One of the longest-serving chief executives in UAE banking, Michael Tomalin retires at the end of this month from National Bank of Abu Dhabi. He tells The National what he plans to do next and discusses the role his bank played in the development of the emirate.
NBAD chief executive wandered the globe in a 40-year career
After more than four decades in banking, Michael Tomalin is heading off into the sunset.
The chief executive of the National Bank of Abu Dhabi retires from his day job at the end of this month, bringing to an end a 14-year tenure at the helm of what has become the UAE's biggest financial firm.
The 66-year-old, who, with his peaked lapels and crisp pronunciation, is every inch the quintessential British banker, is getting ready to devote less time to financing heavy-industry and aircraft-leasing deals.
He intends to start with a visit to the Falkland Islands in January.
"It's an unusual thing to want to do, to count sheep or penguins, but I like remote, distant places," he says.
That may have inspired early thoughts about pursuing a career as a diplomat. But it is such remote places that gave him a head start in banking. As an ambitious young banker in his thirties, he was sent to become one of three directors heading Barclays' Caribbean operations, headquartered in Barbados.
"The job entailed managing 16 different jurisdictions across the Caribbean, from Turks and Caicos Islands to Anguilla, and from Trinidad to the Netherlands Antilles," he said.
"It was a fantastically interesting job, and I spent a lot of time travelling to these places. The bank had its own private jet because it was very difficult to get to some of these places. I don't have a private jet in my capacity at National Bank of Abu Dhabi, so I've actually gone downhill in terms of perks."
The older two directors had spent enough time hopping around islands, so they were happy to let Mr Tomalin do the "hard stuff - going round the branches in Grenada or going out to Montserrat or Charlestown in Nevis", he says.
"For me this was the most wonderful opportunity. I met prime ministers and governors-general and chairmen of banks and all sorts of fascinating people."
Though it was not the British foreign office, a career in banking ended up leading Mr Tomalin to travel just as often as diplomat, and had the additional advantage of being "much better paid".
From the Caribbean, Mr Tomalin then worked in Hong Kong, Japan and New Zealand, rising to global chief executive of Barclays Private Banking at a time when offshore financial jurisdictions such as the Cayman Islands and British Virgin Islands were developing their importance.
He joined NBAD in 1999.
Was it the discretion required to succeed in private banking that made him a good fit within the closely guarded world of Abu Dhabi and government-related firms?
"Private banking relies on confidentiality and trust, but those disciplines apply to banking wherever you go, whether it's Japan or Hong Kong or Barbados or here," he says.
"You're like a doctor with a patient - what you discuss with your patient is private."
When he joined NBAD, the emirate had no stock market, and its ambitious 2030 development plan was almost a decade away from launch.
Dubai had just a handful of smallish skyscrapers and had not yet built its islands. The Emirates was yet to generate much interest from international investors, outside of the oil and gas industry.
But the development of the country's financial institutions has seen some of that opacity ebb away.
"We didn't have a stock exchange until 2000 … The coming of a formal market does require a different governance standard," he says.
"We are very happy to embrace transparency. We think it's one of the reasons why we're considered one of the safest banks in the world, anything significant we disclose to the marketplace."
With a credit rating that now equals that of some of the most highly rated banks in the world, NBAD has found it possible to grow rapidly and take market share from global banks. The bank overtook Deutsche Bank as the Arabian Gulf's third-biggest bond underwriter last year.
"Safety is the new cool in banking," Mr Tomalin says. "Return on equity, balance sheet size and capital adequacy are all vital things, too. But being safe is something that in a much more awkward and difficult and uncertain world is something that I'm most proud about."
Getting NBAD recognised as "the premier bank in the Middle East" is what Mr Tomalin regards as his proudest achievement at the bank.
"When I came here NBAD was quite an inward-focusing organisation. It was a much smaller bank, less than a tenth of the size it is now," he says. "It's a quantum change. We're a much more international open global international bank."
Employing 125 UAE nationals in 1999, its staff of Emiratis has grown to 1,314 over the years.
"Yes, we've got lots of expatriates who bring professional skills into the organisation," he says. "But equally we've built our NBAD Academy for young Emiratis and we've actually got real Emiratis learning a trade. Over time these people will assume more and more leadership roles."
NBAD has made consistent profitability its calling card. The bank has never reported a quarterly loss during his time at the helm, a period in which many other bigger and safer banks had to be rescued or went bankrupt.
