The award reflects Ahli United Bank’s distinct position as the top employer in Kuwait’s banking sector.

Ahli United Bank won this award for the outstanding accomplishments it made in the field of human resources, particularly its HR strategy, which focuses on luring in the most qualified professionals, developing their skills, and engaging with them constantly.

HR Department took various initiatives to ensure smooth operation even while working remotely and took on tasks related to hiring, planning, training, development, and performance management.

Additionally, the HR Department was successful in converting the traditional yearly performance review process into ongoing performance management year-round, which improved communication between Senior Management and staff.

Ahli United Bank was also able to take the lead in change management by engaging in the bank’s transformation project, which put an emphasis on improving workers’ productivity in terms of their ability to use technology and perform data analysis.

By enforcing the internal communication plan and promoting active participation on the in-house IConnect platform, Ahli United Bank also ensures to keep its staff informed about transformational developments.

It was decided to bestow AUB this prestigious award after the International Finance Magazine carried out an initial assessment of the nominees. Following this, it referred the particulars to an external assessment agency to determine the nominees’ final level and to select the award winner.

After that, the winner is announced through a point system that includes the results of the initial assessment, and external agents with input from various experts in the banking industry.

Speaking about global recognition, HR General Manager at Ahli United Bank, Mr. Naqeeb Amin said, “This award emphasizes the success of the Bank’s efforts in developing and maintaining an attractive work environment for the best banking talents, given that the Bank’s employees are the cornerstone of its development and success in achieving its goals, through its direct reliance on the application of a forward-looking policy in managing and developing employees and enhancing their skills in line with the highest international standards.”

“We are introducing a unique and successful experience in Human Resources Department. Hence, our ability to retain a large number of the bank’s employees for more than 30 years, and who have managed to accomplish their career ambitions through an interactive environment between employees and management, that enables them to exchange experiences with each other is apparent evidence of our success in dealing with employees being the bank’s most valuable wealth,” Mr. Naqeeb Amin added.

Mr. Naqeeb Amin concluded by praising all of Ahli United Bank’s HR staff members for their earnest efforts and outstanding performance, which resulted in bagging this prestigious award.

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The development comes at a time when the World Bank seeks to provide a financial stimulus for vaccines and boost investment in low-carbon energy projects.

He was responsible to oversee the bank’s operations across segments such as energy, transport, digital infrastructure and others. He also served as World Bank Country Director for economies such as Brazil, Kenya, Somalia and Eritrea. Mr Makhtar Diop has also served as Senegal’s finance and economy minister.

Furthermore, the World Trade Organisation has appointed Ngozi Okonjo-Iweala as its new director general. Mr Ngozi Okonjo-Iweala is a former Nigeria’s finance minister and World Bank’s managing director.

IFC rolled out a $4 billion financing platform in June last year to bolster the production and supply of vaccines and other healthcare-related operations in developing economies.

World Bank Group President David Malpass, told the media, “Makhtar Diop has deep development and finance experience and a career of energetic leadership and service to developing countries in both public and private sectors. He is now expected to deliver on the IFC capital package policy commitments including increased climate and gender investments and support for fragile countries facing fragility, conflict and violence.”

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Intelligent automation which combines robotic process automation with artificial intelligence functionality and additional capabilities such as natural language processing, is enabling banks and insurance firms to automate workplace processes in a secure, effective and efficient manner. We recently undertook a research to explore this shift in automation strategy and examine the key drivers for banks and insurance companies to scale-up their automation programs.

Pace and scale of automation is set to multiply 

The pace and scale of automation within financial services is expected to increase significantly over the next five years. While just 7 percent of organizations currently claim to have automated more than 20 percent of all of their operational processes to date, the number is predicted to rise to 38 percent within five years and as high as 50 percent within the financial services industry. Interestingly, the drivers for the next wave of automation adoption are very different from the ambitions that organizations had when they first started out. During their early initiatives in process automation, financial services were very much focused on streamlining repetitive and time-consuming processes to drive efficiencies and reduce cost. 

However, as banks and insurance companies now look ahead to the next wave of adoption with the possibilities of more sophisticated intelligent automation platforms. Enhanced productivity is now seen as the main objective for future automation programmes by more than half of financial services strategy leaders, while only 17 percent cite cost as the primary goal.

This is reshaping the way leaders seek to identify the areas of greatest potential benefit for intelligent automation. Only a quarter are focused on addressing the most under-performing processes, while the vast majority are more keen to assess the potential benefit of intelligent automation. This represents a marked shift in thinking from where the industry was five years ago, or even two years ago.

The need for governance 

Automation leaders are facing a new set of challenges as they look to scale-up their automation programmes. On the operational side, these include difficulties accessing the technical skills they need to drive automation across businesses and a lack of alignment between the IT department and other business functions. These issues were certainly around at the outset of automation programs but they have become more pronounced.

At a technical level, however, new barriers have emerged. Within financial services, 33 percent of automation leaders point to bot lifecycle management as the main technology challenge they are experiencing in scaling-up their automation and another third cited low-bot utilisation. A quarter of them state that software licencing is the biggest issue. At a strategic level, the big challenge for automation leaders is how to roll out digital labor at scale across multiple business units, while maintaining the visibility, control and consistency to deliver optimisation. It is in fact a question of governance.

