New Silk Road Finance Awards 2019: Middle East & Africa
Best regional bank for BRI: First Abu Dhabi Bank
First Abu Dhabi Bank consolidated its position as the leading Middle Eastern bank for Belt and Road financing during the awards period from 2018 to 2019.
FAB was created when First Gulf Bank merged with National Bank of Abu Dhabi, a process completed in December.
It offers wide coverage of Asian markets thanks to its well-established presence in five key countries. As well as a regional office in Singapore and a full-service branch in Hong Kong, the bank has branches in India and Malaysia, and representative offices in Shanghai and Seoul.
FAB has leveraged this regional network to support the overseas expansion and globalization of Chinese customers and to facilitate trade flows across the Belt and Road network.
In the current awards period, the bank extended bilateral facilities to firms including China National Building Material, Shandong Qingyuan Group and China National Forestry Commission to develop their trading capacity with the BRI ecosystem.
It also acted as mandated lead arranger for syndicated loans to Chinese borrowers from a range of sectors, including commodities, pharmaceuticals, real estate and technology.
In debt capital markets, FAB acted as bookrunner on the two dollar tranches – worth $1.5 billion in total – of ICBC’s landmark green bond in April. The deal was the first in this format designed to finance and refinance assets along the Belt and Road network.
FAB supported BRI-related infrastructure development in the Middle East, providing financing across multiple projects to China Railway and China State Construction. The bank’s role was recognized at the second Belt and Road Bankers’ Roundtable in Beijing in April, hosted by ICBC; FAB was the only Middle Eastern bank represented at the event and its Asia chief executive Clarence Singam-Zhou was a panel speaker alongside Chinese regulators and other leading BRI participants.
Best Chinese bank in the region for BRI: ABC
Agricultural Bank of China is playing an increasingly important role in promoting Belt and Road objectives in the United Arab Emirates. China’s third-largest bank opened its second Middle Eastern branch in Dubai in May 2017. The new operation acts as a renminbi clearing centre for the UAE, as well as to offer financial services, including trade finance and syndicated loans, to local companies.
In its first two years of operation, the centre – which is the first of its kind to be set up by ABC internationally – has handled transactions worth more than Rmb83 billion ($11.8 billion).
Through its Dubai branch, ABC provides consulting and financial services for Chinese firms operating and investing in UAE, as well as participating in large-scale infrastructure projects in the Gulf region.
The bank has recently advised on construction projects including Dubai’s Federal Supreme Court, the Expo Metro Station and a solar power plant in Oman. ABC helped finance the landmark Acwa Power Noor 1 Energy solar plant through its Dubai International Financial Centre branch.
In Africa, ABC has broken new ground for Chinese lenders through its involvement in Banque Sino-Congolaise pour L’Afrique (BSCA).
Established in the Republic of Congo in 2015, BSCA is a joint venture between ABC and local partners, including the Congolese government. It aims to promote economic and financial cooperation between China and Africa, and to improve financial inclusion in Central Africa. To achieve this, the bank is promoting multi-channel banking: it has the largest ATM network in the Republic of Congo and is trying out a new branch model with self-service machines in rural areas. Its low-cost credit cards for poorer clients have already attracted more than 30,000 customers.
Best international bank in the region for BRI: Citi
Citi is ideally placed to support Belt and Road trade and initiatives across the region given its presence in 24 countries in the Middle East and Africa and its strong track record in Asia.
|Tony Wu, Citi|
The US bank has taken full advantage of this opportunity. Tony Wu, regional China desk head for Middle East, Africa, Pakistan and Turkey, heads a team of four dedicated China desk bankers in MEA. Two are based in the United Arab Emirates (UAE) and cover the Middle East, one is located in Nigeria and the fourth is in Kenya. The bank plans to expand its team further this year.
Citi is also committed to promoting renminbi internationalization, one of the key strategic goals of BRI. In MEA, it offers renminbi cash management and foreign exchange services in the UAE, Nigeria, Cameroon, Zambia, Tanzania, Gabon, Uganda, Kenya and South Africa.
Citi provides its services to more than 170 Chinese companies operating in MEA in sectors including oil and gas, power, telecoms and construction. These include two Chinese oil and gas companies working in Iraq, which Citi supports with cash management and foreign exchange services, as well as several construction companies in Nigeria that require support in issuing renminbi letters of credit.
Citi provided an innovative cash-pool and liquidity-management solution this year to a Chinese power company operating in Cameroon that allowed the customer to centralize its surplus funds in Cameroon, Equatorial Guinea, Chad and the Republic of Congo.
The bank was chosen as sole financing provider by a large Chinese state-owned enterprise to bid for a tramway project in north Africa valued at €150 million with a tenor of 15 years. As a result, in the first half of this year, Citi’s BRI-related business in MEA increased 27% – a rate of growth that is expected to be maintained over next year.
Best local bank in the region for BRI: Banque Misr
Banque Misr wins the award for best local bank in the Middle East and Africa for BRI for the second year in a row by virtue of its impressive commitment to promoting trade and financing flows between China and the region.
|Mohamed El-Etreby, Banque Misr
The Egyptian state-owned lender issued more than 2,200 letters of credit with a total value of more than $1 billion for the import of goods from China and BRI countries during the awards period.
It also issued $150 million of guarantees and counter-guarantees for Chinese counterparts. The highest-profile of these was China State Construction Engineering Company (CSCEC), which has been commissioned to build 20 towers in Egypt’s new administrative capital and which is leading a Chinese consortium that will build Egypt’s first high-speed railway.
