Financial News                                                                                          Thursday October 20, 2011













Gulf customs, rail network on ministers' agenda


Gulf News


Dubai: Gulf finance ministers will address a number of key issues including the Gulf Cooperation Council (GCC) Customs Union and the GCC Rail project in their meeting in Abu Dhabi on Saturday. The UAE will host the 91st GCC Financial and Economic Committee meeting, which will be headed by Shaikh Hamdan Bin Rashid Al Maktoum, Deputy Ruler of Dubai and Minister of Finance. Among others, the meeting will address the GCC countries' participation at the World Trade Organisation (WTO), issues pertaining to cooperation with the European Union (EU) and other countries and financial institutions. Obaid Humaid Al Tayer, Minister of State for Financial Affairs, indicated that the meeting allows the council to convey a comprehensive picture of various financial and economic issues and joint projects to GCC leaders. Al Tayer said that the meeting supported the GCC in its efforts to position itself as a strong economic bloc. "The 91st GCC Financial and Economic Committee meeting acts as a link between the GCC Supreme Council and its financial and economic committees. The meeting will focus on all the recommendations made by these committees and on the directives resulting from the 36th meeting of the GCC Committee for Undersecretaries of Ministries of Finance and Economy. It will also shed light on the progress of joint GCC projects," Al Tayer added.


 Dh10 billion capital for new Emirates Development Bank


Khaleej Times


ABU DHABI - The United Arab Emirates will start Emirates Development Bank (EDB) with Dh10 billion ($2.7 billion) of capital to help promote economic growth in the country. Obaid Humaid Al Tayer, Minister of State for Financial Affairs, announced the issuance of Federal Law No.7 regarding the establishment of EDB, on Wednesday. The bank will support the UAE’s development initiatives, including industrial and real estate projects, and will facilitate real estate loan applications, the Finance Ministry said. It will also provide financial services for small and medium-sized businesses and offer advice and feasibility studies. “This move falls in line with the vision of the UAE government to support the nation’s economic development and to guarantee coverage of all its short and long-term development requirements,” Al Tayer said. He said that the bank will boost economic diversification and development built on innovation, and will provide citizens with suitable housing. Other priority areas will include boosting farm output, promoting local handicrafts and support public sector housing projects, the minister elaborated. The minister said: “It will act as a main pillar for the UAE’s economy, especially with issues pertaining to citizens.” 


Rakbank reports net profit of Dhs906.5m for first nine month of 2011

AME Info


The National Bank of Ras Al-Khaimah (P.S.C.) (Rakbank) has reported a net profit of Dhs906.5m for the nine months ended 30th September 2011, reflecting a 24.2% growth compared to same period of 2010."We are pleased with Rakbank's strong financial results which reflect growth in the Banks' customer base across major business segments," says Graham Honeybill, Chief Executive Officer of Rakbank. "As we continue to place great focus on customer service and follow our sound business strategy, we are confident that we will continue to achieve positive results." 


Capital Adequacy The Bank's capital adequacy ratio as per Basel I at end of the quarter was 17.8% composed entirely of Tier 1 capital against a current minimum of 12% of Tier 1 capital prescribed by the Central Bank of the UAE. If we consider Ministry of finance loan which qualifies as tier 2 capital then the overall capital adequacy ratio stood at 21.2%.

UAE’s dollar millionaire population to swell 35%


Khaleej Times


The UAE’s dollar-millionaire population will swell 35 per cent in five years to reach 54,000 after shrinking to a low of 41,324 in 2011. DUBAI — The UAE’s dollar-millionaire population will swell 35 per cent in five years to reach 54,000 after shrinking to a low of 41,324 in 2011 as the growing rich in emerging nations propelled global wealth to $231 trillion in 2011 from $195 trillion in 2010, Swiss banking giant Credit Suisse said on Wednesday. In the Arab world, Egypt will see the biggest spurt in millionaire population, up 197 per cent to reach 92,000 from the current 31,000 while Saudi Arabia and Kuwait will each record 45 per cent growth in high net worth population to 64,000 and 45,000 respectively, according to the latest Global Wealth Report released by Credit Suisse. In five years, the biggest surge in dollar millionaires will be in South Africa, up 242 per cent to reach 243,000, followed by Egypt at 197 per cent to 92,000. Brazil, India, China and Singapore will also witness fast growth rates in millionaire population over the next five years. The population of UAE millionaires reached a peak of 66,000 in 2008 and fell drastically amid the global meltdown due to a decline in the market capitalisation of firms listed on the stock markets, coupled with the falling values of property in the country, according to Merrill Lynch Global Wealth Management and Capgemini.


 Rocky path seen ahead for Gulf debt restructurings


Arabian Business


Two years after the Dubai debt crisis erupted, contributing to a wave of loan restructurings across the Gulf, those restructurings may be entering a more difficult phase as banks become reluctant to extend maturities further. Government-related and private companies in the region have so far avoided defaults by agreeing with creditors to push out maturities - a process labelled "extend and pretend" by some cynical bankers. This method has helped banks avoid billions of dollars in writedowns and companies to avoid the shame of defaulting. But some banks may now be reaching the limits of their willingness to accept this strategy. Instead, they may demand that debtors make payments while the banks write down part of the debt, or resort to more radical strategies such as debt-for-equity swaps. "In recent months, we have started to see the end of the first phase of restructurings where refinancings were largely based on extending and pretending," said David Stark, managing director for restructuring advisory services at consultants Deloitte, which has advised on debt restructurings in Dubai. "We are beginning to see situations where the hoped-for market recovery has not materialised and, as a consequence, more radical restructuring may be required."


  Arab world needs an economic revolution


The National


The momentum of the "Arab Spring" has been mesmerising, yet the future is uncertain. The Middle East and North Africa (Mena) lags behind other emerging markets in ease of doing business and in competitiveness, and it is undeniable that social change must go hand in hand with economic reform. The Arab world must embrace a reliable path to economic growth. Nurturing an entrepreneurial culture is crucial. According to the Doing Business 2011 report by the World Bank and International Finance Corporation, Mena still lags behind East Asia and the Asia-Pacific and Eastern Europe and Central Asia in terms of the most business-friendly environments. The World Economic Forum's Global Competitiveness Index reveals that much of the Arab world is held back by institutions that do not allow for talent mobility and lack high-quality professional management. Without an economic and social environment supportive of entrepreneurship, efficiency suffers, talent is wasted, education is undervalued, competitiveness is hobbled and growth is imperilled. The Arab world must lay the educational foundations to produce the next generation of entrepreneurs, and challenge barriers to entrepreneurial activity. Both are essential for ensuring sustainable growth within a highly competitive global economy and to guarantee that the youths driving change in the Arab Spring can look forward to a future that includes being gainfully employed.