of the two and obviously what happens internationally is reflected more in Dubai than it is on Abu Dhabi. So if you have international organizations and they are having global layoffs, you are going to feel that locally too. That comes with being switched into a global economy. I think Dubai is part of the global economy and so it will be affected as a part of it.”

There is a fear though that the current situation will lead to people shifting loyalties from Dubai to Abu Dhabi.

Ataya disagrees with that argument. He believes Dubai has a unique selling point much like Abu Dhabi has its own. Dubai’s USP is that it remains an easy place to do business and has attracted large number of people on that basis. Abu Dhabi for that matter with its huge oil wealth supports a different industry. So traditionally people who have remained loyal to the capital will continue to do that and those who have their loyalties towards Dubai will continue to come to the city and make it their base.

Dubai with its open economy has also made itself far more vulnerable to the global economic crisis than several of its counterparts in the Middle East.

Economies that have remained closed or have been plagued by political unrests and hence have lost out on foreign investment in the last two decades are not feeling the pinch at the moment.

“What worked against you in the last two decades is now working for you in the sense that if you are out of the game, the game hasn’t affected you but if you were in the game, you are affected to the extent you were in the game,” explains Ataya. Countries like Morocco and Lebanon have seen zero layoffs so far, he says.

Bayt believes that even if companies are laying off people, they are hiring more talent. The difference this time is that the power has shifted from the candidate to the employer, who is now

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looking at upgrading the talent pool.

Most of Bayt’s clients are going the backdoor way. Instead of advertising for a vacancy, they are using the portal’s database of candidates to choose the most eligible ones. This has made the hiring process a more confidential one.

“We are seeing a decrease in employers advertising for their positions and part of the reason for that is that if you have to rationalize your staff and you are letting people go, you don’t want to advertise the fact that you are recruiting for the post. That does not reflect well on people who have been asked to leave,” Ataya explains.

The quest now with all employers is for increased productivity. The irony of the situation is that in times when the market is undergoing dramatic

Ensuring that they have enough cash on the books will help them to quickly hire people when there is an upswing in the market. Even for those who have not been a victim of the retrenchment drive that is on at the moment, looking for opportunities is what recruiters recommend.

“The worst time to look for an opportunity is when you are out of it. You become far more desperate, you compromise much more and so it is worth at all times, knowing what is out there in the market and being proactive about your long-term career prospects. It is a very bad time to act as though nothing is happening,” he recommends.

That however does not mean that people should take their present jobs for granted. “It is important to be far more dedicated in current job even if you are

Even if companies are laying off people, they are hiring more talent and the difference this time is that the power has shifted from the candidate to the employer, who is now looking at upgrading the talent pool changes it is the recruiters who stand to gain even from this downtrend.

“It has been a positive story so far for us,” says Ataya. “We feel we will be the benefactors of the downturn. But we remain the most cost-effective, quick and easy way to recruit. From the employers’ point of view they can employ up to a thousand people for as low as a thousand dollars.”

Cost-effectiveness is also the target of all companies adapting a new strategy of self-preservation. They are doing so in order to have the flexibility to grow when the times improve.

looking elsewhere because employers have far more choice than they ever had. So the commitment to a job while you are on it has to be far greater than there ever has been,” says Ataya.

As for the recruitment industry, Ataya feels innovation is the key to survival. The internet offers a wide option to reach to a cross section of the work force and this is something Bayt is aiming to build on. In the past, several big and small recruiters have set up shop in the region to capitalise on the booming market.

Ambiy Vijaykumar

REAL ESTATE

‘Wait-and-watch’ becomes panic Dubai property outlook continues to be bleak as funding options evaporate

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hat started as a state of lower overall confidence and investors adopting a wait-andwatch mentality in the Dubai property sector has developed into widespread negative sentiment and even panic in some cases. With properties continuing to remain prohibitive for the actual users in the near total absence of financing options, the outlook is indeed bleak.

According to the latest EFG-Hermes report on the UAE property market, speculative froth continues to exit the market with defaults occurring, particularly on properties sold during 2008, and distress sales becoming more common. EFG analysts say their previous concern that negative sentiment and the trickle of speculators walking away from deposits could turn into a flood now is becoming real.

The lack of liquidity remains a major concern as mortgage companies and banks have significantly curtailed lending for home purchases. The lack of funding has limited buying activity in the market although some lending does remain, solely on a case-by-case basis, with average loan to value ratios having dropped from 70-80 per cent to 55-60 per cent, thus making it largely prohibitive for new buyers. In terms of transactional activity, while the market had only started slowing in 4Q2008, anecdotal evidence suggests there is very limited buying activity, supported

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by data from the Land Department.

EFG-Hermes Residential Pricing Index for Dubai points to a cumulative decline in prices since October 2008 of 13.5 per cent. While acknowledging that this index is a trailing indicator as it is based on list prices with actual transaction prices likely to be materially lower, the analysts, however, point out that it serves as a useful directional guide to the market and in this case shows that prices are in a steady downward trend which they believe will continue.

A compilation of comparison between peak prices and current transaction prices through discussions and listings from brokers and industry professionals shows that since there are currently so few property transactions, it could be a possibility that the final price at which a transaction is completed may end up being lower, with the magnitude of the difference a function of bargaining power between buyer and seller and the associated level of distress/urgency. The investment bank has a view on the new segmentation of the market.

Old Dubai: Observed price corrections in Old Dubai (estimated at 23 per cent) have been relatively muted due to limited supply. Albeit, newer offplan products launched for sale in this area have, however, experienced larger price drops underlining the nature of speculative activity.

Central Dubai: Developments lo-

cated in this area noted an average 35 per cent drop. Analysts believe this is largely a result of high-priced product purchased speculatively during 2008, which has now been abandoned by buyers due to their inability to meet subsequent payments. High-priced primary market product set a new floor for the secondary market, with speculators buying into the possibility of flipping. With the turn in the market and limited opportunities available for re-selling properties, sellers are now willing to shave off a considerable

amount from original prices, mostly due to funding constraints. While maintaining the negative impact of this speculation, they, however, believe that projects located in Central Dubai will continue to be exclusive, owing to the fact that this area is the downtown core of Dubai, is geographically constrained and new residential supply makes up just 10 per cent of total supply.

New Dubai and Outer New Dubai: Both New Dubai and Outer New Dubai are areas where a significant amount of new development is expected to occur.

Analysts always had doubts about the overall viability of these areas, given the scale and number of projects as well as the ‘if’ factor, i.e., the ability of these outlying areas to become new hubs of activity and tourist spots. They note that the observed average price declines of 42 per cent and 36 per cent confirm this scepticism. Moreover, it also helps substantiate the view that the overall master plan of many projects in both these expansive geographic zones is likely to change. It is believed that while work will continue on projects that are currently under way or where the funding has been secured, there may be some delays or amendments to future phases. There is a greater probability that projects which are at an earlier stage could be severely delayed or more likely cancelled.

Office market The commercial sector is also weakening, with prices estimated to have dropped 20 per cent on average from peak levels in 2008. The commercial sector had only recently started to gain traction, with businesses looking at the alternative of buying versus renting in a tight office market, as well on the expectation of high forward-looking yields.

With the UAE immersed in an environment of slower growth, cost-cutting initiatives, layoffs and expansion plans on hold, rental inflation has started to ease. EFG-Hermes estimates that in 4Q2008, rents in Dubai declined 3 per

cent on average and this decline has continued in 2009, with rents having cooled 9 per cent year to date. Moreover, with property prices slumping, cash-rich investors that were previously more inclined towards holding onto units have now started releasing them in the hope of deriving rental income, with the release of this previously heldback supply helping to calm rents in some locations.

The analysts note that interestingly, rental rate inflation in Abu Dhabi is also abating, despite the paucity of new supply and strong demand. In Abu Dhabi, landlords seem to be becoming more rational in terms of expectations, taking into account weaker liquidity and exorbitant rental rates which were becoming prohibitive. High rent levels are also driving some professional expatriates to live in Dubai but work in Abu Dhabi which is exerting some downward pressure on rents in the capital.

EFG expects 2009 to be a year of overall rental stability in Abu Dhabi, stemming less from tight demand-supply estimates but more from a conscious effort to make living in the city bearable for residents.

It is believed that rental rates in Dubai can decline in the 20-50 per cent range from peaks in 2009, depending on location and the scale of increase in local supply. However, the actual decrease in rents will depend more on the quantity of demand, with the expectation being that the population decreases as construction, real estate, financial services, tourism and retail (key contributors to Dubai’s GDP growth) note a decline in 2009. The analysts point out that such a view was also echoed by the CEO of RERA, during a recent press round-table conference where it was suggested a 50 per cent rental decline seemed likely in the light of weaker demand. One support factor, worthy of mention, which may result in a milder drop in Dubai rents, could be the potential re-migration of working professionals from Sharjah and Ajman back

APRIL 2009

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to Dubai (who had previously escaped to these low-rent havens to avoid paying exorbitant Dubai rents).

EFG believes that the recent drop in commercial rents in Dubai is in keeping with slower demand but is also a worrying sign as it suggests that not only are businesses looking to trim existing operations, but also that new businesses are no longer flocking to Dubai. With other global financial centres experiencing a marked slowdown and economic data pointing to a state of prolonged recession, office rents in all global markets have eased. Abu Dhabi office rents on the other hand continue to rise, reflective of tight supply with respect to quality space and strong demand.

