Abu Dhabi, UAEFriday 22 November 2019

NBB plans regional expansion, aims to double debt advisory business to $10bn

Exclusive: Bahrain-based lender received approval from the UAE to reactivate branch licence in Dubai, CEO says

National Bank of Bahrain chief executive Jean-Christophe Durand. The lender has ambitious growth plans. Courtesy NBB
National Bank of Bahrain chief executive Jean-Christophe Durand. The lender has ambitious growth plans. Courtesy NBB

National Bank of Bahrain plans to increase the number of branches in the two biggest Arab economies – Saudi Arabia and the UAE – as the lender looks to double the size of its debt capital market and advisory business to $10 billion (Dh36.72bn) in next two years and launch wealth management services in partnership with an international player.

The majority government-owned lender, commonly known as NBB, has already received approval from the Central Bank of the UAE for “reactivation” of its branch licence in Dubai, NBB chief executive Jean-Christophe Durand, told The National. The lender, which has maintained a branch in Abu Dhabi for more than two decades, is in the planning stage to open its branch in Dubai, the commercial and trading hub of the Middle East, which will focus more on corporate and commercial banking operations, including lending to mid-cap companies.

“The central bank has just confirmed the reactivation of Dubai branch licence. We had the licence [for sometime] ... it required some administrative formalities,” Mr Durand said. “We are based in Abu Dhabi [so far] so we concentrated our efforts there. Having a presence in Dubai will be very helpful [in our regional expansion]”.

In Saudi Arabia, Opec’s top oil exporter and the biggest banking market in the Arabian Gulf, NBB is in talks with the Saudi banking regulator Saudi Arabian Monetary Authority to expand the size and scope of its operations in Riyadh. Once done, the lender plans to apply for additional branches in the oil-rich eastern province and the kingdom’s Red Sea commercial hub of Jeddah, said Mr Durand.

"In Saudi Arabia we are in Riyadh and we want to develop [business] in that market much more actively. It is a jurisdiction which allows several branches,” he said. “We have a business plan [for Riyadh], which we have submitted and then we will think of Eastern Province and Jeddah.”

Establishing a presence in the Eastern Province, which is geographically closer to Bahrain, is a priority, he noted.

Banks in the region, especially those in the UAE and Bahrain, are looking to expand their footprint in the region and beyond to gain access to new markets as they move to offset pressure in their over-banked domestic markets. First Abu Dhabi Bank, the biggest lender in the UAE, and Emirates NBD, Dubai's top bank by assets, have already established presences in Saudi Arabia. Gulf International Bank, another Bahrain-headquartered lender, in April completed the conversion into a locally incorporated bank in the kingdom.

“We don’t have the size we should have in these markets [UAE and Saudi Arabia] although we have had licences for quite some time,” said Mr Durand. “Both countries have [a] privileged relationship with Bahrain so there is captive business flow, which, as a national bank, we should capture.”

Apart from the geographical expansion, NBB plans to strengthen existing business lines across the region, including its debt capital markets (DCM) advisory, structured finance and small and medium-sized enterprises financing and trade finance.

In less than two years since establishing the DCM business, the lender has been able toarrange financing transactions of around $5 billion (Dh18bn) for sovereign and corporate clients in Bahrain.

The plan is now to replicate the success achieved in Bahrain in other regional markets and grow the business to be in the top-five DCM advisory institutions in the region, he noted.

“Probably, two years from now … depending on the market," he said when asked when the bank will be able to double the size of its $5bn transactions arranged so far. “This is the position we have in Bahrain and we should say, double it by doing business in other [regional] markets,” Mr Durand added.

As a national bank in the kingdom, NBB aims to be much more involved in the financing of large projects in Bahrain and increasingly get involved in other mega deals in the region.

“Now every project that comes [to the market] we want to play a role. Not just the role of a participant but an active role including advisory, debt raising and structuring of deals,” Mr Durand said.

The lender is now looking to enter the wealth management business in partnership with an international wealth manager, a new line of business where, Mr Durand said, NBB sees strong chances of growth.

“As the national bank we have access to high-net-worth individuals and so far we have not been able penetrate the space of wealth management,” he said. “We are not going to start from scratch … we could partner with a bank which has the technical wealth management expertise and we are the one who knows the client so we can join forces,” he said, adding that was a “win-win situation” for both parties.

That plan would take some time to materialise as NBB is looking at several options, he said.

Updated: July 1, 2019 06:53 PM