Friday , 18 August 2017
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UAE banks invest in future growth

As part of Cash & Trade’s regional coverage and following our first roundtable in the KSA, we organised a UAE Roundtable discussion under the sponsorship of Emirates NBD transaction banking services.

From Left to right : Sharad Agrwal, Hani AlMaskati, Surenda Bardia, Asif Reza, Natasha Patel, Farooq Siddiqi, Samir Sahu, Neena Prakash

Last year was an excellent one for cash and trade business in the UAE, with the international banks confirming it was a good 12 months across the whole region, with most banks investing more in product innovation, technology and resources to meet the market growth, competition needs and customer demands.

Cash&Trade: What is the corporate treasurer’s key focus today around transaction banking relationships in the UAE?

 

Asif Reza, JP Morgan

Asif: We have recently seen a great deal of technology adoption, with a focus on optimising working capital by treasurers. Also, facilities have taken a big and important position on the radar screen.

With liquidity levels  going up, treasurers monitor and go beneath the balance sheet of their providers. As J.P. Morgan has been in the region for more than 75 years, we were able to ensure our FI customers were fully serviced and had the sufficient liquidity and facilities needed in these challenging times.

 

Farooq:The focus areas today include :

1.  
Liquidity management – especially at group/ holding co. Levels. This includes visibility, unlocking liquidity from balance sheet and supply chains and optimisation of working capital.

2.  
Integrated Risk Management as opposed to credit risk management only

3.  
We are also seeing a “Go East” policy being embraced by regional corporates as a way of expanding their market reach outside the region. It is also more noticeable these days to see business relationship moving away from name lending

 

Farooq Siddiqi, Standard Chartered

Natasha: Prior to my arrival in the region a year-and-half-ago, I was under the impression name lending was the norm, and I was surprised to see middle market names produce audit financials. Since the 2008 downturn, and more recently with the Arab Spring impact, we see corporate treasurers looking more closely to working capital improvement and clean balance sheets. I also share Farooq’s observation on the ”Go East” policy. Collection products and solutions are areas that corporate treasurers always challenge and demand from their bankers.

 

Samir: UAE has primarily been a payments driven market on the cash management front. This is now changing with Corporates focusing on their receivables. This has bought about a demand for Collection products from the Corporates. Visibility on accounts across banks and liquidity management solutions are some of the areas that UAE Corporate Treasurers are focusing on.

By automating collection using solutions such as Direct debit, Corporates can reap significant benefits. Direct Debit Solutions will increase collection efficiency and reduce cheque handling / custody costs for Corporates.

In the Trade space, there is a demand for more innovative trade receivables solutions from the corporates.

 

Samir Sahu, Emirates NBD

Surendra: There are various factors influencing a treasurer’s role including the macro-economic environment and regulatory framework. Specifically, the priorities now firmly include improving different elements of cash management, and also towards counterparty risk management, with focus on efficiency gains as well as cost containment. Moreover the UAE Central Bank is rolling out new regulations such as IBAN, FTS and WPS and compliance with them requires resourcing and focus from the treasury teams.

In this context, managing receivables has become critical and the introduction of the direct debits by the UAE Central Bank will significantly improve the way treasuries manage their collections process, both in terms of cash cycle as well as reconciliation efforts.

 

Cash&Trade: How do you see the importance and the level of system and solution integration between corporates and banks and the role technology plays?

 

Surenda Bardia, Citi

Farooq: Enterprise resource planning (ERP) implementation is definitely on the increase among customers, with Oracle widely used in the region. I look at IT and system integrations from four areas: finding skilled people to execute and implement systems; accessibility; security of internal processes; and control functions within the company. Integration has become more important in the heightened risk environment in the region. For example, take the events in Bahrain when customers had a difficult time reaching the bank; the online solution enabled them to carry on with their banking and payment activities. There are, however, still corporates in the region that prefer to, execute their payments manually, while using the online cap