Jamal Al Kishi was appointed chief executive of Deutsche Bank’s operations in the Middle East and Africa in February, at a time when the German banking leader was facing challenges in its international businesses and threats from American regulators. In his first interview since taking the job, Mr Al Kishi, a career banker in his native Saudi Arabia, gives his view of the global economic environment, the financial challenges facing Deutsche and its long-term role in the UAE banking scene.
How do you view the world economic background to Deutsche’s business?
There is an increased risk profile and anxiety in the global macro picture. The pace of growth in China and other emerging market economies has slowed, but there are signs of bottoming across several large economies and we expect a moderate growth pick-up in 2017. The US is growing anaemically, not fast enough to be the locomotive of the global economy. Trade and commodities are down and equities are volatile. Furthermore, the geopolitical scene is not conducive to optimism. But there are some positive elements. There is some form of stabilisation in commodity and oil markets and now we think the oil price might finish the year nearer to US$60 than $20. Our previous estimate was $45, and now we think that might be conservative.
Some European banks view the UK’s Brexit vote as an opportunity to win business from London. How do you see it?
Brexit has caused great uncertainty and that is not positive for a globally networked economy. The UK is weaker without Europe, and Europe is weaker without the UK. I hope the Brexit negotiations are done in a thoughtful manner. We are still not clear on what structure there will be to future EU-UK relations. Deutsche employs over 8,000 people in the UK and is one of the largest employers in the City. As a bank headquartered in Germany and with a strong presence in the UK, we are well prepared to mitigate the consequences of the UK leaving the EU. We have a base and an infrastructure ready and waiting for us in Frankfurt should a move prove necessary.
The American authorities have suggested a fine as high as US$14 billion as a punishment for mis-selling certain securities. What’s the latest?
With regard to the fines that have been talked about for us, I can only say we are in constructive discussions with the Department of Justice and we are working hard on achieving a resolution of the matter as soon as possible.
When the possible scale of the fine was revealed, it caused worries about Deutsche’s financial health. Was this justified?
Deutsche Bank is fundamentally a much safer and more secure organisation than it was before the global financial crisis. Since then, we have more than doubled our shareholder capital, our balance sheet has been reduced and we have increased liquidity reserves. Over 70 per cent of the balance sheet is funded by long-term, diversified stable sources. Our share price has been impacted by our ongoing negotiations with the DoJ, concerns around Brexit and continued weakness in the euro-zone economies – our home base, if you like. But we do not see a need for further capital raising, not at this time. We have sufficient capital, and have provisioned for future expenses related to litigation. And, of course, the engine is still working. The results of the third quarter demonstrate the operating strengths of our business.
[The bank reported a net profit for the quarter of €1.47bn (Dh5.97bn), up by 78.1 per cent from a year earlier.]
Deutsche is in the middle of a downsizing exercise involving withdrawal from some global markets. Will this affect the Middle East business?
Our commitment to this region is undiminished. If anything, we see the merit in investing further here. We were involved in the sovereign bonds in Saudi and Qatar. We were joint lead manager on DP World’s $1.2bn sukuk and Pakistan’s $1bn sukuk this year and see more of this kind of business coming, in sovereign and corporate debt. We are recognised as having a leading trade finance, cash management and custody platform across the region.
Tell me more about Saudi Arabia, where you have strong relationships.
We’re very bullish about the outlook that’s been created by the Vision 2030 strategy. It shows the dynamism and the will to reform and modernise the country. As a Saudi, it’s especially gratifying for me and it will create opportunities for banks like us across the board: equity and debt capital markets, M&A, structured finance and forex. I’m still the CEO of the Deutsche Saudi operation so that gives me a hands-on role in all that’s happening there.
How do you see the macro-environment in the UAE?
Here I think some have taken too pessimistic a view on the effect of the oil decline and in particular the effect on some high levels of debt. Of course, prices are down and there is fiscal pressure on governments, so it’s natural the credit portfolios of some banks are under some strain. But the system is robust enough to withstand this and resume its upward trajectory. It is nothing like as bad as 2009. It’s not even appropriate to compare it with that time.
What are the top items in your in-tray for UAE business?
The pipeline of UAE activity into 2017 is robust along our traditional lines of business. We’re seeing good opportunities in infrastructure finance and export credit agency financing, which is in line with Dubai’s Expo 2020 strategy. We’re involved in various M&A and structured finance discussions in the UAE. Additionally, we are very determined in our wealth management business, where we focus on very wealthy clients. We have invested significantly in our Dubai offices and feel well positioned for continued growth in this important sector.
Will Dubai creditors be able to restructure obligations where necessary?
We think they will. The new insolvency law seems to strike a good balance, taking into account the interests of both debtors and creditors. It reportedly has a broad range of clauses for creditors around restructuring. So a good move in the right direction in our view.
What is the Deutsche take on the UAE equity market? Will there be an upturn in market activity next year?
Most Mena markets have struggled for direction this year, with Saudi Arabia the notable exception with a double-digit decline. Next year, we expect the oil price to recover on the back of tighter supply and demand conditions. This will set the scene for a more positive backdrop and we expect market participants to regain confidence in the region’s long-term growth potential. As a result Mena equities should enjoy a more positive trend in 2017.
What is the bank’s view on the Abu Dhabi Global Market?
We’ve been watching the steady progress of ADGM with interest and have been impressed with the way they have cautiously and without haste implemented their strategy, which is in line with Abu Dhabi’s own 2030 strategy towards economic diversification. We are confident that as a founding member of the DIFC and with an existing branch office in Abu Dhabi, we are well positioned to capitalise on future business opportunities here in the UAE.
fkane@thenational.ae
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