Some of those other banks are still due to repay large amounts of capital, including Emirates NBD, which NBAD overtook as the biggest bank in the country this year. And in spite of all temptations, NBAD did not have the same problems with bad investments in derivatives that hobbled hometown rival Abu Dhabi Commercial Bank.
"If you use your balance sheet, you should use your balance sheet to support your friends, your customers," he says.
"Bankers actually don't make money out of lending … You lend in order to do something that is attractive, whether it's advising or managing the pension fund or doing the trading."
Lending, rather than an end in itself, should be a way of building a relationship, he added. This helped his bank to avoid troubles with the structured investment vehicles and conduits that laid low many erstwhile financial titans.
"When these fancy products came along that looked like AAA assets we didn't put any money on those things because we could not see the relationship traction," he says.
There was no way that NBAD could sell anything else to a Caymanian special purpose vehicle hoovering up subprime mortgages, or to any of the off-balance sheet funding vehicles that haunted global banks, Mr Tomalin says, since they could not even sell a credit card to the chief executive. Most were little more than shells filled with bad debts.
"It's something I learnt at Barclays, and I don't know why they forgot it."
But as a national bank, NBAD's strongest relationship is always with the Abu Dhabi Government, a fact that accounts for much of its vaunted safety.
Its credit rating is strengthened by the Abu Dhabi Investment Council's ownership of a controlling stake, and during the financial crisis the Abu Dhabi Government also injected Dh4 billion in capital.
A Dh70bn recapitalisation programme from the Ministry of Finance, which targeted the entire banking sector, provided NBAD with a further Dh5.6bn in capital, which it repaid earlier this year.
The Abu Dhabi Government's influence on the bank is clear from Mr Tomalin's office on the 25th floor of NBAD's headquarters on Khalifa Street, where from a window lined with model Etihad jets - a reminder of the bank's many aviation financing deals - one can see across to Reem and Saadiyat islands, where it funds the projects forming part of the emirate's Economic Vision 2030 plan. The bank has fought frequent battles with the Central Bank, lobbying heavily over regulations it disagrees with.
In the past two years, the regulator has delayed consumer protection regulations on retail banking, a move to "chip and pin" security systems on debit cards and a widely criticised cap on mortgage amounts.
Discussions with the banking sector over limits on exposure to government entities, intended to prevent a repeat of the cascade of bad debts from the Dubai World crisis, and liquidity regulations, aimed to help banks to weather periods of market storm, were also delayed.
NBAD did not oppose all of the moves, but was especially critical of the Central Bank's implementation of government lending limits, which would have forced it to reduce exposure to the Abu Dhabi Government (Mr Tomalin explains that the bank agreed with the policy in principle, but in practice it would have contradicted the liquidity regulations, which it supports).
Does NBAD get everything it asks for?
"If only that were true," he laughs. "There are lots of things we'd like which we haven't got. We will argue our corner."
And he says that NBAD will play a "full and active role" in the development of Global Marketplace Abu Dhabi on Al Maryah Island, the emirate's new financial free zone, where the bank is building an office tower.
As for what comes next, Mr Tomalin will remain as a non-executive director at NBAD but is still examining three or four options.
He will be succeeded at the end of this month by Alex Thursby, the head of international and institutional banking at ANZ Group, who was appointed as Mr Tomalin's replacement in April.
"He's responsible for driving the ship now," he says. "There can only be one captain."
Mr Tomalin is looking forward to doing things that he hasn't had time for as a banker.
"One of the difficulties with running a bank is that you're always running a bank," he says. "Even if you're on holiday, you're at the other end of a BlackBerry."
Time is opening up for him to pursue long-held ambitions, he says, such as driving across America.
"I'm very fond of the USA," he says. "You need about 30 days, even if you're going fast. Probably 45 days. I've started thinking about it. I haven't planned it all out yet."
And the fascination with remote islands continues.
Mr Tomalin speaks with animation about planned trips to Lanai in Hawaii, home to an island-wide Dole pineapple plantation.
Or even to the Galapagos Islands, where Charles Darwin conducted studies on the flora and fauna that would later feature in the The Origin of Species.
The evolution of the bank under Mr Tomalin's watch, indeed a survival of the fittest, has made Abu Dhabi itself a little less far-flung in the world of global finance.