Asiamoney Middle East’s Best Banks for Asia 2019

Overall Middle East & Abu Dhabi: First Abu Dhabi Bank

Dubai: Emirates NBD

Egypt: Banque Misr

Jordan: Arab Bank

Kuwait: Kuwait Finance House

Lebanon: Fransabank

Palestine: Bank of Palestine

Qatar: QNB

Saudi Arabia: Saudi British Bank

These days, most Middle East lenders boast some kind of Asia connection. It may be a simple one, based on links with correspondent banks in important markets. Others boast more sophisticated networks, using offices in the likes of Hong Kong or Singapore to support local firms operating across the continent.

Then there are the elite members of this field. It isn’t a large gathering – yet. But up here in the rarefied air, one financial services provider stands head and shoulders above the rest.

First Abu Dhabi Bank’s pre-eminence in this category is due to many factors. None of its peers can compete on a like-for-like basis with its pan-Asian network. FAB has offices in Hong Kong, Singapore, Malaysia, China, South Korea, and India. Each office is carefully tailored to local needs. So, for instance, its Shanghai rep office, operational since 2012, acts as a key bridge between the GCC region and the People’s Republic, channelling capital east and west, and facilitating trade; out of Hong Kong, FAB extends wholesale banking services to large corporate and institutional clients across northeast Asia, including structured and syndicated lending.

The bank’s main regional office is in Singapore where FAB’s Asia chief executive, Clarence Singam-Zhou, directs a team of bankers providing the full spectrum of services, from trade and Islamic finance to global and capital markets. Speaking of which, its investment banking team just had another very busy year. FAB was a sole or joint bookrunner on no fewer than 18 Asia ex-Japan debt capital market deals in 2018, collectively worth $1.11 billion – that’s more deals than the next four Middle East lenders combined.

It also ranked fifth in onshore loan bookrunning in India, and 13th in southeast Asia. First Abu Dhabi Bank has also emerged as a vital enabler, helping to bring Asia’s largest companies together with capital-rich investors from the Middle East. In fact, on many such transactions, its presence is all but mandatory. Just look at the deal list from last year. Take Asia’s largest Reg S-only bond issue, completed by ChemChina in March, which raised $6.4 billion across six tranches, including five in US dollars. Or State Bank of India’s debut green bond, a $650 million, five-year senior unsecured issue, priced in September. Or, dating from June, China Huarong Asset Management’s $1.1 billion triple-tranche, dollar-denominated, senior unsecured bond.

FAB was joint bookrunner on all three sales, and a host of others besides, many of which are directly related to Beijing’s Belt and Road Initiative.

FAB is a founding member of the Sino-Arab Countries Interbank Association, a multilateral mechanism created by China Development Bank that aims to channel $3 billion into development deals. And its roots stretch far deeper into the regional soil. FAB stands out from the crowd thanks to its corporate relationships. It provides a mix of global markets, cash management and trade finance services to a wide array of Asian companies, including Toshiba and Hitachi Zosen in Japan, Jet Airways in India and Kepco, Samsung Engineering and Hanhwa Corporation in Korea.

Its robust ties with Daewoo E&C are an example of the bank’s burgeoning regional presence. FAB’s relationship with the Seoul-based construction firm began in 2005. Back then, it offered simple guarantees, expanding its repertoire each year to include trade finance, foreign exchange swaps and working capital. In 2018, FAB provided Daewoo E&C with a $45 million two-year term loan and dollar-Qatari riyal spot and swap FX hedging services worth $125 million.

And don’t forget, FAB is also integral to the needs of UAE-based firms operating across Asia, including Abu Dhabi National Oil Company, Emirates National Oil Company and DP World.

FAB was joint bookrunner and joint lead manager on the Dubai-based global port operator’s $3.3 billion triple-currency transaction in September 2018, comprising Islamic and conventional bonds priced in sterling, euros and US dollars.

It will be a hard task for any Middle East bank to wrest this prize from FAB’s grasp in future, although many are bound to try.

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In recent years, Emirates NBD has evolved into the outward-looking full-service lender that Dubai – an outward-looking city with global aspirations of its own – needs.

Under the leadership of group chief executive Shayne Nelson, the financial institution has emerged as a genuine banking power in Asia, with branches in China, India and Singapore. In India alone, its corporate banking team is working with multinationals including Tata Group, Jindal Steel and construction firm Larsen & Toubro, providing a wide range of services such as funding, trade finance and cash management.

Its investment banking division, EmCap, has been busy across the region, and was involved in Asia-related capital markets transactions worth a total of $8.7 billion last year.

It was the only Middle East bank mandated to underwrite Singapore-based Puma Energy’s $1.37 billion syndicated loan in May, and it was lead arranger and bookrunner on Mercuria Energy’s $1.35 billion revolving credit facility, finalized in November.

