Last week our columnist Sabah Al Binali wrote, building on prior reporting in the Business section, that international banks including HSBC had withdrawn from the SME sector in the UAE creating an unprecedented opportunity for anyone willing to fill the gap. Today, the HSBC executive Chaker Zeraki writes that the lender is focused on where it thinks it can make a difference for its customers.
Throughout its 150-year history HSBC has been where the growth is, connecting customers to opportunities. As the first bank to be established along the Trucial Coast, HSBC witnessed the growth and development of the Emirates under the vision and leadership of the country’s founding fathers.
Today we are increasingly seeing these businesses actively explore corridors such as the Middle East, China and India as their trade routes of choice. It is this strategic geographic positioning, increasingly diversified economy, and fast paced international trade growth which underpins it as a priority market for HSBC.
We have a strong commercial banking strategy in place built to support the country. Segmented into three areas based on customer needs – business banking, middle markets enterprises and large corporates - this strategy aims to serve businesses ranging from the largest multinationals right through to international SMEs.
Business banking UAE focuses on international SMEs based in the country that have annual turnover of up to US$50 million. I appreciate that “international SMEs” is not a term we have often used in past, and one that can have varied definitions.
Customers we seek to bank are SMEs actively seeking financial support to operate across international markets. Here is where we are in a position to provide the best level of support across the UAE, the GCC, Mena and the world.
But let’s not forget – an international SME does not already need to have an international trade network in place for HSBC to support them. Financing domestic businesses to help them build the infrastructure and platforms they need to go international and begin exploring those markets is where we strongly focus our efforts too.
SMEs are the lifeblood of the UAE economy. They contribute approximately 40 per cent of total UAE GDP, 70 per cent of non-oil GDP and employ 42 per cent of its workforce. The SMEs that we focus on actually make up over 70 per cent of this segment as a whole in the UAE.
The strength of the bank’s commitment to serving this segment is demonstrated in our numbers and performance. A large portion of our liquidity for the commercial bank comes from smaller companies. In the first half of 2014, we doubled our lending to international SMEs in the UAE.
Banks in the UAE have an extremely important role to play in the SME space. Play the role well and businesses will benefit from the right financial support throughout their lives. A business with three years of financials normally turns its focus to growth – and this is where HSBC comes into the forefront. We have the right mix of complexity in our products, quality of service and international reach to guide these businesses into their future.
As per industry reports, lending to SMEs has doubled in as little as three years.
The increase is the result of a wide range of initiatives – one of which has been putting money on the table dedicated solely to SMEs. In 2010 we created the International Growth Fund to help bridge this gap in lending. To date, we have launched five funds in total and have lent over US$1 billion through these collectively.
There is much work to be done by the financial sector for the UAE’s SMEs. By focusing on the part of the segment where we know we can make a difference, we will remain steadfast in ensuring that these internationally focused businesses remain at the heart of our Commercial Banking strategy.
Chaker Zeraki is head of business banking, HSBC Bank Middle East.
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