Fine art of finance with Emirates Investment Bank chief

Emirates Investment Bank CEO Khaled Sifri, with the bank's art collection. Duncan Chard for the National.

Most market professionals would agree there is an art to investment, but Khaled Sifri, chief executive of Emirates Investment Bank, has taken the idea to a whole new level.

Works of art adorn every wall and occupy every spare space at the bank’s offices in Dubai Festival City, mostly paintings or sculptures by young Arab artists.

Mr Sifri explains: “Art is an investment, and it’s also part of our corporate social responsibility programme. We feel a responsibility to support Arab artists.

“But it also provides a valuable investment lesson for clients. Art is where the wealthy differentiate themselves. It underlines one of our central investment philosophies – you should always consider alternative investments, and never put all your eggs in one basket.”

The need for diversification has been a guiding principle since he came in as chief executive of Emirates Investment Bank (EIBank) in 2007. The bank is one of the oldest in the UAE, founded in 1977 by three of Dubai’s big merchant groups – Al Futtaim, Al Mulla and Al Owais families. But the families’ needs have changed over the years.

The original mandate was to attract investment to industrial projects in the newly formed country. But it soon became a wealth management operation, and the clients were often from the families of the shareholders.

In 2007 Mr Sifri was a senior executive at Shuaa Capital, the other Dubai-based bank with claims to longevity as one of the oldest in the emirate. “I left Shuaa and was asked to advise EIBank on a new strategy, which was to broaden the wealth management base to a wider group of high net worth individuals. Then the company asked me to stay on as chief executive to implement the strategy,” says Mr Sifri.

The figures show the change of strategy has paid off. In 2008 EIBank had assets under management of Dh500 million, but by the end of 2014 it was Dh7.2 billion.

“EIBank is now a private bank and an investment bank. We provide access for wealthy clients to investment markets, and we advise them and their businesses on transactions. Most of our clients are entrepreneurial people who believe in buying and selling assets and businesses, so it’s a natural fit,” he says.

“We can advise on such things as IPOs and private share placements, and help clients access investment markets.”

The private banking scene in the UAE is competitive, and becoming more so, as European banks, mindful of increasing regulation, try to diversify outside their traditional centres in Geneva, London and Frankfurt. Meanwhile, local UAE banks are aware of the opportunities in private banking and wealth management. So how does EIBank distinguish itself from the pack? “I think we’re uniquely positioned as the only bank in the region providing private banking to the calibre of a Swiss private bank, but having our booking centre onshore in the UAE,” Mr Sifri says.

“None of the foreign banks book profits onshore in the region. The local banks, for example, do book onshore of course, but we’re the only ones dedicated to the needs of private bank clients. It’s a very different culture from corporate and retail banking,” he adds.

Two key words in his business vocabulary are “flexibility” and “ escalation”. The bank must be able to adapt its services to the needs of individual clients, and to respond to client needs high up the management chain at the bank.

The current investment climate, he says, is characterised by a higher degree of risk aversion. “This has increased, and legitimately so. The worries of the past few months are understandable. People are apprehensive about the confrontation between the West and Russia, the future of Europe if Greece leaves the euro, about regional issues like Saudi and Iran, and about the nuclear situation. They are worried about extremism around the world. They are worried about the oil price,” Mr Sifri says.

That is a long list of concerns, but Mr Sifri is still fundamentally optimistic about the region and the global economy, especially the American equity market. He thinks a profit wobble in the last quarter of 2014 is not a trend for the current year.

On the big question of the oil price and its effect on regional economies, he is relatively comfortable: “On oil, we do not think regional governments will take draconian steps on investment. They mostly have assets and resources that will fill the fiscal gap,” he says.

In this environment, regional capital markets are still attractive to companies, some of whom are EIBank clients, looking to raise money. The bank is advising one of the IPO candidates to have indicated an interest in public listing, the financial group Daman Investments.

“Preparation for the IPO is proceeding cautiously. The client is still committed to the process, and we are optimistic we can achieve a successful IPO in the near future. But we are not committed to a deadline,” he says.

However, he is sharply critical of some of the IPOs that have come to market in Dubai with little track record of trading history. “I personally took a dim view of IPOs that are essentially venture capital propositions, like most of the greenfields. They only make sense when a company has a unique franchise already. Otherwise the company should approach investors used to the risk of venture capital.”[e-mail]

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