Its debt capital markets team was also strong in 2018; the bank was a bookrunner on the sale of $200 million worth of five-year bonds by Indonesia’s Soechi Lines. And it helped Industrial and Commercial Bank of China to raise $1.4 billion via a dual-tranche print of three- and five-year floating-rate bonds, with Middle East-based investors accounting for 14% of ICBC’s three-year notes.

The bank’s underlying strength is visible in the broad sweep as well as the fine details. In 2018, Emirates NBD provided $1.8 billion worth of FX coverage for its clients in five Asian markets, including Sri Lanka, Pakistan and the Philippines, and finalized four derivatives transactions, worth $1.56 billion, for a single Singapore-based client. And it has quietly emerged as a supra-regional leader in trade finance, accounting for 14% of letters of credit by transaction volume passing between the UAE and Asia. 

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When lenders target the Chinese market, usually their first port of call is either Beijing or Shanghai. Not so Banque Misr, whose chairman Mohamed El-Etreby joined in 2011 after nearly 30 years in the commercial banking sector.

When the Egyptian financial institution opened its inaugural representative office in April 2017, it set up shop not in China’s political capital or its main financial hub, but in Guangzhou, a trading city on the Pearl River just a few miles north of Hong Kong. While its decision raised eyebrows, the logic was impeccable. The majority of Egyptian exports enter China via the enormous ports at Guangzhou and nearby Shenzhen, while the nation’s big corporates and commodities traders are regular attendees at the many local expos and trade fairs, including the biannual Canton Fair.

The flag carrier EgyptAir flies to three Chinese cities, including Guangzhou and Hong Kong, offering additional logistical links between Cairo and southern China. Moreover, Egypt was one of the first Mena-area markets to buy into China’s Belt and Road Initiative, due in large part to the Suez Canal, a key pinch-point on the Maritime Silk Road.

Banque Misr has participated in many BRI-related events. It sponsored the first round of the Belt and Road Industrial and Commercial Conference, and attended the China-Africa Cooperation Forum, held in Beijing in September 2018.

While the versatile lender is integral to two-way trade between the countries, its focus in Asia is not limited to a single market. It provides credit facilities to Egyptian companies ranging from steel and chemicals producers to pharmaceuticals and textile makers, in countries including Malaysia, India, Bangladesh, Vietnam and South Korea.

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Amman-based Arab Bank opened its first representative office in Beijing in 1985, long before most lenders had even considered committing time and resources to the People’s Republic of China, and followed up with a second rep office in Shanghai in 1996. In the years that followed, Arab Bank steadily built up its regional presence. Chief executive Nemeh Sabbagh oversaw the process as Arab Bank extended its reach to South Korea and Singapore, enabling it to keep in touch with Asian companies and with Jordanian firms operating across the region.

Next up, in late 2019, following approval from the China Banking and Insurance Regulatory Commission, comes an eagerly awaited upgrade of its Shanghai office to a fully fledged branch. Asia as a whole, and China in particular, are integral to the global aspirations of a lender that boasts 600 branches across five continents, and which reported a 54% year-on-year jump in net profit to $821 million in 2018 – impressive figures, considering the civil war that continues to rage on the other side of the country’s border with Syria.

Arab Bank’s ArabiConnect platform, an online platform for companies that brings together all of its corporate banking services in one place, including cash management and trade finance, is a big step forward for the lender. It allows its clients, whether they are operating locally, or anywhere in Asia, to manage all of their accounts, payments and trade finance transactions in a single location, accessible from anywhere.

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Kuwait Finance House is strong to the core; for 2018, third-quarter net profit rose 22.7% year on year, while net financing income jumped 25.4% in the same period. Its Islamic banking credentials make it a worthy winner of this award.

A global pioneer in its field, in 1977 KFH became the second Islamic bank ever to open its doors to the public.

One of the safest banks in the Middle East, with a market capitalization of $13 billion, it has enjoyed a stellar few years; its shares, which are listed on the Kuwait Stock Exchange, hit a record high in January 2019.

Kuwait Finance House’s network has steadily grown over the years to include 500 branches, of which 14 are in Malaysia, where it offers retail banking services and has participated in some of the country’s more striking and successful real estate projects.

Under the leadership of group chief executive Mazin Al-Nahedh, Kuwait Finance House proudly claims to be the only Shariah law-compliant financial provider that serves both Malaysia and the GCC region, as well as Turkey and Germany.

KFH is also a leading global underwriter of Shariah-compliant bonds. In 2018, it underwrote 15 sukuk worth a total of $8.11 billion, edging Kuala Lumpur-based Maybank into second place.

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Fransabank can claim a number of impressive firsts in Asia. It was the first Lebanese bank to establish a China desk, capable of handling all transactions flowing between the two countries, including those priced in renminbi. The desk plays an integral role in finding viable inbound projects for Chinese firms, and identifying mainland partners for its local clientele.

