National Bank of Abu Dhabi plans to expand in a corridor from Africa to Asia in an attempt to gain business from trade flows between the continents.
NBAD to tap Asia-Africa corridor
National Bank of Abu Dhabi plans to expand in a corridor from Africa to Asia in an attempt to gain business from trade flows between the continents, says the bank’s chief executive, Alex Thursby.
The difference in this is about a flow between continents, Mr Thursby explained. “There are a lot of banks who have attacked specific continents. ANZ has attacked Asia. Emirates NBD is attacking the immediate region. But no one with the exception possibly of Standard Chartered have attacked the flow of business between the continents.”
NBAD hopes to hone in on serving clients that have cross-border financing needs in that corridor, a market that is estimated to be as large as US$137 billion. As well as the bank’s high credit ratings, Abu Dhabi’s position straddling trade routes between the East and the West give NBAD a shot at tapping those trade flows.
While many global banks are still licking their wounds from the financial crisis of 2008-09 and are cutting back in some emerging markets, NBAD wants to expand in a part of the world that it reckons has high potential for growth.
NBAD wants to provide services to companies in the Middle East, Asia and Africa, and attract companies in diverse sectors including finance, energy and property.
Commodity-hungry emerging markets in Asia and Africa that are industrialising and have huge middle-class growth potential will make those continents areas of high economic growth in the future, Mr Thursby said.
As part of the bank’s plan, banking hubs are to be created in eight cities including Mumbai, Singapore and Lagos, said Mr Thursby, a veteran of the Asia-Pacific banking industry. He was appointed in July with the task of steering NBAD’s expansion.
“In our view, the stimulus of Asia and long-term growth prospects remain and its need of hydrocarbons, agricultural output, investment and its output of liquidity, huge industrialisations, a big middle class emerging means that these three pieces are very self-aligned and independent,” Mr Thursby said. “I think many banks are attacking components of it but not many that are actually joining all of this up.”
Trade and investment are already flowing fast between Africa and the Far East. China is Africa’s biggest trading partner, with $200bn of goods moved between the two sides last year.
Under NBAD’s previous chief executive, Michael Tomalin, the lender had already dipped its toes into Asian markets. The bank opened a representative office in Shanghai in June last year to complement its Hong Kong offices and established conventional banking operations in Malaysia in July of that year.
While NBAD is growing under its own banner, other banks have targeted acquisitions as a growth strategy. Two of the GCC’s other largest banks, Emirates NBD and Qatar National Bank, have used takeovers to propel their expansion outside domestic markets.