The chief executive of Arab Banking Corporation (ABC), Ahmed Abdullatif, says the bank may decide, following a review of its strategy, to emphasise new business in the fast-growing markets of Asia and the Middle East rather than the mature markets of the US and Europe where it currently has over half its assets.
‘Our feeling is that ABC’s presence in Europe and the Americas has come to a saturated point,’ Abdullatif told MEED in an interview in Bahrain on 17 November. ‘Markets there are fiercely competitive and linkages are fewer. Other areas present greater potential.’ He named these as the Far East and the Middle East, ABC’s home region.
ABC’s strategy is about to be reviewed by consulting firm Arthur Andersen. The bank has already carried out an in-house review of its operations and wants to get a second opinion, Abdullatif said. He emphasised that no decisions have been taken yet on future strategy. ‘We hope it [the review] will confirm our way of thinking, but no decision has been taken yet because maybe their review will say there are other areas we should pay attention to.’ He said ABC’s own in-house review looked at a wide range of issues including ‘integration, synergies, balance sheet structure and expansion,’ including possible geographical expansion. The consultants are due to report their own conclusions in six months.
ABC, the Arab world’s largest bank in asset terms, had assets of more than $21,000 million at the end of 1995. Of this total, nearly $12,000 million was in Western Europe, North and Latin America, with about $6,000 million in Asia and the Middle East.
Abdullatif said the bank needed to think again about its objectives because of changes in the banking market since it was set up in the 1980s – the Middle East, then an exporter of petrodollars, is now a net importer of capital. But he said the review did not imply fundamental problems at the bank. ‘There is a need to put in place a new strategy to meet new requirements and new challenges. ABC achieved a lot by meeting the requirements of the time [in the 1980s]. The question is how we can sustain that achievement.’
ABC is projected to make the same level of profit as last year – $116 million – or slightly more, he said. The bank has been concentrating on its core business of trade finance and has been ‘selective’ about syndicated lending, preferring to lend only as part of a long-term client relationship, he said.