Abdulfattah Sharaf, UAE CEO of HSBC says his bank is a much loved institution. Not all of its customers would agree. But is the criticism valid? The man charged with being the face of the world’s local bank in the country addresses the knockers head on.
For a man who at the end of last year had around fourteen billion reasons to lie awake at night — Abdulfattah Sharaf, the CEO of HSBC in the UAE, is good company. In his simple office in a corner of HSBC’s Dubai International Financial Centre headquarters, he is charm personified, ushering in Arabian Business with extreme courtesy before proudly showing us photos of himself with various members of the UAE royal family.
For anyone expecting the man who sits in his chair to be easy to dislike — and judging from the responses of the bank’s customers this magazine canvassed randomly ahead of the interview, people with extreme antipathy for the world’s local bank are not hard to find in the UAE — Sharaf is a disappointment. He is extremely likeable, even if some of what he has to say will play straight into the hands of those who see his bank as an uncaring corporate entity concerned only with screwing every last dirham out of its 300,000 customers. But we’ll come to that.
Sharaf is keenly aware of his bank’s role in the history of the UAE, and of his current place in that relationship. In fact, he is very keen to stress that HSBC has always been loyal to the UAE market, since the days long before the world knew about the glittering skyscrapers of Dubai and Abu Dhabi.
He says: “HSBC has been in the country since 1948 — it is committed to the country, and to the region, actually. And when we saw that business is growing and opportunities were there for expansion, we thought about restructuring the management here, so we created the [UAE CEO] role. So this is a new role. It is a great opportunity to grow the business and focus.”
Sharaf joined the bank in May, 2008 after moving across from rival bank Emirates NBD. Originally mandated with taking care of retail banking throughout the MENA region — HSBC is in every Middle East country except Sudan and Syria — he was appointed head of the bank’s UAE operation at the start of 2010.
It was a job in which the challenges were obvious right from the start. Aside from the $14bn the bank had loaned to UAE entities — personal, corporate and state — in 2009, the briefest of conversations with the bank’s customers in the country would have revealed a litany of complaints relating to service levels. Certainly, the merest mention of HSBC on the sister website of this magazine causes a near-Pavlovian outpouring of criticism from customers in the Gulf who feel aggrieved by everything from the telephone banking service to the lack of debit cards, to what is perceived to be an overly aggressive stance on debt repayment.
Sharaf says he has done his best to address these problems since taking charge.
“There are difficulties, but what we have done is invest in the people, invest in the front office, the back office. In 2007, it was the boom, it was difficult to get people, it was difficult to attract them. In 2008 and 2009, it was a better time to attract people. So change has happened. We invested in our technology. I use the online banking, and most of the time I don’t visit any of the branches. I make sure that it is up to the standard with which our customers are happy.”
But what about the call centres — the curse of modern life? Certainly, anyone who has dealt with HSBC’s before the start of this year could tell you it was not always the most dynamic or enlightening experience. Sharaf believes it is a problem that is being addressed.
He says: “We have part of it [the call centre] here in the UAE, and we have part of it in India. And we are looking at in future the system where you call from any of the countries — if you are a UAE customer for example — and your call is diverted to any of the agents available. If you are an Arabic speaker, you will be put through to an Arabic speaker who knows about your account. The bank is making a huge investment in the technology.”
Sharaf will not accept without reservation the idea that all HSBC customers in the UAE are unhappy with the bank. Far from it, in fact. He says he finds many of the bank’s clients he speaks to are not only very happy with the service HSBC provides, but credit the bank with their advancement in life.
“Customers here, they really like to bank with HSBC. Yesterday, for example, we had a customer [corporate] event. Most of them were saying they had been with HSBC for 25 years or more and they were very happy with HSBC for supporting and helping them,” he says, adding that many were quick to offer thanks for loans that had helped them develop their business.
And not all of the problems HSBC is sometimes associated with in the UAE are of the bank’s own making, Sharaf argues. With open palms he explains that all international banks in the country are restricted in the number of branches they can have by the government, which can make banking difficult when, on top of 300,000 personal finance clients, HSBC UAE has a further 21,000 corporate clients.
