Arab Banking Corporation (ABC) is restructuring itself so as to focus on product lines, rather than geographical regions. The reorganisation, which follows a review by consultants Arthur Andersen, will also create several new management posts (see page 6).

The changes, which are to be carried out by the end of March, are intended to improve co-ordination within the bank and 'eradicate differential pricing and competition for the same business', ABC says. The main points of the restructuring are:

The current organisation of ABC into three divisions for Europe and the Americas, the Arab world and Asia will be replaced by a core banking unit and an investment unit. The former will have two sub-units, one for the Arab world and one for international business. The investment unit will manage ABC's interests in financial institutions around the world. The banking unit will be headed by a chief banking officer and the investment unit by a group co-ordinator, both reporting directly to the chief executive.

Product specialists will be appointed to increase co-operation across the bank and manage new initiatives.

Three other new functions will be created: a group treasury, an administrative group and a credit and risk group. ABC plans to set up two treasury units, one in Bahrain and one in London, with the aim of centralising its treasury and back-office operations.

The London, New York and Milan branches will be absorbed into the London- based ABC International Bank. Its operations in Frankfurt will remain under ABC Daus & Company.

ABC Investment & Services will become an Islamic bank, and existing investment banking services will be provided by the parent bank. There are no plans at present to cut ABC's holdings in its subsidiaries, of which the biggest are Banco Atlantico in Spain and International Bank of Asia in Hong Kong. However, their performance will be measured against pre-defined benchmarks. ABC's expansion in the Arab world will continue (MEED 28:11:97).

Most of the costs of the reorganisation have already been paid, though there may be more turnover in staff as specialists are brought in. Twenty five people have already been laid off at the bank's head office. New technology may also be brought in, with the cost spread over two or three years.

ABC thinks that it has enough capital for the moment, and a sale of some of the shares owned by Kuwait, Libya and the UAE is not on the agenda. However, the bank may tap the bond markets.

The Brazilian central bank has given permission for ABC to buy the other 50 per cent of its Brazil affiliate, Banco ABC-Roma.