EFG’s previous assumptions for the Dubai market were for prices to start declining in second half of this year and registering a cumulative drop of 15-20 per cent by 2011. Worsening sentiment in late 2008 suggested that this decline was likely to be more front-end loaded. Meanwhile, for Abu Dhabi, with no major new additions of residential units expected before 2010, it is estimated that prices will grow 100 per cent for the whole of 2008, followed by a further 15-20 per cent rise in 2009.

These ‘soft landing’ assumptions have now given way to a full scale ‘correction’, given the worsening impact of the global financial crisis on the local economies It is estimated that residential prices in Dubai have dropped 34 per cent on average since their observed peaks in 2008. The assumption is that there is further room to go, with an overall price decline of 50-60 per cent possible, suggesting that prices could drop on average another 20-30 per cent before the market hits rock bottom. At these levels, prices would be closer to 2006 levels. Sentiment may improve in 2010 in tandem with better investor confidence and the availability of a wider variety of home finance options. Therefore, the analysts expect prices to stabilise

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during the first half of next year, with prices starting to rise again in second half of next year or early 2011.

EFG has made a series of amendments to its assumptions for arriving at revised forecasts for demand and supply of housing units in both Dubai and Abu Dhabi. Its demand estimates reflect the required demand for housing, based on population estimates, i.e. the incremental growth in the size of the population, as well as the assumption of household size which results in an estimate for the number of housing units required.

The analysts say that ideally, they would like to quantify demand as being the number of housing units being purchased. In order to do this, there is need for better quality information such as official figures of population size, segmentation by income and occupation etc, which is currently unavailable.

In terms of supply, the estimates are based on housing units expected to be delivered, based on the announced project pipeline. The analysts say they have factored in reduced project scope and delays, given the current more constrained liquidity environment. Again,

the supply estimates are based on units previously assumed to be sold and currently being constructed, hence shall be delivered over time and does not include the impact of new inventory released for sale.

They expect new supply in Dubai to come on to the market at a slower pace.

In addition, with the assumption of a negative population growth in 2009, it is believed that demand for housing will also be impacted. However, if demand remains weak, there is a possibility for pent-up demand from previous years to absorb supply that comes on stream. It is important to remember that housing units demanded is a function of both organic growth, from residents within Dubai (renters and buyers) as well as foreign buyers, with both groups expected to contract significantly in 2009, hence underpinning the overall negative net unit demand estimate, EFG points out.

Two support factors for demand could be the continued mismatch between type of supply being delivered and real demand and falling rents in Dubai, which would encourage professionals working in Dubai, but living in neighbouring emirates, to move to the emirate and avoid lengthy commutes.

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REAL ESTATE

Dubai population seen falling 17% Decline to affect overall economic growth performance

E

FG-Hermes has forecast that Dubai’s population would decline by over 17 per cent this year, reflecting a change in the emirate’s economic reality and further affecting the growth performance. The sharp fall is expected to bring down the total UAE population by as much as 5.5 per cent, the investment bank says.

“We believe the impact of the global financial crisis will be particularly harsh in Dubai, compared to the other emirates and the rest of the region. This is because of both the highly leveraged and externally facing nature of the Dubai economy. We will see a slowdown or contraction in a number of economic sectors, most notably in real estate and construction as projects are cancelled or put on hold. We are forecasting that the construction population of Dubai will fall 30 per cent in 2009e. The fall in population will further result in weaker demand for housing,” EFH analysts said in a report.

The cancellation of projects and the sharp correction in property prices will also lead to weakness in other sectors related to property, outside construction. There have been announcements of substantial job losses in real estate and property development companies.

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A number of other sectors also driven by real estate, such as advertising and marketing, will see a contraction in numbers. Outside of property, many other sectors, such as financial, will also see job losses due to the global slowdown, the analysts said.

They have forecast a 13 per cent decline in Dubai’s non-construction population. Looking ahead, they be-

lieve that Dubai’s construction worker population will further decline in 2010 by 5 per cent as more projects are completed, while the non-construction expatriate population will remain steady.

The expatriate population of the other emirates is also expected to contract as projects are cancelled or put on hold, albeit not to the same degree as Dubai But Abu Dhabi’s population will

grow with the continued implementation and expansion of its investment plan, albeit at a slower rate than in 2008, EFG said. Growth in construction workers is seen slowing to 7 per cent in 2009, from 15 per cent in 2008.

According to the report, there will also be a deceleration in non-construction expatriate population growth to 5 per cent in 2009 from an estimated 10 per cent in the previous year. Furthermore, it is estimated that the national population will continue to grow at more than 3 per cent on an annual basis. No deceleration is seen on this front.

These factors will help to limit the overall fall in UAE population in 2009, but will not be sufficient to compensate for

Abu Dhabi’s population will grow with the continued implementation and expansion of its investment plan, albeit at a slower rate than in 2008

the contraction in Dubai’s population, the analysts point out.

The report points out that the UAE’s robust population growth since the beginning of the decade reflects the strong economic activity of that period but also has been an important factor driving the economic expansion. Population growth was predominantly driven by the large influx of expatriates, which boosted private consumption as numbers increased but also as they spent to establish homes. Moreover, the robust population growth also resulted in an increase in planned real estate projects and investment as housing supply could not keep up with demand. The supply/ demand mismatch in housing also resulted in a sharp increase in rents, pushing up inflation.

UAE’s population surged in 20012008, growing by a compound annual growth rate of 7.0 per cent based on official figures and estimates. Much of the population growth was initially driven

by Dubai as a result of the implementation of its investment programme and the strong performance of its wider economic base. The number of residents grew by a CAGR of 9.5 per cent during the same timeframe.

Sharjah also realised robust population growth, although this was mostly spillover from Dubai owing to the latter’s housing supply constraints and rising rental costs. EFG believes that the UAE population growth accelerated in 2007 and 2008 as Dubai increased its investment programme, the expansion of investment programmes by other emirates (most notably Abu Dhabi) and the strong performance of in the nonoil sector (such as finance, real estate, tourism, etc) resulted in the expansion of their labour force. The population growth is believed to have accelerated to 7.7 per cent in 2007 and 8.8 per cent in 2008.

In addition to the influx of expatriates, the growth of the national population is also estimated to have been strong. UAE nationals account for 20.1

per cent of the population, according to data from the 2005 census. Given Dubai’s strong population growth, it is believed that the expatriate population would make up a larger portion of the population in Dubai than the wider UAE. The report says that the fall in the UAE’s population will further add to the downward pressure on the economy and will have a marked impact on domestic demand. Given the level of uncertainty regarding the macroeconomic environment, those with jobs will have a greater propensity to save.

Moreover, with the correction in the real estate sector, the level of wealth destruction will be greater than in other GCC countries. Consumption will be further suppressed with the fall in tourism numbers and spending.

As a result of the deteriorating outlook in the non-oil sector and subsequent fall in population levels, EFG analysts have increased the forecast contraction in the UAE economy to 1.7 per cent in 2009, from a minor contraction of 0.04 per cent when the growth forecast was revised in January 2009. It is now forecast that private consumption will fall by over 13 per cent in nominal terms in 2009, with the outflow of nonconstruction expatriate workers having a far greater impact on the economy.

Also forecast is a greater deceleration in investment growth as a significant number of projects, especially residential property, are being cancelled.

The main factor for the contraction in nominal and real GDP will still remain net exports, owing to the lower oil price and production.

“In a more negative case scenario, if we assume that all the estimated gains in population that were realised in 2008 were eroded in 2009 and that we went back to 2007e population levels, we believe real GDP growth would contract by 1.9-2.1 per cent. This would assume a further deterioration in both the investment and private consumption outlooks,” the analysts concluded.

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PRIVATE BANKS

Private bankers are not going away Strategies of groups like Lombard Odier more relevant today, says Regional MD Pasha Bakhtiar

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ith the US Administration prevailing upon the Swiss authorities to lift banking secrecy laws to help track US citizens’ ill-gotten money stashed in Swiss bank accounts, and public opinion in many countries, particularly India, putting pressure on their respective governments to pursue similar action, the Swiss private banking business has come into the spotlight.

Swiss bank secrecy laws made neutral Switzerland a popular destination for capital during World War II, and for generations the confidentiality of bank customers has been a hallmark of the country’s banking business. But bowing to pressure from the US administration, Switzerland recently agreed to ease its rules and promised to cooperate with other countries on cases of tax evasion and said it would no longer protect wealthy foreigners accused of stashing billions of dollars in secret bank vaults.

The well-entrenched and most favoured private bank destination has been threatened with blacklisting by the G-20, which is keeping the issue red-hot. BBR spoke to Pasha Bakhtiar, Managing Director at the Dubai Representative Office of Lombard Odier Darier Henstch, described as the oldest firm of private bankers in Geneva and one of the largest in Europe.

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The group has an active presence in the world’s leading financial centers with 23 offices in 17 countries worldwide. With 111 billion euro under management, the Group has a headcount of 1,800 and offers its clients a broad range of asset management advice, financial products and specialized services. The representative office in Dubai was set up in 2007, but the group has

been active in the Middle East, offering its suite of private banking services and solutions for over 50 years.

