Banking on Canada's squeaky clean financial image

A major north American lender is confident Canada's enhanced reputation in the light of scandals and bailouts elsewhere puts it at the vanguard of financial services in this region.

Cormac Sheedy, the senior executive officer for the Middle East and Africa at Royal Bank of Canada's investor services business based in Dubai. Satish Kumar / The National
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Cormac Sheedy has worked for many of the big names in the regional financial industry.

For the past year he has been the senior executive officer for the Middle East and Africa at Royal Bank of Canada's (RBC) investor services business based in Dubai.

Here, he talks about the bank's long-term ambitions in the Arabian Gulf.

What is RBC investor services' strategy for the region now RBC controls 100 per cent of the former joint venture with Dexia?

We have in place our global strategic plan for the next five years that we now look forward to pursuing with the support of a financially strong and stable parent.

RBC has been present in the Mena [Middle East and North Africa] region since 1974 and has an established and well-regarded business here. We are strongly committed to doing business here and are proud of our local presence. Following the change of ownership, we will continue to provide investor service solutions for our wide range of local, regional and global clients and look forward to developing relationships with key regional institutions such as sovereign wealth funds [SWFs].

A widely quoted figure puts the size of the SWF market at US$1.85 trillion [Dh 6.79tn] and the funds are increasingly looking for strong, stable counterparts with a global reach but who are also able to respond to them locally. Sole ownership by Royal Bank of Canada, a financially sound, top 10 global bank, combined with our established presence across the region, is already acting as a catalyst for us in attracting new business from sovereign wealth funds.

The new ownership also enables us to leverage the complementary nature of our activity with other businesses in the group, notably RBC Capital Markets and RBC Wealth Management. We look forward to being able to provide clients with holistic solutions that go beyond our current service offering.

Who are the clients here and what services do you provide for them?

We serve a broad range of clients in the region - from asset managers to family offices, institutional investors to SWFs - partnering with them, using our insight, global reach and commitment to excellence to enhance their business results. We provide all the major services you would expect from a global investor services business, including global custody, fund administration, shareholder services, distribution support and securities lending.

Why should a local business or individual seek the services of a Canadian institution, rather than one from the United States or Europe?

There has been a "flight to safety" recently and the Canadian financial industry has emerged from the crisis with its reputation enhanced. Being part of Canada's largest financial institution is therefore a great advantage and reassuring for prospective clients, especially those sovereign wealth funds that are looking for solid and stable financial partners. Moreover, although we are now wholly-owned by RBC, we are a truly global business with invaluable expertise in cross-border distribution, alternative investments and fund administration for large institutional investors. We are among the top 10 global custodians, with over 5,500 employees in 15 countries including the principal fund centres in Europe [Dublin and Luxembourg] and Asia [Singapore and Hong Kong]. As such we are ideally positioned to accompany the region's SWFs and fund managers.

There has been much speculation that indigenous capital will stay in the region, rather than looking outside for investment value. Have you seen any evidence of that?

Given what has been occurring overseas, for example in the European economies, there has been talk that capital flows outside of the region would be scaled back. While this is perhaps the case generally, the region's SWFs, for example, are among some of the most sophisticated investors in the global markets and as such will not ignore or overlook overseas investment if the opportunity and returns are there and match the defined investment goals and risk appetites.

You have a long track record in the Gulf region now. What is your instant analysis of the financial services industry here?

It has been a challenging time for regional fund managers. Like all markets, the last 12 to 18 months have been difficult. The global economic crisis, coupled with the political upheaval in the region following the Arab Spring, have put pressure on many industries. Investors, both institutional and retail, have favoured asset classes that are deemed less risky, such as fixed-income vehicles and there has been a noticeable flight to quality. And yet, the financial services industry across the region has demonstrated a remarkable level of resilience and continues to perform well. The housing market in Dubai has witnessed a noticeable uptick, with nominal GDP for the sub-economy up 7 per cent in 2011, alleviating pressure and encouraging growth to return. Across the region, the industry continues to attract top talent, implements strong but effective regulation and encourages growth as it consolidates its position as an important financial services hub, well placed between Europe and the emerging markets further to the east such as Singapore. Both the UAE and states in the wider Mena region, such as Saudi Arabia, Bahrain and Qatar, hold significant long-term growth potential. As the local market recovers from the impact of wider global financial shocks, serious asset-management, distributive and asset-servicing potential is emerging [here].