Gulf states $50bn largesse supports Mideast sovereign ratings as geopolitical risk rises

People stroll in a traditional market in downtown Amman. Jordan is among the Middle East countries that has received aid from Gulf oil exporters. (AFP)
Updated 28 November 2018
0

Gulf states $50bn largesse supports Mideast sovereign ratings as geopolitical risk rises

  • Fewer direct disbursements being sent from Gulf
  • Aid packages align with regional strategic interests

LONDON: The sovereign ratings of countries such as Bahrain, Oman and Jordan have been boosted by expectations of support from oil-rich Gulf donor states, according to a new report from S&P.
But actual disbursements may fall short of the promised amounts while budget grants are becoming less prevalent as deposits in central banks and other forms of conditional concessional funding are increasingly the norm.
“We anticipate that GCC sovereigns will likely prioritize funding to key regional partners in the context of volatile prices, weaker GCC net asset positions, and their respective domestic agendas of diversifying their economies awat from hydrocarbons,” S&P Global Ratings said.
Saudi Arabia, the UAE, Kuwait and Qatar this year pledged to give around $50 billion in total aid to 10 countries in the Middle East and Africa.
Beneficiaries included Jordan, Egypt, Bahrain and Morocco.
As a proportion of GDP, funding support from GCC countries has been highest in Jordan, where the economy has absorbed large numbers of Syrian refugees since the start of the Syrian conflict in 2011.
However in absolute terms, Egypt has received the most donor support, S&P said.
Gulf states have pledged large sums as geopolitical risks have increased in the form of tensions between Iran and Saudi Arabia and ongoing conflicts in Yemen and Syria as well as the boycott of Qatar by some of its neighbors.


HSBC plans more China tech jobs in push for market share

Updated 22 min 17 sec ago
0

HSBC plans more China tech jobs in push for market share

  • Europe’s biggest bank by assets will boost headcount at its technology centers in Guangzhou, Shanghai and Xi’an by 14 percent
  • HSBC’s expansion plan in China comes amid growing use of technology in the financial sector — from payments to transactions
HONG KONG: HSBC plans to add more than 1,000 jobs this year at its technology development centers in China, as the Asia-focused lender seeks to bolster its presence in the world’s second largest economy.
Europe’s biggest bank by assets will boost headcount at its technology centers in Guangzhou, Shanghai and Xi’an by 14 percent from a current 7,000-strong workforce, said HSBC Chief Information Officer Darryl West.
In recent years the London-based bank has spent $3 billion annually on its group technology operations which employ 40,000 people worldwide, and West said annual investments of $3-$3.5 billion are planned over the next few years.
Many global banks set up low-cost hubs in China and India more than a decade ago to maintain their complex worldwide information technology networks, but these centers have now become a core part of their operations.
The centers develop and implement risk and fraud management technologies, as well as digital applications that make it easier for banks to attract customers and deliver faster and more secure services.
HSBC’s expansion plan in China, a key market for the bank, comes amid growing use of technology in the financial sector — from payments to transactions.
At stake is a bigger share of the billions of dollars worth of retail and corporate banking business in a major financial market with a growing customer base.
“There is a lot more we can do with technology in mainland China. The level of technology adoption and innovation in China is way ahead of other markets,” West told reporters during a tour of HSBC’s technology center in the southern city of Guangzhou last week.
“We see mainland China as a tremendous source of talent, not just for the local market but our technology operations globally. We are hiring very aggressively here,” he added.
About 30 percent of the work done at the Guangzhou center, the largest HSBC tech facility in China with more than 5,000 employees, is for the mainland market and that share is expected to grow over the next couple of years.
HSBC is also using China-based tech centers to develop banking products for its global network, such as the bank’s UK mobile app which was developed in the northwestern city of Xi’an.
Outside China, HSBC employs more than 10,000 people at technology centers in India, with the rest in countries such as Britain, Canada, Hong Kong and the United States.
HSBC has in recent years lifted investment in China, including the prosperous southern Pearl River Delta region. Mainland China and Hong Kong together accounted for nearly 40 percent of the bank’s revenue in 2018.
The bank will invest $15-$17 billion in the next three years in areas including technology and China, its Chief Executive John Flint said last year.
The limited physical presence of foreign banks in China compared to dominant domestic rivals has been a challenge.
HSBC’s losses in retail banking and wealth management (RBWM) in mainland China widened to $200 million last year from $44 million in 2017. The bank aimed to reverse that with its investments in technology.
“Things like that, we see as very important for the next phase of our business growth ... once the major investments have gone in, RBWM will grow bigger and also profitable,” said HSBC Greater China Chief Executive Helen Wong.