Pasha Bakhtiar does agree that the private bank business is going through one of its worst periods, as any investing business is, due to the financial meltdown, which has been further clouded by perceptions about the US investigations rather than realities. In the current

situation, no asset class can be totally risk-free and investors concerns in this respect are fully justified. But the most important task now is how best to negotiate the choppy waters and take the boat to safety, which he says his group is strongly placed to achieve on account of its conservationist strategies.

As for the negative publicity brought in by the US move and the demand for similar action by other governments in various parts of the world, Bakhtiar clarifies that the US action does not cover the whole private bank business of Switzerland and information has been sought on specific cases involving specific entities and the authorities have provided all the required information.

According to him, this course of action is open to any government, desirous of tracking down offensive money.

But the Swiss private banker is quick to point out that this does not mean that all the money lying with Swiss banks originate from questionable sources.

“In fact, contrary to popular belief, it is not easy to open an account with a Swiss bank. There are specialized teams in each bank, rigorously checking each application, questioning the source of the funds and safeguarding against misuse of the system. The banks don’t accept an account unless its investigators are convinced that all the filtering has been gone through satisfactorily,” he asserts.

The term ‘private banker’ is protected by a collective trademark registered with the Swiss Federal Institute of Intellectual Property by the Swiss Private Bankers Association (SPBA) and the trademark can be used only by the members of the SPBA and other banks which fulfill all the criteria.

Pasha Bakhtiar joined Lombard Odier Darier Hentsch in 2003. As a member of the special affairs team, he spearheaded key projects within the bank and formulated its business plan for the Middle East, which culminated in the launch of the representative office in Dubai. The operation is licensed by the UAE central bank and not the Du-

Pasha Bakhtiar

bai Financial Services Authority.

Bakhtiar says he is very optimistic about the Middle East, which according to him, continues to have an impressive growth story. And as for his group, its investment philosophy is to preserve and grow capital and this strategy has once again been proved right as investment ideas based on reckless risk-taking has led to the undoing of all other themes.

“We have a long-run investment approach, which excludes any focus on tactical investments, toxic structured products, nor areas where it has no understanding of the markets. In remaining committed to this philosophy Lombard Odier has steered through 200 years of existence and weathered the many financial storms along the way”.

The second feature of Lombard Odier’s success is unlimited liability – the partners that own the bank run the bank. “They are investing their own money in the bank. The unlimited liability over 7 generations of partnership has instilled a great responsibility in them. How they manage the money of others is how they manage their own money,” he said.

“We benefit from the long-term orientation of our investment philosophy, as well as from the fact that our corporate culture places clients’ interests above those of individuals or the Firm.

As this has been the case for over two

centuries, clients turn to us in view of the security we offer.”

No wonder, unlike other private banks and investment banks, Lombard Odier has not been affected to any significant degree by the current crisis in the banking industry, he pointed out.

The group claims it has no exposure to toxic investments, Madoff or the credit crunch.

Founded in 1796, Lombard Odier Darier Hentsch & Cie offers its private and institutional clients a wide range of advisory services in wealth management, financial products, and specialized areas. Its offices include Geneva, Amsterdam, Barcelona, Bermuda, Brussels, Dubai, Gibraltar, Hong Kong, Istanbul, Jersey, Lausanne, London, Lugano, Madrid, Montreal, Nassau, Paris, Prague, Rio de Janeiro, São Paulo, Tokyo, Vevey and Zurich.

Lombard Odier Darier Hentsch & Cie is directed by nine Managing Partners, who represent the seventh generation of private bankers in charge of the company. They are both owners and managers, as much involved in strategy and management as in serving clients.

The group says its portfolio managers enjoy the privilege of sharing their clients’ confidence. “Together they build up a relationship of trust, based on continuity and the greatest respect for personal privacy. By listening attentively to their clients’ needs, they are able to take a global approach to each financial situation and come up with tailor-made solutions meeting the highest professional, ethical and quality standards.”

According to the group, since the partners are both owners and managing directors, they are as concerned as their clients to see their business succeed. Because they are not subject to shareholder pressure, the constraints of operating in a large group and inherent conflicts of interest, the partners are also able to maintain a long-term vision and to develop mutual trust with their clients, the cornerstone of any relationship, it says.

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RISK MANAGEMENT PROPERTY

Banks must do better The financial crisis has revealed all too starkly the vulnerability of banks to severe market shocks

By Simon Baker

T

he difficulties in the financial markets have continued to an extent that nobody foresaw, or arguably could have foreseen. Governments and monetary authorities globally have taken critical action to try to prevent the collapse of their financial systems.

The quality of the governance in many firms has been questionable.

Regulators are considering the actions that they will need to take to create an environment where confidence may be

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restored. More intrusive regulation is the inevitable repercussion of this.

While the current crisis is unprecedented in modern times, it is true that many banks might have been better prepared had they subjected their business models to severe stress and scenario testing. While some may claim that this was indeed the case, it would be interesting to know whether there were any who felt that they would have to raise more capital as a consequence.

This article focuses on the key areas

of stress and scenario testing, on which the UK’s Financial Services Authority (FSA) published a Consultation Paper (CP08/24) in December 2008.

The concept of stress and scenario testing is not new. Some banks have indeed recognised the benefits of better understanding the resilience of their business. This has been reinforced by regulators through the need to stress test their portfolios as part of the Internal Capital Adequacy Assessment Process (ICAAP). However, the FSA has

concluded that in its experience “...for many firms, stress and scenario testing is not as robust, nor as embedded in senior management decision-making, as we would like.”

Stress and scenario testing is the analytical process involved in subjecting a bank’s portfolios to a series of tests in order to assess their potential vulnerability to exceptional yet plausible

Real world scenarios from past experience are sometimes better to use, since buy-in can be more easily achieved from business leaders, who may more readily regard them as plausible. This risks, however, underestimating the impact of potential future crises as has been the experience recently. Equally, scenarios are rarely exactly repeated, since controls will have usually been

to consider the resilience of firms and the financial system to exceptional but plausible scenarios. They assess how the selected events might impact on the relevant risk factors in a firm’s portfolio.

Scenarios can be either event or portfolio driven.

• Event-driven approaches identify risk sources that will cause changes in financial markets followed by an

The quality of governance in many firms has been questionable; so regulators are considering actions that they need to take to create an environment where confidence may be restored

events. They are intended to establish whether a bank has enough capital to absorb losses in a recession. They enable banks to obtain a better understanding of portfolio risk and make potential losses clear. Stress testing is an effective and necessary tool that complements statistical models for quantifying and monitoring risk and capital adequacy.

So what forms can stress testing can take?

implemented to attempt to prevent recurrence.

Single factor tests are intended to show how portfolios react to changes in relevant economic variables (e.g. interest rate changes) or risk parameters. They can be performed rapidly and provide senior management with a ‘quick and dirty’ idea of the impact of a change in a financial variable.

Scenario tests should be designed

assessment of the extent to which risk parameters may change should such an event occur.

• Portfolio-driven approaches start with an assessment of which parameter changes might result in a portfolio loss and assess what kind of events might bring about these changes.

Historical scenarios rely on significant past events and are based on actual data. They therefore tend to be more fully articulated and require less judgmental input. One drawback is that they may be less suited to the actual risk profile of the firm and may not adequately take account of recent advances in risk

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Under reverse stress testing firms will be required to identify and assess the scenarios most likely to cause their current business plan to become unviable

taking.

Hypothetical scenarios will be based upon market events or macro-economic scenarios that have not yet occurred.

They will be labour-intensive to construct, require judgment and specialist expertise. While historic data may be used to help devise the scenario, such an approach may lack support from the business due to the perceived artificial nature of the exercise. Arguably, however, the more widespread and effective use of hypothetical scenarios ahead of

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the current chaos may have prepared firms better to face the ensuing impacts.

Hybrid scenarios have become more commonplace. They use historical market moves as inputs, but do not necessarily link to a specific historical crisis. They need to strike a balance between realism and comprehensibility to gain the serious engagement of the business in considering the potential impacts and mitigating action needed.

Contagion takes into account the

transmission of shocks from individual exposures or portfolios across a financial services group as a whole and potentially across the financial system.

This is an area that financial institutions have often found difficult to assess in the past, but it is a risk that has crystallized alarmingly during the current market turbulence.

Designing scenarios that will prove useful to the business is not as straightforward as it may seem. While firms have clearly undertaken exercises as a result largely of regulatory necessity, there has been too often a reluctance to entertain scenarios that might upset the status quo. This is changing due to present circumstances and as a consequence of supervisory insistence. Notwithstanding this, the construction of scenarios can often ignore some potentially key elements such as: • Time horizon - the near term is used most often while a longer time horizon may be more appropriate as some macro-economic impacts may take more than a year to filter through.

• Unexpected illiquidity - many crises are characterized by an abrupt lack of liquidity in the markets. This element was not adequately addressed previously, but is now a key aspect of any meaningful test.

• Lack of hedges - hedging instruments may be rendered invalid during stress events. Reliance on these in a time of crisis will probably project an over optimistic outcome.

• Aggregation - the aggregation of the effects of stress tests performed at a risk type level raises issues regarding diversification benefits.

