UAE's First Gulf Bank builds investment banking business

Lender says it is hiring investment bankers to tap pickup in companies issuing debt
UAE's First Gulf Bank builds investment banking business
By Reuters
Tue 04 Feb 2014 05:02 PM

First Gulf Bank is hiring investment bankers to tap an expected pickup in companies issuing debt and listing on stock markets, a senior executive said on Tuesday.

FGB, the second-largest lender by market value in the UAE, wants to add investment banking to its wholesale operations to better compete with local banks.

Banks in the UAE are reaping the benefits of a recovering economy, helped mainly by an upturn in the real estate sector together with reduced debt worries at some state-linked entities.

"The markets are giving us enough confidence to invest in this business. Some banks have built up capabilities in this, FGB was slow to the party," Simon Penney, head of FGB's wholesale & international banking told reporters.

FGB, majority owned by the Abu Dhabi royal family, plans to add at least 30 people this year to its nearly 300 staff in wholesale banking, he said. The bank's wholesale business comprises mainly corporate and international banking.

Wholesale banking accounted for 39 percent of FGB's revenue last year and the latest initiative is aimed at driving revenues higher, Penney said, declining to give any growth estimates.

FGB sees high business potential in debt capital markets, syndicated loans, advisory, mergers and acquisitions as well as initial public offerings (IPOs) in the UAE and the region.

It has mandates for arranging loans and bonds for UAE entities totaling around $15 billion, Penney said without naming the firms.

The bank also expects to win IPOs deals this year due to a high level of interest in them, he said. The last stock market listing in the UAE was in 2011.

"You've got refinancings and capital investment in the UAE, it is a perfect combination from our perspective," he said.

FGB, which has a strong presence in corporate and retail banking, posted a fourth-quarter net profit of 1.37 billion dirhams ($373.2 million) last month, the highest quarterly profit by a UAE bank

FGB plans to upgrade its representative office in India into a branch soon, Penney said.

The bank aims to expand into three or four new foreign markets in 2014, seeking to push the percentage of its profit from international operations into double digits, its chief executive told Reuters in November

The bank's overseas business, in Qatar, Singapore, Hong Kong, India and Libya, currently contributes about 7 percent of profit.

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