Under the leadership of chairman Mohamed El-Etreby, Banque Misr is taking a leading role in the internationalization of the renminbi and its use in Chinese-Egyptian trade and financing.
The bank’s representative office in Guangzhou has been strengthening relationships with Chinese correspondent banks, including ICBC and Bank of China, and in March the renminbi was added to Banque Misr’s FX list for trade finance business. In the following two months, the bank issued 34 letters of credit, totalling Rmb44 million ($6.2 million).
The Guangzhou office promotes Banque Misr’s image and reputation in the Chinese market; its bankers attend economic and financial forums, and help to further the bank’s cooperation with UnionPay.
Banque Misr has announced an ambitious expansion of its existing network in MEA BRI countries. It plans to add representative offices in Kenya, Somalia, Djibouti, Saudi Arabia and the Dubai International Financial Centre, and to upgrade its Côte d’Ivoire operation into a branch.
Best bank for BRI-related financing in the region: HSBC
Supporting the Belt and Road Initiative globally is a strategic priority for HSBC – and the bank’s deep roots in Asia make it a natural partner for governments and firms looking to enhance their integration with the project.
Landmark deals for HSBC in the Middle East and Africa during the awards period include a $843 million Sinosure-covered financing facility for New Urban Communities Authority (NUCA), the government body charged with the construction of Egypt’s new administrative capital.
This marks the first time HSBC supported China State Construction Engineering Corporation (CSCEC), the engineering, procurement and construction (EPC) contractor for the project, for their exports; it is also the bank’s first participation in a Sinosure deal led by ICBC.
The HSBC team contributed to the documentation process, helping ICBC to negotiate and meet the requirements of international banks.
On the M&A side, HSBC’s standout deal in the region was the strategic acquisition by SDIC Mining Investment Corporation of a 28% stake in Jordan’s Arab Potash Company, in a deal worth $502 million.
HSBC acted as sole buyside financial adviser, providing advice on agricultural inputs and guidance through the cross-border auction process. The deal represented the first outbound investment by SDIC Mining and reflects the Chinese government’s core BRI strategies, as it will provide important supplies of potash reserves in strategic locations for expansion and end-use in Asian markets.
HSBC has an extensive on-the-ground presence in BRI countries across MEA, with dedicated China desks in the UAE, Israel, Saudi Arabia, South Africa and Mauritius.
Best bank for infrastructure/project finance in the region: Standard Chartered
With a track record of more than 160 years of operations in China and 150 years in the Middle East and Africa, Standard Chartered is ideally placed to foster connections between the regions in the Belt and Road Initiative.
|Sunil Kaushal, Standard Chartered
Last year, more than half of the UK bank’s near-100 BRI-related projects were located in MEA, with the majority focused on infrastructure and energy.
In June 2018, Standard Chartered supported China Road and Bridge Construction in issuing a performance bond for a railway project in Kenya to support part of the building of the Standard Gauge Railway between Mombasa and Nairobi.
Under the leadership of Sunil Kaushal, regional chief executive for Africa and the Middle East, the bank has been involved in important road projects. For example, in Zambia, it facilitated the financing of the rehabilitation and construction of over 400 kilometres of roads by China Henan International Cooperation Group, while in Kenya, it was nominated as the sole project account bank by a Chinese EPC for the Redhill Link road project, providing services including payments, collections and related FX.
In the energy sector, the landmark deal in the awards period was Acwa Power Noor Energy 1, a 950-megawatt solar power plant in Dubai that attracted financing from several Chinese banks and equity investment from the Silk Road Fund.
As the documentation bank, Standard Chartered led the structuring from pre-bid in 2017 to closure in early 2019, in keeping with its commitment to uphold the highest governance standards in its involvement in the BRI.
The bank was the mandated lead arranger for facilitating the financing of the Haya Power and Desalination Plant in Bahrain this year, which attracted a range of global investors and will be built by Chinese contractor Sepco 3.
Best individual BRI project or initiative in the region: Acwa Power Noor Energy 1
In March, Dubai Electricity and Water Authority (Dewa) and a consortium led by Saudi Arabia’s Acwa Power and the Silk Road Fund announced the financial closing of the fourth and final phase of the 950-megawatt Mohammed bin Rashid Al Maktoum Solar Park, the largest single-site solar park in the world.
|Rajit Nanda, AcwaPower
The project, known as Noor Energy 1, is a landmark for cooperation between the United Arab Emirates and China under the Belt and Road Initiative.
The Silk Road Fund has been involved since inception in 2017 and owns 24% of Acwa’s share in the project. Shanghai Electric will collaborate with Dewa and Acwa Power on the 700MW concentrated solar power (CSP) portion of the facility, while Chinese banks provided the majority of the senior funding.
ICBC acted as lead arranger for the $1.5 billion senior loan. Bank of China and Agricultural Bank of China also played a leading role in the financing of the project, while China Everbright Bank and China Minsheng Bank participated in the senior syndication.
Noor Energy 1 is the first international solar project with Chinese financing and represents and fulfils the sustainability agenda of the BRI. The facility, which will cover 44 square kilometres and feature the world’s tallest solar tower, will provide clean energy for 320,000 homes and will reduce Dubai’s carbon emissions by 1.6 million tonnes per year.
It will have a thermal storage capacity of 15 hours, allowing for energy availability around the clock, and will support Dubai’s commitment to increase the share of clean energy to 75% by 2050.
The project is also a landmark for the Silk Road Fund, which in June deepened its involvement with Acwa Power by taking a 49% stake in the Saudi Arabian firm’s renewable arm. Acwa Power’s chief investment officer, Rajit Nanda, has been at the forefront of the drive to increase cooperation with Chinese entities.