• Correlation - levels that prevail in ordinary conditions may cease to exist under exceptional events.

Stress tests should be all encompassing and cover primarily credit risk, market risk and operational risk. Firms should also consider changes to portfolio concentration levels, reputational impact, and the effect on the availability of li-

quidity sources.

Observations of the FSA Paper Rules and guidance on stress and scenario testing will be tightened and clarified. The main aspects are: • A ‘reverse stress test’ will be introduced. This is designed to consider scenarios most likely to cause banks’ business models to become unviable.

• Firms have been too optimistic in assessing the severity and impacts of adverse scenarios. In too many cases, this has been a simple desktop exercise designed to meet a regulatory requirement, which has ostensibly shown that existing capital levels were adequate.

• Capital planning generally has been poor. There needs to be a more rigorous assessment of material risks and mitigating management actions.

• Firms will be expected to review their stress and scenario testing arrangements immediately, and they should expect supervisors to challenge them.

• Group risk will become a core Pillar 2 risk, which must be considered in the context of the ICAAP. The key new elements are the reverse stress test and inclusion of group risk.

Under reverse stress testing firms will be required to identify and assess the scenarios most likely to cause their current business plan to become unviable. The firm’s plan should be considered to have reached this stage at the point where materialising risks cause the market to lose confidence in it. Recent experience suggests that this may be reached well before regulatory capital is exhausted. An underlying objective is to try to ensure that a firm may continue long enough to either restructure its business, or allow a more orderly wind-down or transfer. Recently there have been cases where there has been insufficient time for measured

courses of action to be followed.

• This requirement is intended to be holistic, so firms should consider liquidity risks as well as risks to their capital positions.

• The likelihood or remoteness of such risks arising in practice should be assessed.

• Firms are already expected to project their capital resources over three to five years and to estimate the financial resources needed to survive the impact of a cyclical downturn. Such a downturn may address a firm’s predominant risks where the majority of its business is composed of non-trading book activities. However, firms are additionally expected to hold capital to withstand specified yield curve shifts where they are exposed to banking book interest rate risk, and more sudden, severe market events that may be particularly pertinent to trading book risks.

• Senior management must be effectively engaged in the process, the outputs of which should assist in the formulation of business strategy, risk tolerances, capital and liquidity planning, risk mitigation strategies and contingency planning.

• Reverse stress testing will need to be documented, and signed off by the Board. It may be reviewed by supervisors alongside the ICAAP as part of the Supervisory Review and Evaluation Process (SREP).

Deficiencies were evident across the

Contagion takes into account the transmission of shocks from individual exposures or portfolios across a financial services group as a whole and potentially across the financial system market, although it is fair to say that the extreme nature of what has occurred was probably not anticipated by anybody. The Institute of International Finance (IIF) has also made recommendations for stress testing which the FSA has supported. There is willingness on the part of all stakeholders to address the shortcomings and to start the long and arduous task of starting to restore confidence to a system whose credibility has been shattered.

Simon Baker is deputy head of consultancy at Quadrant Risk Management (International) where he is actively engaged in governance, risk and compliance consulting. Credit: gtnews.com

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MARKETS PROPERTY

Concern at banks’ asset quality From a popular growth theme, Gulf markets turn to illiquid trade in a matter of weeks

T

he Gulf markets are very cheap, but the asset quality of banks, particularly in the UAE, is a cause of concern, despite government support to the financial sector through fiscal stimulus packages, Merrill Lynch has said in a report on the prospects for Frontier Markets, which groups many of the Middle East and the GCC markets.

Frontier markets were an outperforming, uncorrelated asset until the credit crunch went global with the bankruptcy of Lehman. Asset price correlations thereafter soared and vicious contagion caused an increasingly popular, secular growth theme to become a lonely and illiquid trade. Eastern Europe was hit by a credit crunch while the Middle East was badly affect-

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ed by the collapse in oil prices.

According to Merrill Lynch, between 2000 and 2008, the Frontier market index had a low 32 per cent correlation with the S&P 500, compared with 78 per cent or Emerging Markets (EM) and 86 per cent for Developed Markets. But between January 2000 and August 2008, annualized returns from Frontier Markets were 19 per cent versus 8 per cent from Emerging Markets as the perceived risks from Frontier markets were falling thanks to policy improvements – external debt as a share of GDP fell in almost all regions.

But the collapse of Lehman Brothers caused a banking crisis, the onset of a global recession and a massive deleveraging of investor positions in every secular growth theme. So, Fron-

tier went from being an increasingly popular growth theme to a lonely and illiquid trade in a matter of weeks. Correlations with the S&P 500 spiked from a 32 per cent o a very high 90 per cent, in line with EM and DM, Merrill Lynch points out.

Simultaneously the two key drivers of the asset class, bull markets in commodities and risk collapsed, causing emerging markets to depreciate and levels of CDS to soar. Frontier Markets plunged, with countries that had relied on foreign borrowings for growth particular hard hit, the report notes.

Merrill Lynch feels that the Frontier markets, which were the last to go into the de-leveraging vortex, are unlikely to be first out. “In other words, secular bulls on the asset class will need to be

Between January 2000 and August 2008, annualized returns from Frontier Markets were 19 per cent versus 8 per cent from Emerging Markets as the perceived risks from Frontier markets were falling thanks to policy improvements

patient”.

Global investors in 2009 are extremely concerned with liquidity and the potential for capital controls or other protectionist measures to commit fresh capital to relatively illiquid Frontier markets. Outflows from Frontier markets such as the Middle East have moderated in recent weeks. But for the Frontier bear market to come to an early end, two cyclical catalysts are needed, the report suggests. And these are higher oil prices, preferably in excess of $60 per barrel, and a recovery in global risk appetite.

But the asset management company feels that neither is immediately likely.

And recoveries in both are unlikely to be dramatic without a successful inflationary solution to the broken balance sheets of the G7 economies. Merrill Lynch forecasts higher oil prices in 2010 but global bank stocks are not suggestive of global re-leveraging anytime

soon.

According to the report, Qatar is Merrill’s top pick in the Gulf on a relative basis as the country is expected to post a 5 per cent GDP growth in ’09, the strongest in the region according to analysts. CDS spreads are the lowest among GCC ex Saudi countries.

Merrill equity analysts say one big unpredictable catalyst is the possible inclusion of Saudi Arabia, by far and away the largest regional market, in the MSCI Frontier index. At 9.6x earnings Saudi Arabia is the most expensive market in the Gulf, but the growth potential is huge, analysts point out.

The analysts are extremely cautious on Eastern Europe as high external debt burdens make credit markets a key equity driver in coming months.

“IMF-led bailouts to Latvia, Serbia, Ukraine, Romania and Serbia may act as a floor to stock prices. But for an end to the bear market we need to see CDS

spreads decline sharply and verify improvements in banks’ balance sheets,” they point out.

At the same time, the analysts argue that although the secular argument for Frontier has been wounded by global recession, it is not fatal. The asset class remains undercapitalized, underowned with strong growth potential.

The report points out that poor countries tend to grow faster than rich ones. GDP per capita in frontier markets averages $4,000 versus $6,000 in EM and $40,000 in DM. Strong urbanization trends, particularly in Africa and Asia, should support the secular growth theme in FM, it suggests.

Emerging Markets have had 13 bear markets in the past 20 years, yet the asset class still grew from 1 per cent to 10 per cent of global market cap. Today Frontier markets represent less than 1 per cent of world market capitalization and, as a share of their own GDP, have plenty of room to catch up with the norms of both developed and emerging markets.

The analysts suggest that Frontier investors must have long horizons and high risk tolerance. The key risks remain poor corporate transparency; challenging trading and settlement, poor liquidity and dependency on commodity export revenue.

The frontier markets index is likely to get two additions: Pakistan and Argentina as the two are being declassified from the emerging markets index. Pakistan’s downgrade is due to the fact that while Karachi Stock Exchange has returned to normal trading conditions, the index no longer meets the size requirements set for the MSCI Emerging Markets index, while in the case of Argentina, it is in view of the continued restrictions to inflows and outflows of capital in the Argentinean equity market.

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37

ECONOMY PROPERTY

MENA countries better off

World Bank update forecasts rapid deterioration in financial and economic conditions world over

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ountries in the Middle East and North African region are comparatively among the least affected by the global economic crisis so far, according to a World Bank update of its projections for the Global Economic Prospects report.

Growth for 2009 drops just 0.3 points from earlier projections to 3.3 per cent, but the shift from MENA’s strong 2008 performance is more pronounced, the review points out.

Reduced oil revenues and cuts in oil output will restrain GDP among oil exporters to 2.9 per cent from 4.5 per cent in 2008; while recession in the EU, reduced tourism arrivals and remittance flows are likely to yield an easing in growth among non-oil economies to 3.6 per cent in 2009 from 6.5 per cent in the preceding year.

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East Asia and the Pacific (EAP) is likely to be most affected by the falloff in global investment and trade, crimping industrial production and fostering declines in capital spending.

Investment stood at 36.3 per cent of GDP in 2008, contrasted with 26.5 per cent for developing countries excluding EAP, and contraction in capital outlays is likely to carry proportionately larger effects on regional growth.