The Beirut-based lender, chaired by Adnan Kassar, was chosen in July 2018 as one of just five founding members of the China-Arab Countries Interbank Association, a multilateral group created by China Development Bank, which aims to channel up to $3 billion into development deals.

In November 2018, Fransabank was the first Lebanese lender to join the Asian Financial Cooperation Association, a China-led non-profit organization that encourages cooperation and communication between financial institutions from 30 countries. It is also collaborating with UnionPay to bring the Shanghai-based card payment provider’s first branded credit cards to Lebanon, with the aim of introducing the service into other Fransabank markets across the region.

Central to the bank’s strength in Asia is its expanding network of correspondent banks, which consists of nine lenders across seven Asian markets – including Japan, Korea, China and India – and is used to offer services including factoring and forfaiting, as well as letters of credit and guarantees.

Fransabank handled 315 LCs with partner banks in Asia in 2018, collectively worth $411 million.

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Bank of Palestine might be easy to overlook at first. Ensconced in a small territory (the West Bank) in an extremely troubled and uncertain part of the world, squeezed between Israel and Jordan, it is not a big lender by any measure.

But the Ramallah-based lender, which reported a net profit of $38.8 million in the third quarter of 2018, up slightly from the same period a year ago, has quietly but consistently been expanding its reach into Asia in recent years.

It has a large and growing international correspondent banking network that includes 12 big lenders in nine Asian markets.

The Palestinian lender issued a little over $10 million in documenting credits via its correspondent banks in the first nine months of 2018, helping its Asia-based clients – mostly import-export firms – to obtain credit and to hedge against currency risk. Bank of Palestine is a small but impressive lender from a tough place: it is well run by its chairman, Hashim Shawa, and quietly doing solid work across the region.

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Qatar National Bank has quietly transformed itself into one of the Middle East’s bigger and better international lenders.

Financially robust, it reported net profit of $3.8 billion in 2018, up 5% from the previous year, while boosting its capital adequacy ratio, trimming its cost-to-income ratio and keeping its share of bad loans below 2%.

It has doubled down on Asia in recent years as it looks to build on a regional network that includes full bank branches in India and Singapore, and rep offices in Myanmar, China and Vietnam. Its standout market in Asia is Indonesia, where it has 37 branches thanks to its 90.96% stake in QNB Indonesia.

India is another important market, both for outbound and inbound business; QNB has joined forces with HDFC Bank to offer rupee-denominated remittance services to non-resident Indians living in the Gulf state.

The next few years will be central to the bank’s – and the country’s – long-term development. At the sovereign level, Qatar is preparing to host the next football World Cup in 2022, while striving to diversify away from hydrocarbons to meet objectives set out in its National Vision 2030.

QNB – which is rated A+ by Fitch and A by Standard & Poor’s, and which is currently managed by acting group chief executive Abdulla Mubarak Al-Khalifa – continues to press ahead with its plan to establish a strong foothold in many of Asia’s more competitive markets, and to become a leading financial-services provider in southeast Asia by 2020, while continuing to expand its footprint in the Middle East and Africa.

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Saudi British Bank’s presence in Asia grows in strength and depth each year, and for good reason. China is the biggest market for Saudi-made goods and services, and the Kingdom’s single largest source of imports.

The same is true across the region, with oil and gas flowing east while Japanese, Korean and Singaporean construction companies and consumer goods firms are investing heavily in a fast-growing economy with ambitions to diversify and develop a slew of sectors, from tourism and education to public infrastructure and health.

Under the guidance of managing director David Dew, SABB is in pole position to benefit from the rise of China and the increasing global economic predominance of Asia’s largest markets – and it is determined not to miss out.

It set up its first dedicated China desk in 2010, long before the emergence of the Belt and Road Initiative, later adding a Korean desk for good measure.

The bank, which reported a 14.5% year-on-year rise in net profit in the third quarter of 2018, provides payroll services to more than 20,000 Chinese expatriates working in Saudi Arabia.

In the full year 2018, it extended $10.6 billion in credit facilities to mainland corporates operating in the Kingdom. SABB delivers world-class financial services – ranging from cash management and trade finance to business credit cards and bank guarantees – to many of Asia’s largest firms, including Korean shipbuilder Hyundai Heavy Industries and China’s Sinopec Engineering.

And SABB has also recognized the importance of China’s renminbi as an increasingly significant trade currency in Saudi Arabia and across the Middle East. The bank held four seminars on renminbi internationalization in 2018, hosting more than 120 Chinese companies working in the Kingdom. It has also conducted roadshows in Hong Kong, Tokyo and Singapore to promote its renminbi services, which include solutions for trade settlement and cash management.

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