Banco Atlantico

Assets: $9,018 million

Shareholders equity: $486 million

Net profits: $32 million

ABC stake: 66 per cent

ABC’s largest subsidiary, Banco Atlantico, faces a testing future as a medium-sized player in the Spanish domestic market. Lending margins have declined in recent years so the bank has put more emphasis on high- yield products such as mortgages. It also has Latin American interests and is expanding its network in other European countries. Atlantico is conservatively run by its Spanish management and problems with bad loans have receded, but it boasts neither size nor a niche in the Spanish market. A measure of its relatively weak profitability is that it made less money than International Bank of Asia (IBA) last year, though its asset base is more than four times bigger than the Asian banks.

International Bank of Asia (IBA)

Assets: $2,272 million

Shareholders’ equity: $200 million

Net profit: $40 million

ABC stake: 55 per cent

IBA is the best performing ABC subsidiary: ABC currently owns just over half of the Hong Kong bank’s equity after selling 45 per cent of its holding in 1993. IBA’s net profits have risen steadily for eight years, reaching $40 million last year. The bank has diversified its business across the retail and commercial sectors and with a return on equity of 20 per cent, it far outperforms ABC as a whole. Ratings agency Standard & Poor’s says IBA should make good profits into the medium-term and expansion into mainland China is a possibility. IBA also has an office in Vietnam, an affiliate in the Philippines and a leasing subsidiary also based in Hong Kong.

ABC International Bank (ABCIB)

Assets: $1,969 million

Shareholders’ equity: $278 million

Net profits: $11.6 million

ABC stake: 100 per cent

ABCIB, based in London, specialises in trade finance and syndicated lending and operates a private banking unit in the centre of the city. It also acts as a gateway to the London interbank market for ABC.

Arab Banking Corporation – Daus & Co

Assets: $724 million

Shareholders’ equity: $278 million

Net profits: $0.3 million

ABC stake: 99 per cent

With a boost from earnings on securities trading, ABC’s German subsidiary returned to profit last year after making a small loss in 1994. The bank’s main activity is financing German-Arab trade though it has been expanding its business in other areas, notably Latin America. Loans are falling as a proportion of total assets as the bank focuses on its core, trade- related business.

ABC Investment & Services

Assets: $653 million

Shareholders’ equity: $75 million

Net profits: $9.5 million

ABC stake: 100 per cent

The returns made by ABC’s investment banking arm were among the highest of any of its major subsidiaries in 1995, when its return on assets of 1.45 per cent was nearly three times that of the group as a whole. Half- year figures for 1996 show strong profit growth from the company’s securities investments and proprietary trading. The Bahrain-based company has its own brokerage unit and fund management services and runs two investment vehicles that provide short-term liquidity to Islamic banks. Both of them are due to be handed over to ABC’s new Islamic banking affiliate when it starts operations next year.

Islamic finance already accounts for about one-third of profits at ABC Investment & Services, and providing Islamic clearing services could be a lucrative business. A question for the future will be how successfully the company uses its skills and the strength of its parent to win fee- earning capital markets and project finance business at home in the Arab world.

ABC Banque Internationale de Monaco

Assets: $332 million

Shareholders’ equity: $21 million

Net profits: $0.3 million

ABC stake: 99 per cent

Profits have fallen every year since 1992 at ABC’s Monaco unit, which offers private banking services and finances trade between Europe and the Arab world. Recently this second area has been the bank’s main focus and customer deposits have grown. However, the bank remains by far the poorest performer in the ABC group in terms of returns on capital.

ABC (Jordan)

Assets: $241 million

Shareholders’ equity: $22 million

Net profits: $2.8 million

ABC stake: 60 per cent

This Jordanian subsidiary of ABC is a commercial bank listed on the Amman Stock Exchange. A strong performer in 1995, it also operates a local brokerage unit. The bank’s prospects are tied to those of the Jordanian banking sector, where activity is currently being dampened by high interest rates and a tight monetary policy imposed by the central bank.

(All figures are end-1995)