Abu Dhabi Commercial Bank (ADCB) is reaching out to cash-strapped future captains of industry with loans of up to Dh250,000 (US$68,063) to undertake MBA studies. The lender has partnered with INSEAD, the French international business school, to provide students of its MBA programme with loans to finance their studies. The partnership is the latest attempt by ADCB to corner a potentially lucrative segment of the personal finance market.
"This partnership brings together two renowned institutions to encourage and support specialised higher education and ensure collaboration to foster educational development in the UAE," said Sundar Parthasarathy, the head of consumer assets at ADCB. ADCB will give students at INSEAD in Abu Dhabi education loans at "competitive" rates of interest, without the need for salary transfers. Students will be able to borrow between Dh10,000 and Dh250,000, although the maximum loan will not cover the full cost of the course, which is $90,000 for a year's studies. The loans can be paid back over a period of between six months and five years.
INSEAD, which is based in Fontainebleau, France, has other satellite campuses in Singapore and Dubai. "The Middle East is one of the fastest-growing regions in the world and INSEAD provides professionals with the business acumen necessary to excel in this dynamic region and on a global stage," said Javier Gimeno, the dean of INSEAD's executive MBA programmes. The university is ranked fifth for MBAs worldwide, according to the Financial Timesbusiness school rankings for this year, and has traditionally vied with the London Business School for the position of Europe's best.
ADCB is actively pursuing the education loan sector in the UAE, having announced a number of partnerships with local universities and branch campuses in the past year. "ADCB are aggressive in this market," said Janany Vamadeva, an analyst at HC Securities in Dubai. "They've found that market to be under-penetrated and the asset quality isn't that great. "It's a high-yielding segment. Because of the risk factor that's involved, they can always charge a higher rate. It's not like an infrastructure project that's backed by the Government."
Only a few local lenders, such as Mashreq, target this sector with loans tailored to students. Sofia el Boury, a banking analyst at Shuaa Capital, said ADCB's focus on education loans was a "logical" diversification of its retail offerings after its takeover of Royal Bank of Scotland's retail business. "Education spending is a key area of focus for the local government, so ADCB's move seems to come in line with that vision," Ms el Boury said.