ADCB offers to defer loans and waive interest for customers hit by coronavirus

Abu Dhabi Commercial Bank is offering to defer loan payments and waive interest for up to six months for customers impacted by the coronavirus outbreak.

The lender said the move, effective from April 2, will support 1.2 million retail customers of both ADCB and Al Hilal bank, as well as more than 50,000 SMEs who bank with ADCB. Relief measures will be subject to an "appropriate level of scrutiny" from the bank.

ADCB said it would offer payment deferral and waive interest charges on loans for three months to those who are placed on unpaid leave as a result of the outbreak.

A payment deferral will also be available on request for customers who have personal loans, car loans or mortgages, with no extra charges incurred.

Other measures adopted include a 5 per cent increase in the loan-to-value ratio for first-time homebuyers, a full refund of processing fees on foreign currency credit cards, reduction of 50 per cent in late payment charges on credit cards, interest-free instalment plans for school fee payments and a refund of charges on cash withdrawal from ATMs.

These measures would also be applicable to retail customers of Al Hilal Bank, which merged with ADCB and Union National Bank last year.

ADCB revealed a number of measures for its SME customers as well. The lender said it would defer a month's loan instalment on all business and equipment loans. It will also waive the interest due on all equipment and business loans by 1 per cent and 3 per cent, respectively.

The Abu Dhabi bank also said it would reschedule working capital facilities on a case-by-case basis to help businesses deal with cash flow disruptions. ADCB will reduce minimum balance payments for all SME accounts to Dh10,000 per month.

Mubadala group chief executive Khaldoon Al Mubarak was voted in as the bank's new chairman and Hussain Al Nowais as vice-chairman at a board meeting on Wednesday. Earlier in the day, Mr Al Mubarak, Ahmed Saeed Al Calily and Mohamed Ali Al Dhaheri were voted onto the board by shareholders at the lender's annual general meeting. Former chairman Eissa Al Suwaidi, vice-chairman Mohamed Al Hamli and Mohamed Al Mehairi stepped down from the board.

Mr Al Mubarak thanked the three departing directors "for their enormous contributions to ADCB’s success over the years".

"Eissa Al Suwaidi ... steered the bank through a number of challenges, including the 2008 global financial crisis. He was instrumental in the bank’s growth for over a decade, and guided ADCB through one of the region's most significant mergers," Mr Al Mubarak said.

ADCB's support measures come as the UAE Central Bank launched a Dh100 billion stimulus package via the local banking sector to support businesses from the economic fallout of containing the coronavirus.

The Targeted Economic Support Scheme, announced on Saturday, provides funding to banks and allows them to delay principal and interest payments for up to six months on loans to all private sector and retail borrowers affected by the coronavirus.

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Mercer, the investment consulting arm of US services company Marsh & McLennan, expects its wealth division to at least double its assets under management (AUM) in the Middle East as wealth in the region continues to grow despite economic headwinds, a company official said.

Mercer Wealth, which globally has $160 billion in AUM, plans to boost its AUM in the region to $2-$3bn in the next 2-3 years from the present $1bn, said Yasir AbuShaban, a Dubai-based principal with Mercer Wealth.

“Within the next two to three years, we are looking at reaching $2 to $3 billion as a conservative estimate and we do see an opportunity to do so,” said Mr AbuShaban.

Mercer does not directly make investments, but allocates clients’ money they have discretion to, to professional asset managers. They also provide advice to clients.

“We have buying power. We can negotiate on their (client’s) behalf with asset managers to provide them lower fees than they otherwise would have to get on their own,” he added.

Mercer Wealth’s clients include sovereign wealth funds, family offices, and insurance companies among others.

From its office in Dubai, Mercer also looks after Africa, India and Turkey, where they also see opportunity for growth.

Wealth creation in Middle East and Africa (MEA) grew 8.5 per cent to $8.1 trillion last year from $7.5tn in 2015, higher than last year’s global average of 6 per cent and the second-highest growth in a region after Asia-Pacific which grew 9.9 per cent, according to consultancy Boston Consulting Group (BCG). In the region, where wealth grew just 1.9 per cent in 2015 compared with 2014, a pickup in oil prices has helped in wealth generation.

BCG is forecasting MEA wealth will rise to $12tn by 2021, growing at an annual average of 8 per cent.

Drivers of wealth generation in the region will be split evenly between new wealth creation and growth of performance of existing assets, according to BCG.

Another general trend in the region is clients’ looking for a comprehensive approach to investing, according to Mr AbuShaban.

“Institutional investors or some of the families are seeing a slowdown in the available capital they have to invest and in that sense they are looking at optimizing the way they manage their portfolios and making sure they are not investing haphazardly and different parts of their investment are working together,” said Mr AbuShaban.

Some clients also have a higher appetite for risk, given the low interest-rate environment that does not provide enough yield for some institutional investors. These clients are keen to invest in illiquid assets, such as private equity and infrastructure.

“What we have seen is a desire for higher returns in what has been a low-return environment specifically in various fixed income or bonds,” he said.

“In this environment, we have seen a de facto increase in the risk that clients are taking in things like illiquid investments, private equity investments, infrastructure and private debt, those kind of investments were higher illiquidity results in incrementally higher returns.”

The Abu Dhabi Investment Authority, one of the largest sovereign wealth funds, said in its 2016 report that has gradually increased its exposure in direct private equity and private credit transactions, mainly in Asian markets and especially in China and India. The authority’s private equity department focused on structured equities owing to “their defensive characteristics.”

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