With the honeymoon-period over and his feet well and truly under the boardroom table, recently appointed chief executive of Emirates Bank, Rick Pudner, is now confident and ready to stamp his mark on the UAE financial powerhouse. Andrew Mernin meets the career number cruncher as he embarks on his latest Middle Eastern mission.
A steep learning curve”, says Pudner with a wry smile, describing his five-month tenure at the helm of Emirates Bank.
“People talk about the 100-day honeymoon period for CEOs — you’ve got to come in, do your homework, get to know as many members of staff as possible, bond with senior management and get the team working as your team,” he adds. But for the silver-haired banking veteran, since taking up his post at the bank from his role as CEO of HSBC in Korea, it has been anything but a honeymoon. Like many UAE finance houses, the bank suffered poor second quarter (Q2) results thanks largely to a downward trend in financial markets, a lack of Initial Public Offering (IPO) activity and a decline in the equity markets. Added to this was the pressure of joining the huge business as an outsider, and, crucially, succeeding the 15-year reign of Arab national Anis Al Jallaf, at a time when the finance house had enjoyed record-breaking 2005 profits. UNDER PRESSURE
Despite the obvious pressure however, Pudner remains unfazed by the task ahead and is relishing the challenge of spearheading the Emirati institution. “It’s always interesting to come into a situation where the bank is in profit. There was a lot of pressure to keep things continuing on the same lines that we have been going for the past few years,” he admits.
And he insists that the poor Q2 results — that saw April to June profits plummet to AED 368.69 million (US $100 million) compared to AED 442.35 million (US $120 million) in 2005 — were market driven and have not increased the weighty boardroom pressure on his shoulders.
“Realistically, everybody could see that the second quarter results were affected by the market situation and was not unique to Emirates Bank, and this was very much due to macro-economic factors,” he says. The results of Pudner’s UAE banking rivals would certainly suggest that market forces were at play and not poor management. Mashreqbank, for example, reported a 21.3% drop in Q2 2006 with profits falling to AED 318 million (US $86.6 million) compared to AED 404 million (US $110 million) the previous year, while the Commercial Bank of Dubai suffered a 56% drop in profits between Q1 and Q2.
“Last year was a one-off in terms of capturing the opportunities through IPOs and the equity market. This year the performance of the bank is still going very well, and there is an understanding that this is the case, so there hasn’t been too much pressure from the board,” adds Pudner.
Despite the disappointing results, Emirates Bank recorded a 36% growth in profit for the first half of the year taking AED 971 million (US $264 million) compared to AED 712 million (US $194 million) for the same period last year. Total assets for the group reached AED 72.4 billion by the June 30 2006, an increase of 36% for the same period in 2005.
The Emirates Bank CEO — who enjoyed a 24-year banking career with HSBC that has taken in the UK, UAE and most recently Korea, where he held the position of CEO - would savour the opportunity to see out his career with the institution.
“I would like to stay here as long as they [Emirates bank] want to keep me here — this is an exiting role, the challenges ahead are interesting in terms of the opportunities to grow, it’s a very exiting brand name, and I think it has huge opportunities to build on the success that has already been established for the bank.”
If the UAE is to be his last stop as chief executive, unless early retirement beckons, Pudner will have to overcome the three-year CEO turnover threshold, something he believes he is well equipped to deal with.
“You’ve got to create success to ensure that people want to keep you on but I don’t think there’s any top secret way of doing that. You’ve got to get on with customers as a priority, get on with your board, they’ve got to understand where you’re coming from and you’ve got to understand your staff.
“If you cover these three angles then hopefully you will get better results, and results keep you in the job. If you’re not getting results then it’s not going to be easy to stick around,” he says. HACKING ALERT
At a recent IT-security conference in Las Vegas (US), experts proved it is now possible for hackers to steal personal information from computers with wireless capabilities, even when they are offline. Hackers have the means to drop what is known as a ‘root kit’ into laptops while they are being used in public places such as cafés and airports, and can then gain access to sensitive information, files and passwords.
With the internet fast becoming the most popular means of accessing personal banking details, this must surely alert institutions such as Emirates Bank to the ongoing need to constantly monitor and strengthen online security measures.
Pudner says Emirates Bank is “absolutely 100% focused on internet security”, and it is something the bank “continuously monitors”.
“It’s vital to our reputation that we maintain that rigour and standard of security. ATMs are a classic case here. There have been cases in the past and there will be cases going forward of sophisticated hackers trying to get into financial systems so we employ people to make our ATM security as good as anybody’s in the market,” he says.
While security is perhaps the most immediate concern surrounding the development of internet banking, another is that as face-to-face banking declines in popularity, banking itself is becoming more impersonal which makes Pudner’s job of retaining customers all the more difficult.
“People don’t want to stand in queues in branches just to speak to someone. The technology that has been developed has made life easier for customers, so the trick is then how do you combine the technology of the interface and still stimulate more face-to-face contact with the bank?”
But Pudner maintains that face-to-face banking will survive the meteoric rise of internet finance. “It will never become extinct as it’s what makes life tick in finance. Most banks still promote trust, integrity and strength. These are still the values of any financial institution that’s worth its salt holds dear, and I think the corporate banking world is still very much a people business,” he says.
Although he holds on to traditional banking values, Pudner remains excited about how the technological revolution will shape the sector’s future.
“I absolutely see the day when we pay our bills with our mobile phones,” he says. “Coming from Korea, there are over 400,000 mobile phone users paying for services using the chip in their phones, so I think that these payment mechanisms, or ‘contact-less’ cards that pay for small transactions such as public transport, parking tickets or whatever, will be an integral part of using our service in the future.” REGIONALLY FOCUSED
Having worked in Dubai for HSBC Middle East between 1998 and 2003, Pudner is certainly no stranger to the region. As a man who remembers the days when Dubai was more blueprint than reality, he admits that he has been taken aback by the rate of its development.
“The change of Dubai has been phenomenal. I personally think the two most exciting parts of the world to work in are Dubai and Shanghai. They are the places to be,” he says.
“There has also been a continual evolution in the UAE in terms of the sophistication of the banking and finance industry and I’m sure that will continue to move forward.
“I think the standard and structure of the financial industry has improved immensely and I see that continuing for some time to come.”
So, for the man who admits that in his short time at Emirates Bank he has strived to understand how all the group’s subsidiaries fit together and get his “head around everything that’s going on”, what does the future hold?
“Our future in the UAE is pretty dynamic as the population continues to increase, with new communities setting up all the time, but I think, like a lot of banks, we need to start following our customers around the GCC and the rest of the region because there are huge amounts of investment emanating from the UAE. So, we need to follow those customer flows,” he says.
In following his growing list of customers across the region the well-travelled chief executive could see a lot more of the Middle East than the UAE in the years to come.
“You’ve got to get to know as many members of staff as possible, bond with senior management and get the team working as your team.”