Euromoney Middle East awards for excellence, 2013

Euromoney, July 2013

 BEST FLOW HOUSE, MIDDLE EAST: Deutsche Bank

Deutsche Bank stands out for its dominance in important areas, its ability to read key movements quickly, and its launch of new rates products.

In terms of scale, it claims to be the only bank quoting all MENA credit curves, liquid and illiquid, across all maturities and ratings. That reach has led it to positions of leadership on the most important securities: it executed over a quarter of the trades for the $25 billion that flowed into the Dubai debt market in 2012 after the sovereign redeemed three of its bonds, it was the biggest market maker in Nakheel bonds, and completed over $3 billion of Dubai, Egyptian and Lebanese CDS trades. It won 20% of volumes in the Saudi Arabian equity swap market and handled trades as big as a SAR1.2 billion rate swap and a SAR4 billion forex trade.

When it came to reading the market, Deutsche claims to have been the first bank to call the rally in Dubai assets – and it took clients with it. It advised clients early to go long sovereign and corporate Dubai debt well ahead of the sovereign’s redemptions, which triggered a 250 basis point tightening in cash bonds and CDS. It also called the Dubai equity market rally. Deutsche also predicted Egypt’s devaluation “almost to the piastre,” the bank says.

And in product, it launched the first interest rate swaps in Kuwaiti dinars and Qatari riyals in 2012, allowing local users to hedge risk in their own currencies. In FX, it also became the first bank to offer live streaming on all GCC markets on both spot and forward.

Best cash management house, Middle East: HSBC

There are several strong competitors for this award, particularly Citi, but HSBC edges it for its exceptional geographical range in the region and its continuing efforts to improve from what is already a position of leadership.

HSBC covers 14 countries in the Middle East through 295 offices, and although the bank has lost ground in some respects through cutbacks in the region – such as Islamic finance – cash management has lost none of its power. Indeed, it’s a source of investment: the last 12 months have seen the launch of its global billing system platform in Bahrain, Kuwait Oman, Jordan and Qatar, RMB account services in five more nations in the region following success in the UAE and Saudi, and improvements in account and receivable reconciliation, lodge cards and PayCards, which are issued to the low-income non-banked community in Saudi Arabia.

HSBC’s case studies and testimonials are numerous and often confidential, but an example is a solution provided to the Government of Sharjah, making it one of the first electronic governments of the UAE, moving manual payments of salaries and vendor payments to electronic channels; with all information in the ERP system being in Arabic, a translation system was required in order to enable straight through processing.

Best risk advisory, Middle East: HSBC

HSBC has the largest trading and sales team in the Middle East, giving it considerable bedrock for the risk management needs of its 10,000 corporate and institutional clients in the region. Wherever these products are permitted, HSBC offers and short and long-term forwards, both deliverable and non-deliverable; currency and interest rate swaps; and structured solutions, backed by a dedicated structuring desk. It is noted for its publications on MENA currencies, was the first international bank to be given the new Research License in the UAE and is also a regional leader in MENA debt, which when combined with hedging solutions for its many DCM deals, further cements its place in risk advisory. Recent improvements in energy risk management have brought a wide range of energy derivatives to local clients, including thermal coal, gas and European electricity contracts.

Examples over the last year have included the first uridashi trade in the region, including a dollar-MXN cross-currency swap; RMB currency hedges with Emirates Airlines; advising Dubai Holdings on its exposure to a euro-dollar asset swap; executing a $420 million equity derivative financing transaction with a regional sovereign wealth fund, to draw liquidity from its local equity portfolio and diversify asset exposures; and being sole hedge co-ordinating bank for a cross currency swap against a samurai for a regional corporate. HSBC was also a key advisor on Egypt’s $2.3 billion Egyptian Refining Company project financing, and handled a major cross-currency swap for the Sharjah government.

EGYPT

Best bank: CIB

To say the least, it hasn’t been the easiest year in Egypt, and many of the big foreign-owned names have sold their presence to Gulf suitors. But one local bank has succeeded, remarkably, in delivering a record year on numerous metrics: CIB.

“CIB has the best corporate franchise in the country,” says one fund manager who holds the stock. “I first invested in this bank back in the mid-1990s and they have consistently added value for shareholders over the long term.” CIB’s FY2012 consolidated net income, at EGP2.227 billion, was up 38% year on year, with standalone revenues up 36%. ROAE was 22.68% with deposits, net interest margins and total assets all up. Yet NPLs, in a grim environment, stood at just 3.63%, among the lowest in the sector.

CIB has achieved this through a combination of conservatism and smarts, rebalancing the loan book, stepping into areas vacated by retreating foreigners, and focusing on consumer banking and bancassuarance alongside traditional institutional leadership. Notably, its investment banking arm, CI Capital, is also improving, and was lead manager on the first Egyptian ECM transaction since the financial crisis, for Housing and Development Bank, as well as advising Arafa Holding on its sale of a stake in local business Concrete.

Best investment bank: EFG Hermes

Whatever challenges Egypt’s banking system has suffered in recent years, it still boasts one of the region’s finest homegrown investment banks in EFG Hermes. It is among the Arab world’s leaders in M&A advisory and equity fundraising.

Within Egypt, EFG was financial advisor to Al Mokhtabar on its merger with Al Borg Laboratories, owned by Abraaj Capital, creating a new medical diagnostics business, Integrated Diagnostics Holdings. EFG also stepped in to raise US$462 million of equity for the Egyptian Refining Company’s US$2.6 billion project financing; the raising, through private placement to Qatar Petroleum and InfraMed, played a vital role in filling an equity gap for this landmark project which should reduce Egypt’s diesel import needs by half. Other significant deals included advising Japan Tobacco on its acquisition of Al Nakhla Tobacco, and handling an equity raising for Wadi Degla Investments.

MOROCCO

Attijariwafa Bank

Morocco’s biggest home-grown bank is also its best. Like most in slow-growth Morocco, it didn’t have an extraordinary year in 2012, but still grew: deposits were up 5%, loans 7.3%, and its Dh4.5 billion profit, up 1% year on year, would have been higher if not for mandatory contributions to a solidarity fund to fight poverty, and hedges for political instability in more troubled parts of the region.

Attijariwafa is impeccably connected – its largest shareholder is a conglomerate led by the royal family, and its client base includes the strongest corporate and retail names in the country – but also leads by example. “One of their competitive advantages is their portfolio of specialized subsidiaries in the likes of consumer finance, mortgages and leasing,” says one fund manager who holds the stock despite it requiring an off-index bet to do so. “Moroccan economic growth is not the most exciting in Africa so ATW is focusing on expansion into Africa. It is also the most efficient and, partly as a result, the most profitable bank in Morocco, with a return on equity around 50% higher than the rest of the sector.”