He says: “Let me be frank, we are restricted by the Central Bank to have only eight branches, like all foreign banks. You can have customer service units, but you cannot do banking transactions there… I have been talking to them [the Central Bank] and asking them to give us more branches. Any international bank here wants more branches.”
After the famous decade-long boom, the last two years in the UAE have been a period of considerable correction as both individuals and corporations in the country have struggled to manage debt. It is no secret: the international media has been filled with stories of debtors fleeing the emirates to escape the country’s draconian penalties for defaulting.
Asked if his bank must take some responsibility for the circumstances many people now find themselves in as result of irresponsible lending practices during the boom, Sharaf says:
“I think banks have taken the responsibilities, by provisioning and taking the debt. Always banks are responsible for their lending to people. If I lend you more than you should be given, I take part of the responsibility. Not under the law, but we have tightened our credit lending. We have done tremendous work on the lending side, and looking at the customers. If your salary is AED25,000 [a month], we just follow the Central Bank policy on that, and you cannot exceed a AED250,000 personal loan. I really like that. Banks find ways to lend people more than that, but I think the Central Bank has done a good job of putting these criteria in place.”
In the West, and much of the rest of the world, people unable to meet their financial obligations are able to declare themselves legally bankrupt, meaning that anyone who has lent them money is no longer entitled to repayment. It is a law many believe encourages cautious lending. In the UAE, people who default on debt can be sent to prison until the money is recouped. It is a state of affairs which has led to criticism that banks in the UAE are using the police as a debt collection agency after lending irresponsibly. The law is also believed to be responsible for causing people to ‘skip’ the country, running away before being sent to prison.
Sharaf says: “I have seen a reduction on that, people running away. In 2010 it has tremendously reduced. Yes the restriction [jail] is good, when you can get your money back. But if you can’t get anything back, how am I going to benefit from people being in prison? The restriction is good, but there should be… I mean it worked for us. People immediately got people to come and bail them out, and get the money in.”
But would he like to see the law change? After all, there are many who argue that it must in order for the UAE’s economy to properly modernise.
He says: “Once we have the credit bureau come in, most of these laws are going to relax. That would help a lot, a credit bureau… We have faced lots of clients who come to us, they have a mortgage, they have lots of problems on their payments. We have delayed their payments, we have given them holidays, we have said ‘Okay, find yourself a job, come back in two months or three months,’ and they have kept in touch.
“Honestly, I like HSBC clients, because they are quality clients. Very rarely you find people who come and take the money and then run away. I can’t give you the numbers, but people call us and say ‘I have lost my job but I know I have this asset with you, or this loan with you, please give me a [payment] holiday of three months, I am getting a job, I am doing some interviews.’ We have been very open to that. I mean, these are the clients that are Premier Customers, they are advanced customers, they are people with a high income, and it’s nice when a customer comes to you.”
Many people in the UAE profess to being fearful of approaching their bank — not just HSBC — when times are tough for fear that an admission of financial difficulty will lead automatically to a travel ban, preventing them from leaving the country, and other tough measures. Would Sharaf let someone who owed HSBC money and was open about it leave the country before the money was repaid? His kindly smile flickers.
“No, I won’t let you go. If you have a job and prove to me that you have an income and you can do some repayment and there is a way of working it out, then yes, I can work it out with you. If I send you to prison, what do I get?”
Before the interview ends, Sharaf will take pains to stress that his bank is not only “open for business” in terms of lending, but that it is doing as much as possible to support SMEs in the region and Dubai itself. HSBC, he points out, was the first international bank to agree to the terms upon which Dubai World wanted to revamp its $24bn debt in November 2009.
“We are part of the family,” he says.
Clearly, as far as the banks customers are concerned, not everyone agrees with that sentiment — read the comments beneath an HSBC story on our website if you want proof. But that’s thing about families, isn’t it? They don’t always get along.