Gulf banks major acquirers in MENA

Updated 04 February 2013

Gulf banks major acquirers in MENA

Banks in the Gulf Cooperation Council (GCC) countries are becoming active buyers again of stakes in banks in the Middle East and North Africa (MENA) and even farther afield, Standard & Poor’s said yesterday.
As acquirers in MENA, Gulf banks are taking the place of European banks that are shoring up their balance sheets in the aftermath of the financial and sovereign crises.
“Banks in the Gulf have capital to spare, and are literally capitalizing on their traditional strengths such as strong capital positions, healthy liquidity, and supportive shareholders to pursue acquisitions in MENA emerging-market countries, where opportunities for long-term growth exist,” said Standard & Poor’s credit analyst Timucin Engin.
Standard & Poor’s Ratings Services has noted a sharp rebound in acquisitions by Gulf banks in 2012, especially in Turkey and Egypt, in a report published today, “Exit European Banks, Enter Gulf Banks as Major Acquirers in the Region’s Emerging Markets”.
Mergers and acquisitions in 2012 in MENA were the highest since 2008, and buyers favored the financial sector slightly more at 30.5 percent of transactions than telecommunications at 26.7 percent. And Egypt and Turkey attracted much of the activity. According to the report, 142 deals were announced or closed in Turkey for a total value of $ 10.1 billion, and in Egypt, transaction volume reached $ 9.8 billion from 38 deals.
Looking at the prices of the announced and realized deals, we observe that the price of a controlling stake in a financial institution is significantly lower than before the crisis, creating affordable access for long-term business operators.
“We look at the potential impact on the ratings of issuers on a case by case basis. Potential rating movements depend on a conflux of factors, such as how well capitalized the acquirers will be post-acquisition, how well they will manage the credit exposures arising from these expansions, and whether they will be able to reap potential benefits of diversification,” said Engin.
Growth into higher economic risk countries could boost a bank’s risk-adjusted capital requirements, lowering our assessment of its capital adequacy. However, Gulf banks generally have supportive shareholders and strong internal capital generation which might serve as a cushion.
Furthermore, these transactions are opportunities for diversification into markets with large unbanked populations, which can provide for longer-term growth. A negative factor is that, excluding a few ones, banks in the Gulf — Bahrain, Kuwait, Oman, Qatar, Saudi Arabia, and United Arab Emirates — usually lack lending and credit underwriting experience outside their region, which we view as a significant risk factor.
According to the S&P report, European banks will continue to sell noncore assets, especially those outside of their home markets, to rebuild their balance sheets in the aftermath of the financial and sovereign crises, and meet tighter regulatory requirements.
Before the crisis hit, major European banks acquired a large portfolio of financial institution stakes in key emerging markets to provide them with long-term growth opportunities.

Saudi Arabia has lion’s share of regional philanthropy

Updated 26 April 2018

Saudi Arabia has lion’s share of regional philanthropy

  • Kingdom is home to three quarters of region's foundations
  • Combined asets of global foundations is $1.5 trillion

Nearly three quarters of philanthropic foundations in the Middle East are concentrated in Saudi Arabia, according to a new report.

The study, conducted by researchers at Harvard Kennedy School’s Hauser Institute with funding from Swiss bank UBS, also found that resources were highly concentrated in certain areas with education the most popular area for investment globally.

That trend was best illustrated in the Kingdom, where education ranked first among the target areas of local foundations.

While the combined assets of the world’s foundations are estimated at close to $1.5 trillion, half have no paid staff and small budgets of under $1 million. In fact, 90 percent of identified foundations have assets of less than $10 million, according to the Global Philanthropy Report. 

Developed over three years with inputs from twenty research teams across nineteen countries and Hong Kong, the report highlights the magnitude of global philanthropic investment.

A rapidly growing number of philanthropists are establishing foundations and institutions to focus, practice, and amplify these investments, said the report.

In recent years, philanthropy has witnessed a major shift. Wealthy individuals, families, and corporations are looking to give more, to give more strategically, and to increase the impact of their social investments.

Organizations such as the Bill and Melinda Gates Foundation have become increasingly high profile — but at the same time, some governments, including India and China, have sought to limit the spread of cross-border philanthropy in certain sectors.

As the world is falling well short of raising the $ 5-7 trillion of annual investment needed to achieve the UN’s Sustainable Development Goals, UBS sees the report findings as a call for philanthropists to work together to scale their impact.

Understanding this need for collaboration, UBS has established a global community where philanthropists can work together to drive sustainable impact.

Established in 2015 and with over 400 members, the Global Philanthropists Community hosted by UBS is the world’s largest private network exclusively for philanthropists and social investors, facilitating collaboration and sharing of best practices.

Josef Stadler, head of ultra high net worth wealth, UBS Global Management, said: “This report takes a much-needed step toward understanding global philanthropy so that, collectively, we might shape a more strategic and collaborative future, with philanthropists leading the way toward solving the great challenges of our time.”

This week Saudi Arabia said it would provide an additional $100 million of humanitarian aid in Syria, through the King Salman Humanitarian Aid and Relief Center.

The UAE also this week said it had contributed $192 million to a housing project in Afghanistan through the Abu Dhabi Fund for Development.