Regional exports shift from gains of 15 and 10 per cent in 2007 and 2008 respectively, to decline of 1 per cent in 2009. Against this background, GDP eases to 5.3 per cent in 2009, as growth in China slumps to 6.5 per cent, and several ASEAN members, including Thailand fall to recession.

South Asia (SAR) has been marked down to 3.7 per cent growth for 2009 from 5.4 per cent anticipated earlier—

and down from 5.6 per cent registered in 2008. Though terms of trade have moved in favour of the region with the falloff in oil prices, weakening demand in export markets (including burgeoning Indo-Sino trade) is being felt sharply, as is a tempering of services exports from India’s high-tech centers, as capital spending wanes globally.

Remittances are anticipated to ease as conditions in host countries falter, albeit with some lag. Capital inflows have diminished, contributing to falloff in investment growth, notably in India.

Fiscal support for slowing economies may face constraints in already quite high budget deficits.

The review points out that what began six months ago with a massive de-leveraging in financial markets has turned into one of the sharpest global economic contractions in modern his-

tory. As investors repatriated overseas assets and credit conditions were tightened, firms around the world had to scale-back production and postpone capital spending plans. Faced with unprecedented loss of wealth and rapidly weakening labor markets, consumers reined-in spending, especially for durable goods.

This update reflects the rapid deterioration in financial and economic conditions—and the increasingly negative interaction between weakening economies and fragile financial systems—that have come to the fore since late 2008 for virtually every country in the world.

• Global GDP is expected to contract by 1.7 per cent in 2009, which would be the first decline in world output on record. This marks as substantial 2.6 point deterioration from earlier GEP forecasts.

• High-income countries are in deep recession this year, with OECD economies likely to contract 3 per cent and other high-income countries 2 per cent.

• GDP among developing economies should ease from an advance of 5.8 in 2008 to 2.1 per cent (contrasted with earlier projections for 4.4 percent growth). Two developing regions, Europe and Central Asia, and Latin America and the Caribbean will witness GDP decline in the year.

• Volumes of world trade in goods and services are expected to drop 6.1 per cent in 2009, with a significantly sharper contraction in trade volumes of manufactured products.

• Oil prices are expected to remain more-than 50 per cent below 2008 levels, averaging $47 per barrel for the year, while the decline in nonoil commodity prices is forecast to remain in excess of 30 per cent.

The report points out that the global character of the recession has carried a dramatic impact on economic per-

formance among high-income countries. Until mid-2008 the slowing of OECD domestic demand was partially offset by continued strong growth in exports of capital- and higher-tech products, supplying the investment that underpinned fast growth in the developing countries. Conditions have now reversed, as the collapse of highincome exports is reinforcing contraction in domestic demand in highincome countries. The tight global links between trade in manufactured products and the capital expenditures needed to support economic activity have now transformed into a vicious circle.

Economies specialized in capital goods production—among them Japan, Germany, Taiwan, China, and the United States—have been most adversely affected by the downturn in investment spending. The declines are especially dramatic in Asia. For example, the volume of goods exports from Japan had in January declined 40 per cent from a year earlier. The size of the contraction in Taiwan, China was 30 per cent and in Singapore 25 per cent.

The fall in industrial production was of

2009—a step-down from GEP projections of 2.8 percentage points.

The deceleration in economic growth in low-and middle income countries as a group is expected to match the deceleration in high-income countries. The developing world is anticipated to see growth fall from 5.8 per cent in 2008 to 2.1 in 2009, a drop of 3.7 percentage points, similar to the falloff in high-income economies. This highly synchronous growth collapse cannot be solely explained by trade linkages, but illustrates also that developing countries have been directly hit in their domestic economies by the financial crisis.

The reversal of capital flows, collapse in stock markets, and in general the deterioration in financing conditions have brought investment growth in the developing countries to a halt, and in many developing countries investment is sharply declining.

The report says that the present recession is spreading pervasive effects throughout the global economy that go well beyond substantial declines in GDP, production and trade. Commodity prices have halved, triggering sizable shifts in terms of trade and current ac-

What began six months ago with a massive de-leveraging in financial markets has turned into one of the sharpest global economic contractions in modern history similar magnitude in those countries.

Consistent with that picture, GDP in Japan dropped 12.1 per cent at an annualized rate in the fourth quarter of 2008, at 21 per cent in Korea and 25 per cent in Taiwan, China.

The Japanese economy is now expected to shrink 5.3 per cent (a markdown of 5.2 points since November), roughly twice the contraction in Europe and the United States. GDP in all high-income countries together is anticipated to decline 2.9 per cent in

count positions, while rapidly lowering domestic inflation across the world. Fiscal pressures are mounting swiftly, even for governments that enjoyed budget surplus at the start of the crisis. And large financing gaps on balance of payments are emerging for a large number of countries, which are increasingly likely to require large-scale support from official sources to prevent harsh market-driven corrections.

The commodity price boom that began in 2003 came to an end in July

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2008. Apart from strong demand, a number of factors drove prices higher, including a weak dollar, low pre-boom investment in extractive industries, supply disruptions, biofuel mandates, investment fund activity, and government policies such as export taxes and bans on several food commodities.

Many of these factors reversed at midyear 2008, as the incipient slowdown in economic activity and fallout from the financial crisis induced massive price declines across all commodity sectors.

By December 2008, crude oil prices dropped to $41per barrel —down nearly 70 per cent from July peaks—while non-energy prices fell nearly 40 per cent. Demand for most commodities slowed or declined—including import demand in China—particularly for oil and metals. Against this background, current projections call for crude oil to average near $47/bbl in 2009, some $27 per barrel below earlier expectations, with non-oil commodities falling 32 per cent. As most of these declines have already been realized for the year, the remainder of 2009 should be characterized by little overall change in price levels, though volatility is apt to remain elevated. As demand is not expected to recover meaningfully until 2010 or thereafter, prices should remain low in part due to idle capacity that could be reactivated in the case of metals and oil, and spare agriculture capacity.

CPI inflation across the G-7 countries as well as developing economies is slated to slow substantially into 2009-10, with the former easing to 0.4 per cent from 2.9 per cent in 2008 as commodity prices retrench and weak demand and continued rise in unemployment keep price pressures at bay.

Central bank fears of deflation will likely be offset by continued additions of liquidity to economies though stimulus programs and financial support measures. For developing countries, the median personal consumption deflator is viewed to fall from 8.5 per cent in 2007-08 to 5 per cent by 2010. Even

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if prices temporarily fall in some developing countries, the risk of widespread deflation is still small, as the fall in commodity prices is expected to be a one-time event, and core inflation was till recently on an upward trend, in response to the surge in food prices during 2008. Moreover, many countries may experience further weakening of their currencies, which would curb disinflationary pressures.

All developing countries now face the prospect of substantial deterioration in fiscal balances, as tax revenues fall (a good proportion related to international trade and the collapse in the manufacturing sectors), borrowing costs skyrocket and transfers to maintain social safety nets burgeon.

Stimulus packages and other measures to mitigate mounting stress in the private sector are bound to lead to further deterioration in fiscal positions in the coming years. The most substantial widening in fiscal shortfall is expected in developing Europe and Central Asia, where contraction in trade and production is severe, the private sector is highly vulnerable, and social safety nets have broad coverage.

External financing requirements for developing countries as a group are anticipated to increase to $1.3 trillion in 2009, comprised of current account deficits ($330 billion) and principal repayments on private debt coming due ($970 billion). With a decline in capital flows to developing countries underway, this would generate an estimated financing gap of between $270-$700 billion, depending on the size of rollover risks and the magnitude of capital flight. Regions with the largest funding gaps are Europe and Central Asia, Latin America, and Sub-Saharan Africa. In the current projections, 84 of 109 developing countries would face financing gaps, in most cases too large to cover by drawing down reserves alone.

This suggests that in the absence of sufficient international support, countries could be forced into generating a sharp

The present recession is spreading pervasive effects throughout the global economy that go well beyond substantial declines in GDP, production and trade reversal in current account balance, implying further decline in domestic demand and imports.

The report refers to the debates regarding the possible ‘shape’ of recovery from the current downturn continue, but says there is little question that the outlook for 2010 in particular, is surrounded by extreme uncertainty across a wide array of policy- and other variables that will eventually bring about a revival in economic activity. The pronounced cycle in worldwide investment could have sufficient dynamic to carry global growth back to positive territory by 2010, as the pace of decline in investment moderates, and postponed demand for durable consumer goods begins to catch up. Together with the effects of monetary and fiscal stimulus this results in the modest global recovery in the baseline forecast presented here.

However, continued banking problems or even new waves of tension in financial markets could lead to stagnation in global GDP or even to another year of decline in 2010. In all cases, the estimated output gap would increase in 2010 because (in the baseline as well), growth falls well short of potential. This implies that unemployment and fiscal deficits will increase further into 2010, in high-income and developing countries alike, while disinflationary conditions could persist well into the year.

INTERNATIONAL

Geithner’s plan to fix the financial system is a good one; now he needs to execute

The $2.5 trillion repair job

By Jeff Applegate and Charles Reinhard Moments after US Treasury Secretary Timothy Geithner unveiled the Obama administration’s much-anticipated. Financial Stability Plan (FSP) on Feb. 10, the stock market began sinking. Curiously enough, the credit markets barely budged—a sign, perhaps, that the fixed income players were willing to give the $2.5 trillion plan a chance.

