ABC International Bank (ABCIB) is refining its strategy in the light of regional and international economic change.
The London bank’s general manager, Abdulmagid Breish, says the balance sheet has been restructured to increase liquidity and the product range diversified to increase the proportion fee income contributes to total profit.
There is also a shift in ABCIB’s geographic emphasis. ‘In 1994, we are looking to diversify a little bit more from our traditional markets,’ says Breish, speaking in an interview in his City of London office on 23 May. ‘Unfortunately, we have seen problems in some major markets that we had been working in.’ He cites Algeria, Iran and Libya.
‘Instead, we are now trying in other markets where there is a link with the Arab world,’ Breish adds. ‘We have been engaged with Scandinavian business with the Arab world. That is expanding, and we have just concluded a transaction for Nokia, which is exporting machinery to a Saudi client.’
Financing trade – essentially but not exclusively with Arab countries – is a core ABCIB activity. This has encompassed supporting Arab oil sales to Latin America and financing exports from Brazil to Europe. In the Middle East, Jordan and Morocco are getting more attention.
Breish has been general manager of ABCIB, a 100 per cent subsidiary of Arab Banking Corporation (ABC), since it started operating on 1 April 1991. Efforts to restructure its balance sheet are paying off. ‘We are now a little bit less reliant on customer and interbank deposits,’ says Breish. ‘On the asset side, we are also trying to bring down the maturities. Our most important goal is staying liquid.’
This has complemented a customer-friendly approach. ‘We are getting closer to our clients and developing dir-
ect relationships,’ says Breish. ABCIB also wants to structure its own deals and initiate transactions.
ABCIB controls the Paris branch and the private banking operation in Mayfair set up in 1993. ‘The private banking unit is moving slowly, but it will build up its own momentum,’ says Breish. The 3,200 shareholders in the Arab world that have acquired ABC shares floated in 1990 are a prime target for this unit.
In December 1993, ABCIB set up a property fund with equity of £21 million ($32 million). It has bought three buildings and is considering two more.
These innovations have not distracted ABC from its long-term plan of integrating all its western hemisphere activities under ABCIB. These include ABC subsidiaries in Monaco, Milan, Frankfurt and Madrid, and an affiliate in Sao Paulo.
ABC had hoped European integration would have happened sooner, but the EU still generates problems. ‘The tax law has not yet been standardised,’ says Breish. ‘If you want to integrate an Italian branch you have to pay an enormous amount of tax.’ Further, integration is highly unlikely this year, but the long-term plan is still in place, he adds.
ABC was rocked by Abdulla Saudi’s resignation as chief executive in February (MEED 18:3:94). However, the furore this caused has had no impact on the activities of ABCIB, of which Saudi remains a highly visible executive chairman. Says Breish: ‘I can tell you, it has not affected us in terms of our relationships with banks, with customers or with government institutions.’
ABCIB had assets of £1,333 million ($2,000 million) at the end of 1993. Net profit for the year was £6.3 million ($9.3 million).