London's financial centre could play a central role in the efforts of the GCC economies to reduce their reliance on hydrocarbons, UK officials said.
City of London seeks place in GCC growth
London's financial centre could play a central role in the efforts of the GCC economies to reduce their reliance on hydrocarbons, UK officials said. Companies from the City, as the financial centre is known, could provide expertise to help in reforming the region's financial services sector, advise on financing infrastructure projects and offer business training, the officials said. UK financial institutions already have an exposure of more than US$85 billion (Dh311.95bn) to the Gulf, with UK banks such as HSBC, Lloyds TSB, Barclays, Standard Chartered and Royal Bank of Scotland active in the region. UK contractors are also heavily involved in the region's construction sector.
The GCC governments are putting some of their revenues from oil and gas into developing sectors such as financial services, property and logistics, as well as diversifying exports. Abu Dhabi has set a target of raising the contribution of non-oil exports to the emirate's GDP to 11 per cent by 2030 from 1.5 per cent now. "Gulf centres are global business hubs," said Nick Anstee, the Lord Mayor of the City of London during the City and GCC Conference in London yesterday. "London can flourish if it continues to be effective and competitive - in delivering business services and mobilising capital for them and with them."
UK accountancy organisations such as the Institute of Chartered Accountants in England and Wales and the Chartered Institute of Management Accountants have already moved into the region as they look to help improve corporate governance and disclosure. The Emirates Securities and Commodities Authority last month signed a deal with the UK's International Centre for Financial Regulation to strengthen market oversight.
"There are great opportunities for increasing co-operation between regulatory authorities," said Lord Sassoon, the commercial secretary to the UK Treasury. "Successful financial services reforms are necessary to underpin the economic growth of the Gulf and we want the UK to fully support those reforms. "Dubai World served as a warning that it is vital to make progress in this area." UK banks had the biggest exposure among global lenders to the $23.5bn debt restructuring at the Dubai Government-controlled conglomerate.
At the heart of the GCC diversification drive has been a growing recognition of the need to foster a knowledge-based economy and nurture start-up business talent among young nationals. As leading providers of training, higher education and professional upgrading, UK-based training and education facilities have opportunities in the region, Mr Anstee said. And as the GCC governments embark on vast infrastructure projects spanning transport, housing and power schemes, there could also be openings for UK banks.
The London-based lenders have the knowledge and experience to bring together investor consortiums as well as the expertise to support the development of sovereign debt markets that are needed to fund the projects, Lord Sassoon said. Saudi Arabia's budget for this year includes an unprecedented $69.3bn for new and existing infrastructure projects. Europe Arab Bank estimates the country has a housing deficit of about 2 million homes.