NBAD eyes up debt deals with export credit agencies as part of international expansion plan
National Bank of Abu Dhabi (NBAD), the country’s biggest lender by assets, is keen to arrange debt for export credit agencies (ECAs) as part of plans to expand its loans portfolio.
“I see an increasing role for export credit agency support. We are setting up a team that will soon be able to arrange ECA debt,” said Mark Yassin, NBAD’s senior managing director and head of global banking.
“The likes of Hermès in Germany or Coface in France, ECAs are there to support exports of both equipment and contracts. They are therefore more likely to provide lending for projects in other countries and are, by nature, long-term financing. We will be actively involved in developing ECA financing in the region.”
NBAD took part in Emirates airline’s US$913 million Islamic bond, which was backed by the UK Export Finance (Ukef) agency.
The transaction was co-structured by NBAD and was the world’s first sukuk financing supported by Ukef and the largest capital markets debt in the aviation space with an export credit agency guarantee.
In the first quarter of this year, the bank managed about $3.9 billion of international sukuk issuance and still has appetite for more, said Mr Yassin.
The lender is forecasting $40bn worth of GCC bond issuance this year, versus $33bn last year.
Besides bond issuances, the bank is also concentrating on expanding its business outside the UAE.
UAE lenders are looking to generate greater revenue from international operations because of the competitive domestic market, where 51 lenders exist.
In Asia the bank is considering the possibility of expanding into Singapore.
“I can see Singapore becoming a potential hub for the bank,” said Mr Yassin. “But this is still at a very preliminary stage. We have not yet decided whether we want a representative office or a full-fledged bank, but if we decide to go it would be the latter in my opinion.”
The bank, which currently has a presence in 18 countries besides the UAE, is creating eight hubs in Abu Dhabi, Mumbai, Lagos, Singapore, Hong Kong, London, Paris and Washington. It plans to open a representative office in India in July.
“We are expanding our banking services in Asia, with special emphasis on flow business including global transaction banking, foreign exchange and trade,” said Mr Yassin.
“Trade financing in particular is becoming a big area of revenue. We now want to help our clients finance their intra-Asia trade flows – between Singapore and Hong Kong – for instance, or Malaysia and China [etc].”
The lender’s global transaction banking increased last year by more than 60 per cent compared with 2013, he added.
Asia is a big focus for UAE lenders, who are seeking to tap into increasing trade between the Middle East and North Africa region and Asia.
The Abu Dhabi-based lender FGB last year set up a new representative office in Seoul, which is in addition to its branch in Singapore and a representative office in Hong Kong. Meanwhile, Dubai Islamic Bank (DIB), the country’s oldest Sharia-compliant lender, plans to increase its holding in Indonesia’s Bank Panin Syariah to 40 per cent from 25 per cent, pending regulatory approval.
NBAD has also set its eyes on expanding its business in Africa, which is fast becoming a magnet for UAE lenders.
“We have started to explore and develop our interest in Africa,” said Mr Yassin. “Africa is a yield enhancer, a place where you can find higher returns because of its perceived risk. The margins are healthier and the pricing in general is more lucrative.”
NBAD’s expansion in Africa will focus on two sectors – energy and resources, and financial institutions.
Mashreq is also considering setting up representative offices in Kenya and possibly Nigeria, while DIB plans to open a branch in Kenya.