In our view, the FSP has the features needed to get bank lending and

securitized markets functioning in a more normal fashion. Now Geithner needs to put it to work, which is what we—and the markets, somewhat more tentatively— expect to see in the weeks ahead.

ST RESS TEST: The first element of the FSP is a comprehensive regulatory stress test for major banks. The aims of this test are to make sure the banks could still lend even if they suffer further losses and to recapitalize banks

that fall short.

The exam looks at a bank under worsening economic conditions—a 3.3 per cent contraction in GDP in 2009, an average 10.3 per cent unemployment rate in 2010 and another 25 per cent decline in home prices.

After the review, banks needing more capital will be encouraged to seek private sources. Still, the US Treasury, Federal Reserve and other agencies are committed to making sure banks have

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the capital and liquidity necessary to make credit available.

A vital aspect of the first piece of the FSP is that the government will provide a temporary capital buffer to recapitalize banks that need it and take convertible preferred shares in exchange. The budget released Feb. 26 includes $750 billion for the financial rescue plan as needed to be carried on the books as a $250 billion loss. What if the banks need more? That will depend on the extent of further losses, which the next part of the FSP, the Public-Private Investment Fund, is designed to address.

This investment fund, which is to acquire bad assets from banks, is crucial. The government will lend money to private investors such as hedge funds to buy these assets, thereby letting the market set the price. The difference between that price and whatever values banks are carrying on their books would have to be absorbed as additional bank losses. Since the private-sector cost of borrowing will be low and the loan is nonrecourse, demand for these assets could be quite robust; by extension, potential bank write-downs and additional recapitalization needs will be commensurately lower.

LEVE RAGING UP: The third part of the FSP is the expansion, up to $1 trillion, of the Federal Reserve’s previously announced Term Asset-Backed Securities Loan Facility (TALF). The plan calls for using $100 billion of Troubled Asset Relief Program funds, and then leveraging them by a factor of 10. In essence, this is a further extension of the Fed’s credit easing, as the central bank will now become a market maker in securitized credit card, auto, student, commercial and residential loans. The Fed’s initial foray into credit easing in the commercial paper market last autumn succeeded in getting that market working again with lower absolute yields and spreads. The subsequent venture into the mortgage market achieved positive results as well.

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We think the TALF will work, too.

This should also mean the Federal Reserve’s balance sheet, which had recently dropped back below $2 trillion as some of its commercial paper holdings matured, will rise again—potentially to $3 trillion—as the TALF ramps up.

While the FSP may fall short of what ultimately will be required, in our view it is an innovative initiative. Combined with the $787 billion stimulus package signed by President Obama on Feb. 17 and the $275 billion Homeowner Affordability and Stability Plan intro-

The plan calls for using $100 billion of Troubled Asset Relief Program funds, and then leveraging them by a factor of 10. In essence, this is a further extension of the Fed’s credit easing, as the central bank will now become a market maker in securitized credit card, auto, student, commercial and residential loans

duced by the president on Feb. 18, the FSP is another element that should lead to a recovery in economic growth in the second half of 2009. This recovery should be anticipated first in US and global equity markets. Moreover, this steady flow of initiatives from the Obama White House confirms our view that this administration will be much more activist than its predecessor.

BEYOND THE US: Developed-country central banks, such as those in the UK, Japan and Canada, are moving toward a Fed-type ZIRP (Zero Interest Rate Policy) or deploying credit easing to keep local credit markets functioning.

Unfortunately, the European Central Bank hasn’t been aggressive enough on rates, though we expect that it will move closer to ZIRP this summer. Developing-country central banks, such as those of China and Brazil, continue to reduce interest rates—albeit from much higher levels—to stimulate their local economies.

Finally, global fiscal policy stimulus is at work, too. Including the US, our economists estimate fiscal stimulus will be more than 5 per cent of global GDP across 2009 and 2010.

As long as an adequate global policy response is forthcoming, the US and global financial markets and economy should complete its bottoming process.

Almost across the board, that policy mix seems appropriate, in our view.

However, there remain concerns over the risk of protectionism. The ‘Buy American’ provision in the US fiscal stimulus package is one example; fortunately, it was mostly gutted after the White House opposed it.

PROTE CTIONIST RISKS: In some circles, it’s considered ‘financial protectionism’ when global banks reduce lending or sell assets outside their markets. In our view, such actions are more a corporate response to the downturn. Similarly, we disagree that backing US automakers is ‘industrial protectionism’Canada and Germany, for example, have been supportive of

American auto companies in those nations just as the US has been. So, while protectionism remains a risk to markets, it is a fairly low-level threat, given the globalization of labor and capital extant today.

ROUND TRIP: US and global equities have round-tripped back to their November lows, as consensus earnings estimates and valuation reflect the deeper recession. US and global

recoveries usually take place in a favourable liquidity environment—and that liquidity is in place. Moreover, while the credit markets have not returned to normal, they are moving in that direction—and borrowing costs are low.

REAL YIELD: The US equity market also looks promising in terms of real yield, or the yield on risk-free Treasury bonds less the inflation rate. In the

As adequate global policy response is forthcoming, the US and global financial markets and economy should complete its bottoming process expected earnings for 2009 are now $64 and $17, respectively, versus $87 and $24 in November, while forward price/earnings ratios are 12 and 11, respectively, versus nine and eight previously.

Historically, prospective equity returns have depended quite a bit on the characteristics defining the starting point. Currently, P/E ratios are below their long-term historical averages.

Earnings are also below trend. As a result, equities would stand to benefit if markets move toward more-normalized valuations in the months and quarters ahead. In addition, market

1950 through 2008 period, any time real yields were below 3 per cent, as they are now, stocks were up an average of 13.5 per cent in the next 12 months.

That is significantly greater than the 5.1 per cent afforded to Treasury bonds or 3.1 per cent to cash in the same environment. That history is yet another reason for investors to stay resolute through these difficult times.

Jeff Applegate is Chief Investment Officer and Charles Reinhard Senior Investment Strategist with Citi Global Wealth Management

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43

TECHNOLOGY PROPERTY

Cyber criminals getting more innovative TrendMicro report says underground economy flourishing in financial meltdown

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riminals are using more sophisticated techniques than ever before to steal and sell victims’ personal information including email logins, credit card numbers, social security numbers, account passwords, PIN numbers, and gaming passwords, the TrendMicro Annual Threat Report has concluded.

Trend Micro says researchers observed the continuation of a pattern established in 2007 in which cybercriminals employ an increasingly professional approach toward creating schemes and using malware to make a profit in the ‘Underground Economy’.

Unlike the suffering, real world economy, the Underground Economy continues to thrive and prosper, the report points out.

Stolen information is big business for today’s cybercriminals. Prices vary based on type of data, time of year sold, valuation of currency, account balanc-

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es, credit limits, and other complicated criteria. According to a recent article in the Chicago Tribune, some estimate the global cyber-crime business to be generating $100 billion-a-year in profits.

Motivation is simple—online crime pays. For example, the average salary for a Russian professional is approximately $640 per month yet cyber-crime gangs are offering computer programming graduates from Moscow’s technical universities up to $5,000 to $7,000 a month. As in the past, Russia continues

to be a hotspot for cyber crime. Russian malware is bought and sold for as much as $15,000 and rogue Russian Internet service providers charge $1,000 a month for bulletproof server access.

According to a recent article in The Independent, off-the shelf malware is sold for $50 to $3,500, depending upon its sophistication, its ability to target victims, the kind of information it steals, and how well it evades security software.

Criminals can even subscribe to a service to monitor antivirus developments

The average salary for a Russian professional is approximately $640 per month yet cybercrime gangs are offering computer programming graduates from Moscow’s technical universities up to $5,000 to $7,000 a month

and tweak malware accordingly for $25 to $60 per month, or can purchase a ‘premium service’ to avoid detection.

Additionally, the article reports that a basic list of unqualified email addresses costs about 1/10th of a cent per address, while botnet services cost about $10 for a million emails. Botnets can also be rented and used for spamming, hacking, and denial of service attacks. An hour of usage on a network of 8,000 to 10,000 computers costs approximately $200.

Credit card details are the most common item bought and sold in the underground. Criminals either use the numbers on their own to exploit victims or sell the numbers on a black market online forum for two to five per cent of their remaining balances. For example, if the average card on the list had remaining credit of $1,000, each set of details would be worth approximately $25.

Geography also influences criminal booty. For example in Asia, online gaming passwords are all-the-rage and command top dollar. When the Internet Explorer zero-day vulnerability was identified in December, Chinese hackers used the security hole to steal login credentials to online gaming platforms and then sell them online for profit. In addition, virtual gaming is so popular in China that people have actually been murdered for their virtual goods. In Eastern Europe, hackers use the same vulnerabilities for different purposes— usually to steal online banking logins and credit card information. PayPal and eBay accounts are also being bought and traded online. Criminals locate users with high reputation ratings then steal their login data and leverage victims’ high ratings to scam consumers.

