x Abu Dhabi, UAESunday 23 July 2017

Unrest prompts extra bank vigilance

Barclays Bank increases its vigilance over funds and clients suspected to have ties to former political leaders in Libya, Tunisia and Egypt.

John Vitalo said Barclays Bank Mena was increasing its levels of scrutiny of people looking to open accounts, and incoming funds.
John Vitalo said Barclays Bank Mena was increasing its levels of scrutiny of people looking to open accounts, and incoming funds.

Global banking institutions have to be "extra vigilant" in dealing with potential clients and funds suspected to have links to toppled presidents in Egypt and Tunisia, as well as Libya's embattled leader.

John Vitalo, Barclays Bank's chief executive for the Middle East and North Africa, said the bank was increasing its levels of scrutiny of people looking to open accounts, and incoming funds.

His warning comes amid increased focus on so-called "politically exposed" clients after Switzerland last week froze 830 million Swiss francs (Dh3.49 billion) of assets linked to Libya's Muammar Qaddafi, Hosni Mubarak, the former Egyptian president, and Tunisia's deposed head, Zine el Abidine Ben Ali.

"Our standards have been very tight and have been strong all along," he said. "But you're more wary. Your antenna goes up a little more.

"There's sanctions on Libya and any bank in the world should be extra vigilant on funds that could possibly be coming from Libya or people associated with the regime in Libya."

Although he stressed the bank had robust policies and procedures concerning how it assesses its clients and their sources of wealth, it was asking more questions and doing more investigations of clients with potential political links.

Barclays Bank reported a decrease in profits for the Middle East from £97m (Dh583.1m) to £76m, according to its interim management statement released earlier this month.

"It's not shaping up to be a gangbusters kind of year, but it's shaping up to be an acceptable year," Mr Vitalo said. "The investment banking business in the very short term will experience a bit of a slowdown."

However, the decreasing volume of corporate restructurings was one cause for optimism, he added.

Barclays Capital had been one of the biggest lenders to Nakheel, and alongside Dubai Islamic Bank and National Bank of Abu Dhabi headed the co-ordinating committee for the developer's restructuring.

"There are other restructurings, smaller, less on the radar scale, not so public, that'll continue to play on for a while. But we're not aware of any other big ones out there," Mr Vitalo said.

The note of caution from Barclays on its Middle Eastern business was echoed by Royal Bank of Scotland, the British lender that was partially nationalised after the financial crisis.

The bank said in its interim management statement it had cut its exposure to countries that had experienced unrest during the quarter.

"Limit controls are being applied on a risk-differentiated basis and exposure to most countries in North Africa and the Middle East reduced during the first quarter of 2011," the bank said in its statement.

The bank said it had lending exposure of £302m to Bahrain, £160m to Oman and £101m to Egypt.

HSBC, Europe's largest lender by market capitalisation, is due to release its interim management statement for the first quarter tomorrow.

 

ghunter@thenational.ae