UAE banks follow oil to the East

Banks in the Emirates are finding lucrative opportunities in the shift in the oil trade towards Asia as the US shale gas revolution diminishes the importance of the world's largest economy to the Middle East.

With the US predicted by the International Energy Agency to become the world's largest oil producer within the decade, UAE banks are looking to forge new links with the Asian oil-importing nations that are expected to pick up the slack.

National Bank of Abu Dhabi, the capital's biggest lender, says there has been a "huge" increase in the trade flows it finances between the UAE and emerging markets in Asia - business traditionally financed from London or New York.

Capturing that trade represents a significant opportunity for banks in the Arabian Gulf, said Michael Tomalin, the NBAD chief executive, at a forum in the capital last week.

"We're going to countries for a particular reason: to intermediate growing trade capital flows between key parts of the world," he said.

"NBAD wants to play a part in intermediating those flows of trade."

First Gulf Bank also expects to generate new business from its rapidly growing international lending division.

"Our focus is on Asia and the oil business and the trade flows of the oil business," the chief financial officer Karim Karoui said last month.

While western banks have a long-established presence in the Gulf, limiting UAE lenders' ability to compete, most Asian banks are only just beginning their expansion in the region.

Industrial and Commercial Bank of China, the biggest bank in the world by market capitalisation, is in the process of expanding to Saudi Arabia and Kuwait to complement its existing operations in the UAE and Qatar, following its entry to the region in 2008.

Nomura, Japan's biggest investment bank, is seeking to rebuild its local franchise with senior hires after relocating staff away from the region during the global financial crisis.

A number of banks from South Korea have also signed agreements with UAE banks this year to develop strategic links.