The methods employed to make money in the underground are growing more sophisticated, actually mimicking the real world. An entire industry of malware software programmers exists, for example, who sell code online

just like any real-world software development firm. In addition, cyber crooks employ a small army of work-at-home employees who receive payment for accepting funds from Western Union, for example, or for receiving then resending shipments of stolen goods—essentially money-laundering operations. FBI officials are reportedly tracking the correlation between rising unemployment and an increase in web-related schemes that promise large paychecks for a few hours of work per week from home.

Fake mortgage refinance schemes are also being used to bilk money from already hard-hit homeowners. The spam campaigns promise a better mortgage rate if recipients send money for an appraisal then the criminal makes off with the fake appraisal fee. One of the reasons for the growing prevalence and profit of cyber crime is the ease with which criminals can launch operations.

Free tools abound to create a variety of nasty web threats—from free, pre-made phishing kits to free spam

templates that exactly replicate the appearance of popular banking web sites.

In March, a slew of phishing kits were discovered built to target top Web 2.0 sites for social networking, video sharing, free email service providers, banks, and popular e-commerce sites.

Many of the kits originated from ‘Mr Brain’—a group of Moroccan fraudsters who launched a dedicated web site that advertises free, easy-to-use phishing kits. Mr Brain kits have been used to target several well-known banks and other organizations, including Bank of America, Chase, eBay, HSBC, PayPal, Wachovia, Western Union, and many others.

The underground economy will continue to prosper as long as cybercriminals develop increasingly sophisticated malware tools and as long as consumers and businesses lack the proper protections. According to the 2008 breach report from Identity Theft Resource Center, 35 million data records were compromised last year in 656 admitted

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incidents, compared to the 446 data loss cases reported in 2007.

Computer malware, hacking, and insider theft made up 29.6 per cent of overall recorded breaches, while data losses due to human error accounted for 35.2 per cent. Businesses and consumers alike will continue to suffer from data leaks, financial losses, identity theft, and damaged reputations in 2009, creating a security environment that is ripe for change.

As cybercriminals employ increasingly complex and distributed methods of attack, defense methods require a wider security net. Understanding the inner workings of single pieces of new malware code is insufficient for creating adequate protection. Just as critical is solving the puzzle of interactions among the malicious piece-parts of malicious spam, compromised web sites, and downloaded malware files.

The evolution of threats from mere files transferred through floppy disks to the sophisticated, blended web threats of today poses a unique challenge for the content security industry. New threats are now composed of multiple components, some of which may be non-malicious on their own. These threats are hard to detect since they require catching the malicious aspects of each and every component, TrendMicro points out.

While malicious spam attachments have been infecting users for years, 2008

saw a huge increase in spam that employed social engineering techniques.

In January and February, for example, several targeted attacks occurred using Trojanized Microsoft Word files embedded with malicious code. The files (in reality, Trojan downloaders) were sent as attachments with related spam that supported the Tibetan government in exile. The file names were lifted from actual press releases and news headlines, such as ‘Free Tibet Olympics Protest on Mount Everest.doc’ and ‘CHINA’S OLYMPIC TORCH OUT OF TIBET 1.doc.’ The technique is familiar, dredging up memories of WORM_NUWAR and leveraging headline-grabbing events to facilitate propagation.

In the middle of the year and toward the end, .ZIP files were spammers’ malicious attachments of choice, used to evade text-based spam filtering technologies. Examples included bogus UPS and FedEx email notifications containing a tracking number (to make the message appear authentic) with a message body informing recipients of a package delivery problem and a message urging the recipient to print the attached ‘invoice’ to claim the ‘package’.

The attachment was the same file type as those seen in previous spam runs.

The .ZIP file contained an informationstealer detected by Trend Micro as TSPY_ZBOT.MCS. ZBOT spyware— infamous keyloggers known to steal confidential information, such as those

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related to online banking credentials.

The increase in malicious attachments may be attributed to the ease they provide cybercriminals in altering tactics, such as attachments that leverage social engineering tactics and the ease with which payloads are delivered in the form of vulnerabilities that can be exploited. A a huge spike in malicious attachments occurred in September and October 2008.

Spam Spam has consistently risen over the years and the US continues to be the ‘most spammed’country, receiving 22.5 per cent of all spam, while Europe is the most spammed continent. China’s percentages have been increasing lately, showing 7.7 per cent of spam volume in 2008, compared to Russia at 5.23 percent, then Brazil, the Republic of Korea, and others. Spam is predominantly written in English—at 93 per cent of all spam tracked by TrendLabs. The next highest spam language is Russian at 3 percent and after that, several languages attribute1 percent to spam, including Japanese, German, Chinese, and others.

Although still the spam leader in volume, English is slowly decreasing as a percentage of overall spam. Spam was in the news in April when ‘backscatter spam’ reinvented itself. ‘Backscatter’ is a term coined to refer to the intended effect of sending spam using forged sender addresses.

Spammers who send email messages with different sender names in the From field are in fact counting on certain types of mail transfer agent (MTA) programs that return the entire text or message to the forged sender (as in Message Sending Failure messages or bounced email notifications) instead of truncating the messages. MTAs that are configured like this inadvertently cause a spam run, because they “send back” message to users who did not send these messages in the first place. Similar to malware attacks that reuse old exploits, this recycled technique is as effective today as when it

first appeared, as long as the conditions that allow it persist.

Another spam trend is the increasing use of malicious URLs embedded in spam to snag victims. Over 30 per cent of domains named in spam were registered in the past 60 days— implying their shady nature—with 10.8 per cent registered in the five days prior.

In November, a group of security researchers blew the whistle on San Jose-based McColo Corporation—one of the world’s most disreputable hosting providers and one of the world’s largest sources of spam. With suspected links to the Russian Business Network (RBN) in St. Petersburg, McColo was believed to have hosted some of the command and control (C&C) infrastructure for several of the world’s largest identified botnets, including Srizbi, Rustock, Mega-D, and Cutwail. These botnets were controlling hundreds of thousands of zombie PCs involved in email spam, spamvertising, malware, child porn, credit card theft, fraud, and get-rich-quick scams.

As a ‘bulletproof’hosting provider, McColo was known to be unresponsive to complaints about its hosted sites, collecting a premium from criminal operators for turning a blind eye when notified of infractions. McColo was finally disconnected from the Internet after

years of investigation culminated in a complete shutdown, eliminating an unbelievable 50 to 75 per cent of the world’s junk email in a single day. Unfortunately, the spam reprieve was temporary and spam counts are again inching back up.

In particular, Srizbi—one of the largest known botnets with links to McColo— appears to be regaining strength. The McColo shutdown indicates that botnets have been and will continue to be the biggest spam producers. Continued vigilance within the security, law enforcement, and business communities will be critical in spam control in the years ahead.

In 2008, phishers became even more adept at using social engineering techniques to fool victims into falling for phishing schemes. In addition to targeting financial institutions and banks, a new twist on phishing was discovered in November involving a fake McDonald’s Member Satisfaction Survey that promised a $75 credit for completing the survey. After completion, users were asked for full name, email address, credit card number, and electronic signature.

Bogus surveys related to Wal-Mart, American Airlines, and U.S. PresidentElect Barack Obama were used in several phishing attacks this year to collect personal information from potential

victims. The surveys usually promise some form of reward to participants, clearly demonstrating that cybercriminals are leveraging users’ increasing need to save money this past year.

With the increase in malware has come a dramatic rise in Internet crime.

According to a study by the Organization for Economic Cooperation and Development (OECD) into online crime released last summer, an estimated onein-four US computers is infected with malware.2 In addition to the staggering number, many threat types have morphed into targeted, combined attacks, rendering sample collection almost impossible.

Unlike the old days when hackers created viruses to be mischievous and to “show they could,” modern-day malware authors create threats primarily to make a profit. As the Underground Economy has grown and flourished into a multibillion dollar industry, cybercriminals have developed new methods for tricking PC users.

In 2008, a series of mass compromises showcased the dangerous potential of today’s criminals to launch wide-scale attacks that affect a range of innocentlooking sites. Gone are the days when users could simply refuse to open attachments from unknown senders to avoid infection. The majority of today’s infections arrive via the web—hiding on legitimate-looking web pages, lurking behind convincing warnings for fake antivirus software, hidden under fake digital certificates that once indicated sites were safe.

Dramatic and daring exploits were revealed in 2008, such as DNS changing malware that exploits a recently revealed vulnerability that can literally route any machine to any other site. The zeroday bug found in Microsoft Internet Explorer in December was similarly shocking in its scope. The identified vulnerability affects almost all versions of Internet Explorer and Microsoft security researchers estimated that as many as one in 500

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Internet Explorer users could have been exposed to malware attempting to exploit the flaw.

Ransomware also made a splash in 2008, with a Trojan that encrypts files, making them inaccessible without an encryption key. Experts predict more ransomware in the future, capitalizing on small to medium-sized businesses that lack the IT resources to combat such threats, particularly in a down economy.

In 2008, removable, physical drives became a popular threat vector, especially in Asia. Autorun malware, which infect removable drives, was also on the rise last year. In addition, a rash of incidents involving infected USB sticks are causing companies throughout the world to create new, more stringent policies about the kinds of devices allowed to access the corporate network. Not all threats were new last year, however.

The Master Boot Record (MBR) rootkit made a spectacular comeback, with new technology that helps prevent detection.

Another oldie— backscatter spam—also reappeared as a recycled threat that became newly effective in 2008.

