BofA Merrill's Jonathan Moulds: the UAE's "measured upside"

Jonathan Moulds was made president of Europe, Middle East, Latin America and Canada earlier this year at the newly merged Bank of America Merrill Lynch. He came to the merged company from Bank of America, where he had overseen banking operations outside the US.

It is a big new role for Mr Moulds during an era of unprecedented shake-ups at some of the world's oldest and richest banking firms. As many of them struggle amid the rubble of the financial crisis, Mr Moulds says his company maintains a strong balance sheet and plans to expand its reach in the Middle East, bucking a trend in which many of his peers are scaling back and moving out.

In an exclusive interview yesterday during his first visit to the region in his new role, Mr Moulds discussed the merger, the bank's strategy in the region, his perspective on financial derivatives and his outlook for the UAE's economy, which he said had a "measured upside".

It has been a tumultuous year for banks and investment firms across the globe. Lehman Brothers failed last September, and Bank of America bought Merrill Lynch for about $50 billion when Merrill was on the brink of collapse, also in September. You came to the merged company from Bank of America. How has the merger affected your business so far?

Given what has happened over the economy in the past few years, it has certainly been a challenging environment. [But the merger] gave a tremendous boost to our business, particularly internationally. It's a significantly larger platform, and it's a platform that I think can compete with all the key players across the international space.

Did Bank of America even have a presence in the Gulf or the Middle East before the merger?

Bank of America prior to the merger had a very targeted strategy, and the resources meant the number of clients covered was obviously smaller. It's not that Bank of America did not do anything in that area, however. Our strategy was targeted in the Gulf.

What businesses are you concentrating on in the Middle East? Where do you see the most room for expansion and growth?

We have a strong wealth management presence in a number of places. I think if you look at our advisory business, M&A is strong and trading in equity is very strong. Combine that with an organisation that has a strong balance sheet and a strong presence on the ground and I think we can make a big impact here. We already are.

You oversee Bank of America Merrill Lynch's operations across a wide swath of the globe - your mandate includes Europe, the Middle East, Latin America and Canada. How much of a focus is the Middle East - and particularly the UAE - within those geographical regions?

I do think that it is a focus. I think we clearly have a strong presence in a number of areas and we will continue to add talent.

Do you see the bank picking up business rapidly in the region?

We will do it selectively. We have to recognise that it's a region where some parts of the market - real estate, for example - are stressed. But clients want access to financial solutions to raise capital, to provide advice on large cross-border mergers. We're in a very good position. As an organisation that has come through this is pretty good shape, a number of lessons have been learned. If we are in strong financial standing, it gives us opportunities.

What is your outlook for the UAE's economy?

There has been significant progress on infrastructure since I was last here. There is a transparent financial system, and a regulator that I think in many sectors is progressive. There is a measured upside, but it will take time.

Mergers and acquisitions naturally take place during times of economic turmoil. But what about other traditional investment banking activities, like advising on IPOs? Do you see that coming back any time soon?

IPOs in the region are going to take time to come back. We're all aware of that.

You have a background in derivatives [Mr Moulds was chairman of the International Swaps and Derivatives Association from 2004 to 2008]. Many people have said that these complex instruments are partly to blame for recent market volatility and economic turmoil. Speculation in oil futures, a form of derivative that determines global oil prices, has been a particularly touchy subject. Has any of this changed your mind on the usefulness of derivatives? Are they fundamentally dangerous?

I think derivatives play a very important role in terms of how you mitigate risk. But they can also be concentrators of risk. I'm an advocate of the use of derivatives, but I think it's important to have regulation and make steps in the right direction to make the infrastructure [of the markets] more efficient.