x Abu Dhabi, UAEMonday 24 July 2017

National Bank of Fujairah stands ready for resumed Iran trade

NBF is among a handful of such specialist banks in the UAE that would get a big chunk of business from trade flows with Iran should sanctions be eased, said Vince Cook, the bank's chief executive.

Vince Cook, the chief executive of National Bank of Fujairah, says the bank is preparing for business from trade flows with Iran should sanctions against the country be eventually eased. Pawan Singh / The National
Vince Cook, the chief executive of National Bank of Fujairah, says the bank is preparing for business from trade flows with Iran should sanctions against the country be eventually eased. Pawan Singh / The National

National Bank of Fujairah (NBF) expects a boost to its business if sanctions against Iran continue to ease after a thaw in ties with the West last year.

The trade finance lender is among a handful of such specialist banks in the UAE that would get a big chunk of business from trade flows with Iran should the Islamic state return to the fold of the global economy, said Vince Cook, NBF’s chief executive.

Iran suspended part of its nuclear development work in January. The United States and Europe responded by temporarily lifting some of the sanctions that have buckled Iran’s economy in recent years – although these were still limited to a handful of industries, such as car parts and petrochemicals.

The sanctions against Iran have had a knock-on effect on the UAE’s economy because of its proximity to the country.

Last November, the US secretary of state, John Kerry, said the UAE had paid a great price for sanctions on Iran, with a nearly Dh70 billion loss of business.

Trade between Dubai and Iran sank by nearly a third last year to Dh25bn, down from Dh36bn the previous year, according to Dubai Customs data.

“We would benefit a lot if those sanctions were eased in respect to business with Iran. There is a lot of business which goes through unofficial channels somewhere in the region which would easily return back to the UAE should it be allowed to. And being a significant trade finance player, we would benefit from that,” Mr Cook said.

While more business from Iran trade flows would be welcomed, Mr Cook said his bank did not need to rely on it to grow profits because of increasing trade into Asia and Africa.

“The good thing in Dubai is that when one market shuts, the traders typically open three others,” he said. “Iran became difficult but then East Africa, South East Asia, everything else suddenly became more prominent.”

The bank will also get an uplift from the Fujairah oil pipeline, around which many ancillary businesses will emerge, he said. The 380-kilometre Abu Dhabi Crude Oil Pipeline that was inaugurated in 2012 snakes from the heart of oil production at Habshan through the desert and mountains to a port in Fujairah.

The pipeline will allow all of Abu Dhabi’s onshore production to bypass the Strait of Hormuz, a narrow waterway that Iran has in the past threatened to block.

“In addition to the pipeline, there is talk of an additional pipeline. There’s also a second refinery plan, expansion of the port, further bunkering facilities and then a number of spin-off services around that area of business and a regasification facility for taking gas into the UAE through facilities in Fujairah,” Mr Cook said.

“All of these things create demand for finance. What we’ve seen over the years is as Fujairah has become more significant, Fujairah businesses [are] growing relative to the rest.”

mkassem@thenational.ae