Predictions for 2009 call for more of the same threats that plagued both home users and businesses in 2008, with new events and occurrences in the New Year that will shape the social engineering techniques that make today’s spam so believable.

In an effort to help customers prepare for the newest threats, Trend Micro provides the following Annual Threat Roundup and Forecast to showcase the malware that made headlines in 2008 and to deliver predictions for 2009.

Knowledge of the threat landscape is the most important layer of defense— both for home and business networks.

This report serves as a roadmap for all users to better understand both new and existing threats with helpful tips to protect against tomorrow’s new malware attacks.

For security-minded IT network managers and individual computer us-

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ers alike, the digital threat landscape is undergoing radical change. Simply stated, the sheer volume of new threats is overwhelming traditional protection methods. At the same time, the source or direction from which threats attack computers is predominantly via the Internet. By the end of 2008, less than 10 percent of all malicious attacks arrived by threat vectors other than the web.

Meanwhile, the perpetrators of digital threats have become increasingly well organized. The underlying crimes carried out by digital threats are part of larger mass criminal enterprises that rely on quiet, continued operation on a huge scale. Gone are the days when the threat landscape was defined by the occurrences of high impact, single event outbreaks.

Not only are the individual crimes associated with digital threats part of larger criminal operations, an increasing fraction of digital threats themselves are merely piece-parts in composite threat mechanisms that utilize several stealth techniques together to overcome threat protection.

Historically, cybercriminals have continued to advance their malware development skills, and the security industry has responded with new tech-

up with the increasing volume of new threats, eventually it becomes logistically overwhelming to deploy updated protection throughout the world.

Conventional malware protection involves gathering samples of malware, developing pattern file fixes, and then quickly distributing these pattern files to protect users. Because many Web threats are targeted, combined attacks, collecting samples is becoming almost impossible. Also, the huge and growing number of variants uses multiple delivery vehicles (i.e., spam, instant messaging, and websites), rendering standard sample collection, pattern creation, and deployment insufficient. Traditional virus detection processes are also challenged by a fundamental difference between viruses and evolving web threats.

Viruses were originally designed to spread as quickly as possible and were therefore easy to spot. With the advent of web threats, malware has evolved from an outbreak model to stealthy ‘sleeper’infections that are more difficult to detect using conventional protection techniques.

Cybercriminals realize they can overwhelm content protection efforts with the sheer volume of new threats. The volume of new threats is easily increased

Businesses and consumers alike are expected to continue to suffer from data leaks, financial losses, identity theft, and damaged reputations in 2009, creating a security environment that is ripe for change nologies to combat threats. Most recently, however, cybercriminals have exploited an inherent weakness in the traditional approach to protection. As content security companies discover new threats and develop countermeasures, this newly acquired threat knowledge must be deployed to all protected computers and networks. Even if the threat discovery process could keep

because of variants—i.e., the same Trojan can change hourly or daily in an attempt to fool security scanners. This means that millions of unique malware can, in fact, represent variants of the same piece of malware. Cybercriminals are also fully aware of the difficulty in issuing updates, and they use this fact to their advantage, creating new malware en masse and as quickly as possible.

ABN AMRO Bank Head Office: The Netherlands Dubai Branch, Regional Hub for UAE and Middle East P.O.Box: 2567, Khalid bin Waleed Street, Dubai, UAE. Non-stop banking service: Dubai Branch: Colin Macdonald Burhan Khan Hassan EI Nahas Vishnu Deuskar Padmanabh Mishra

Tel: 04 3512200 Fax: 04 3511555 04 3080000 (Toll free)

Country Executive Head of Consumer Banking Head of Private Clients Head of Global Market Head Commercial Client Coverage

04 5062601 04 5062801 04 5062301 04 5062551 04 5062701

Abu Dhabi Corner of Hamdan and Salam Streets P.O. Box: 2720, Abu Dhabi, United Arab Emirates

Tel: 02 6963000 Fax: 02 6963001

Sharjah Abdul Aziz Al Majid Building, King Faisal Street P.O. Box: 1971, Sharjah, United Arab Emirates

Tel: 06 5594900 Fax: 06 5591009

Abu Dhabi Commercial Bank Head Office: Abu Dhabi Mall P.O. Box 939, Abu Dhabi Branches Al Salam Omar S. Al Tamimi Khalidiya Al Bayah Khaled Al Mannaei Al Dhafra Yaqoob Al Dosari Al Muroor Ramzi Al Rimawi Al Shahama Hazim Al Suwadi GHQ Essam Husain Al Habshi Tourist Club Area Hadia Dalloul Hamdan Abdalla Al Jaberi Sh. Rashed Road Mohamed Al Dosari

Tel: 02 6962144

Manager Manager

Fax: 02 6450384

02 6962486, 02 6666311 02 6669910 02 8721300

(Edgar Ruaya / GM in charge) 02 5851030 Manager

02 4444216

Manager

02 5633424

Manager

02 4415626

Manager

02 6725178

Manager

02 6335820

Manager

02 6213237

Corniche Ghassan Kandalaft Mussafah Firas Al Eid Baniyas Town Hamad Salem Rashid Al Junaibi Ruwais Mohammad Ismail Zayed Town Dhababa Rashed Obaid Al Mansouri Gayathi Haraba Al Mazroui Al Baya Ottakath C Mohamed Kutty Al Ghuaifat Pay Office Ottakath C Mohamed Kutty Al Ain Main Branch Mohd. Al Darmaki Al Ain Khalifa Street Salim Al Darmaki Sinaeyah (Indust. Area) Salem Ahmed Al Wagan Nayla Al Ameri Al Yahar Khamis Sulum Abdun Khamis Al Hayer Khalid Omar Eissa Riggah Mudhi Al Haj Karama Omran Abbas Taimour Mina Hosam Al Refay Naif Ms. Seema Mohd. Malk Al Ettihad Salem Ali Khammas Jammahi Al Qusais Fahd. M. Baroudi Manager Sharjah Main Ms. Wissam Moaded Farah Al Ulama Abdulla Al Shamsi Abdullah Fayez Al Shamsi Ajman

Manager

02 6275111

Manager Manager Manager

02 5544272

Manager

02 8775015

Manager

02 8846180

Manager

02 8742155

Manager

02 8721300

Manager

02 8723499

Manager

03 7543413

02 5821550

03 7511322 Manager

03 7210064

Manager

03 7352100

Manager

03 7815600

Manager

03 7322557

Manager

04 2956969

Manager

04 4055135

Manager

04 3984444

Manager

04 6024110

Manager

04 3615151 ext. (202)

Manager

04 2634244

Manager Manager Manager Manager

06 5737737 06 5566169 06 5433300 06 5432006

APRIL 2009

49

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

50

APRIL 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 – 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 S’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

APRIL 2009

51

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:

52

03 7519880 03 7659554

Sheikh Rashid Bldg.Ali Bin Abu Talib Street,

APRIL 2009

Bur Dubai, Vinod Malhotra Asst. General Manager Shekhar Tripathi Senior Manager (Operations) M.K. Patel Senior Manager (Credit) Beena Desai Manager (India Desk) Retail banking Shoppe, Dubai Mr. Saravana kumar

Mr Ketan Dave

Mr Vinay Rathi

04 3531955 04 3534516 04 3530166 04 3534080 04 3537586 04 3534390 04 3540041 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 Deputy Branch Manager

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

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

Tel 04 2222291 Fax 04 2279861

Abu Dhabi Mohd. Joan Al Badi Bldg., Hamdan St. P.O. Box 3771 Ghassan Haddad Acting Regional Manager Samir Rached Acting Branch Manager

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

Chairman Vice Chairman

APRIL 2009

53

H.E. Sultan Bin Nasser Al-Suwaidi

Governor

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

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

54

APRIL 2009

Commercial Banking Services (F) Regional Head Office Oud Metha Towers 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

Clearstream Banking 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

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

Chairman Deputy Chairman Managing Director and Board Member 04 2242104

Alyia Al Mulla Ahmed Bin Masood Fujairah Branch Manager

Sharjah 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

06 512100 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

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55

The Gate bldg, 9th Floor Fax 04 3620001 Dubai International Finance Centre ( DIFC), Dubai 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

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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 2959999 04 2233300 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

Deira Main Branch Al Souk 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

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

02 6455151 03 7510055/77

09 2222114/110 04 3910840/1

04 8844689 04 8815551

Karama Shopping Complex Nawal Al Khader Manager 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

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57

Zain Ghazali Branch Manager Abdul Basheer Deputy Branch Manager 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

Habib Bank limited 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 Representative Office: Dubai

58

APRIL 2009

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

Tel 04 3966991

Fax 04 3967010 Tel 04 3966991

HSBC Bank Middle East Ltd 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 – 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 Snowdon  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.

APRIL 2009

59

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

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APRIL 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

APRIL 2009

61

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

62

APRIL 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 Sha’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

Tel 02 6275024 Fax 02 6272752

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

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

Tel 02 6741600 Fax 02 6786080

APRIL 2009

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

63

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

6464

APRIL March2009 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

APRIL 2009

1

BMW 5 Series

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010_AUD_BMW 5 Serice Tactical_UAE Banking_21.1x28.1cm.indd 1

3/19/09 12:57:56 PM