UNION National Bank (UNB) is about to publish its balance sheet for the first time after five years of operating in the shadows. The bank, created from an affiliate of the notorious Bank of Credit and Commerce International (BCCI), has kept a low public profile. The results, however, are expected to show that it has steadily built up its market share and profitability.

The Abu Dhabi-based bank was created in 1991 from BCCI's UAE affiliate, Bank of Credit and Commerce Emirates. Earlier this year Abu Dhabi, the majority shareholder in BCCI, signed a compensation agreement with BCCI's creditors which cleared the way for it to officially take over the defunct bank's 40 per cent stake in UNB. The Abu Dhabi government's finance department holds this stake, while Abu Dhabi Investment Authority and the government of Dubai hold another 10 per cent each. The rest is owned by private investors.

UNB declines to give out details of its balance sheet until it gets the go-ahead from the central bank, which is expected to happen in August. Bank officials say only that the picture of UNB's operations will be a positive one. 'We're quite pleased with the balance sheet, given the circumstances we came through.' says acting chief executive Anwar Sher. who has headed the bank for the past five years,

Sixth ranking

Local analysts estimate that UNB has assets in the order of AED 5,500 million ($1,496 million), of which about AED 2,800 million ($762 million) is in loans and advances. Customer deposits are estimated to be just over AED 5,000 million ($1,360 million). These figures would make UNB the country's sixth largest local bank in asset terms.

The bank currently has 19 branches across the UAE, of which seven are in Abu Dhabi, five in Dubai and the rest in the northern emirates. This network is one of the more evenly-spread of the UAE banks with the exception of the privatelyowned MashreqBank, the bigger institutions which dominate the industry tend to have most of their business in their home emirate.

'In the next 12 months we're planning to add another four to five branches,' says Sher. One of the new branches will be in Dubai, while the others will be in the interior of the country in areas where banks are currently thin on the ground. 'These are going to be basically small operations.'

About 40 per cent of UNB's lending is trade-related with another 15-20 per cent accounted for by retail business. The remainder is government business or receivables financing for government. Local analysts note that both Abu Dhabi and Dubai are shareholders in the bank, which may help it to gain access to governmentrelated business in both emirates.

Shares option

The trade, retail and government sectors are likely to remain the core of UNB's business, though it is also expanding its equity-related services. The bank was the registrar for the flotation of Abu Dhabi Shipbuilding last year and is operating its own share settlement computer system, called Union Securities. 'We will be building our resource base quite aggressively,' says Sher.

UNB is involved in some syndicated lending around the Middle East, but does not see this as a major growth area at the moment, Sher says. 'The market is not what it used to be in the mid-1980s in terms of syndications. We as a bank are doing it. but we don't see enough deals coming out in the region where the riskreward profile is really good. Alright. but not good.'

Sher also rules out setting up branches overseas, at least for now. 'Domestic business has been good and this takes the incentive out of going overseas. I don't think it's going to happen in the immediate future.'

The bank already has an extensive network of correspondents abroad, despite its low profile, and this is likely to be enhanced by publication of its results and balance sheet. Among its overseas connections are remittance services for expatriates working in the UAE, which include one joint venture with Barclays Bank and another with a bank in the Philippines.

The bank will be launching new investment products in the coming months, Sher says, but he declines to give details. However, the bank is cautious in the consumer market and will not lend to borrowers if they do not also bank with UNB. 'We don't do asset-backed finance for personal lending,' Sher says.

UNB appears to have relied largely on word-of-mouth and the loyalty of its customers in the years when it kept out of the public eye. Sher says the bank is unlikely to start aggressive marketing after releasing its balance sheet. 'We live in an environment where people know a lot about what is going on. We don't need to go out and tell them.'