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Thu 9 Dec 2010 01:23 PM

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Emirates NBD targets commodities market with gold unit

Deputy CEO says gold certificates to be issued to customers

Emirates NBD targets commodities market with gold unit
Bin Ghalaita said the emirate is home to 20 percent of the global demand for gold, a market which “has been gaining traction all over the world."

Emirates NBD’s group deputy CEO says the bank will be focusing on commodities a following the launch of Gold Business, which will offer a range of gold products and services to all UAE market segments - providing a one-stop shop for customers looking to invest in gold.

“What we learned [in the financial crisis] is that you have to have some money in commodities because commodities can guard you against shocks in the market,” Jamal bin Ghalaita said in an interview with Arabian Business. “We scanned the world – the US, Canada, Australia – looking for the best places for gold. We have always diversified our assets… it’s a good investment for our clients.”

He said the Emirate is home to 20 percent of the global demand for gold, a market which “has been gaining traction all over the world.”

The bank will issue customers the Emirates NBD Gold Certificate – the first of its kind in the GCC – in lieu of physical gold at the international rates prevailing at the time of purchase.

Spot purchased on behalf of clients as gold bullion in denominations of 0.5 kilograms, it will be stored by the bank through the Transguard Group, a leading security service provider in the Middle East.

It heralds a shift in the gold markets, from a focus on jewelry to one on investment. Bin Ghalaita said $29bn in gold trade moves through Dubai annually.

The bank has long dabbled in gold activity but this is its first major step as a regional player.

“We’ve been in this business for a long time but we’ve always been a backseat player… we had our toes in the water,” said Asif Lakhany, NBD’s head of international and new ventures. “Over the past five years we’ve seen a shift from a demand for [gold] jewelry products to a demand for investment products.”

“The demand for gold has risen enormously on both a regional and global level as a result of the recent period of economic uncertainty,” Bin Ghalaita said in a statement. “Recent dramatic price increases prove that investor appetite continues to remain high, particularly in this region where gold is considered as a preferred store of value.”

Lakhany said NBD would continue to expand, especially in a market like Saudi Arabia, where it has a branding license, on the heels of its opening its first offshore branch, located in Singapore.

But for the meantime, gold remains the bank’s focus.

“Gold is not stable – gold will always go up,” bin Ghalaita said. “We think it’s a good risk. We’re in the risk business. We will look at all the metals, but we first have to do a good job in gold.”

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