Many financial services organisations have previously looked to address the governance challenge with a centralised approach. Specialist automation skills have resided in this function and many banks and insurance companies have built up sizable teams. Smaller, discreet automation projects are relatively easy to manage and control—usually with a central team of experts (both internal and external) overseeing and delivering the technology platform, skills and staff training required to introduce digital labor.

New opportunities in financial services

Governance frameworks and policies need to evolve to support scaling-up.

Also, leaders need to identify and execute on governance strategies that are agile and support rapid adoption—while maintaining a consistent, efficient and effective approach to business automation.. This is a very exciting time for banks and insurance companies that are looking to scale-up their automation programmes and transform their operational models. The opportunities to pursue new business initiatives, develop new products and services and drive growth are almost limitless.

Meanwhile, financial services need to learn the lessons of their previous initiatives and put in place the right foundations to ensure success. This means developing robust governance structures and adoption models to ensure automation is pursued in a controlled and sustainable way. Empowering people across  organisations with skills and tools required to deploy digital labor in an agile manner is important.

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Roberto Sallouti, CEO of BTG Pactual, said in a statement, “Our focus is on exceeding expectations and offering the best experience to our customers, and Amos Genish has unique expertise as a technology and retail entrepreneur. We are reaping the benefits of our significant investment in technology throughout the Bank over the past few years, and we will now extend our product and services offering to all retail segments.”

The digital platform was created in 2016 and is available for retail clients. In practice, the platform will allow clients to open accounts for free and providing them access to portfolio management solutions, media reports said.

BTG Pactual is is the largest investment bank in the region. It operates across investment banking, corporate lending, sales and trading, wealth management and asset management markets. The bank was established in 1983 with deep focus on customer excellence. 

Sallouti added “”We are extremely proud of what we are building and of how we conducted our businesses during this unprecedented crisis, and we are prepared to capture new opportunities, with a solid capital and liquidity position. The success of this offer reinforces our commitment to generating the best return for our shareholders and society.”

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Africa’s banking industry has a ‘refreshing contrast’
In 2018, a report published by McKinsey titled Roaring to life: Growth and innovation in African retail banking observed that the African banking industry provides a ‘refreshing contrast’, pointing to the fact that its markets are fast developing, yet there is great potential for future growth. One reason for that is because the African population is relatively young compared to developed economies with a large percentage of unbanked. The continent is still pushing poverty out in an effort to build financial inclusion—and in turn has created huge opportunities for foreign and domestic banks to work together on disruptive strategies. The report highlighted that 300 million Africans were banked in 2017 and the numbers could significantly rise to 450 million in 5 years since then.

“This makes it attractive in terms of building a young, upcoming customer base which is keen to embrace technology,” PwC Partner Francois Prinsloo told International Finance. “Some of the South African banks have been leading the technology journey in terms of customer experience and innovation and have received international awards on that front. For this reason and others, foreign capital issuances from the major South African banks have generally been oversubscribed, reflecting international investor confidence in South African banks and the South African banking system.”

Prinsloo makes a strong case that large South African banks have been well-regarded internationally on many fronts, including trusted brands and diversified franchises, returns on equity levels higher than their G-SIB counterparts, prudent approach to capital and liquidity management and experienced stable management teams who have embraced technological change for some time now. And this is another good reason for Japanese banks to seek collaboration with them for developmental initiatives.

South Africa, Nigeria and Kenya are recognised as mature markets with higher branch penetration. In fact, these competitive retail banking markets with high levels of mobile banking and long-time trade connections could be motivational factors for Japan to grow its stake in Africa.

JBIC supports trade between Africa and Japan
Last May, the Japan Bank for International Cooperation (JBIC) and a group of private financial institutions extended a $350 million export credit line with a tenor of up to 20 years to the Trade and Development Bank (TDB) operating in eastern and southern Africa. The proceeds from the credit will be used by Trade and Development Bank to financially help customers in Sub-Saharan Africa to import machineries and equipments from Japanese companies and their overseas affiliates. One important aspect of this move is that it will financially support Africa-bound exports from Japanese companies and build new opportunities for banks and trade companies. Previously, JBIC had extended a $12.5 million three-year export credit line in 2007 followed by a $80 million seven-year credit line in 2016.

Japanese banks become a prominent player
Japanese banks have become a prominent player on the continent trying new ways of doing business, making investments, getting work done—which in part is seen positively for the continent “as the interest in Africa grows, many investors consider the African continent to be a potential investment destination,” Prinsloo made a point.

The year 2016 was promising for Africa because it saw three largest Japanese banks seek business expansion into the continent. But the idea behind the expansion for Sumitomo Mitsui, Mizuho Bank and Mitsubishi UFJ was to help Japanese companies operating in Africa to tap the continental market and further develop the corporate sector.
First, Sumitomo Mitsui had established an agreement with Trade and Development Bank to offer loans up to $80 million to the African bank, along with JBIC’s credit line extension. Sumitomo Mitsui had also signed an agreement with the African Development Bank and Banco de Desenvolvimento de Angola for future developments.

Meanwhile, Mizuho Bank had agreed to form a business collaboration with Africa’s six financial institutions including the Zambia Development Agency and the Development Bank of Southern Africa to provide in-depth knowledge and enhance the banking sector on a large scale. Around the same time, Mitsubishi UFJ and the Kenya Investment Authority had collaborated under the terms that the bank would receive insights regarding new investment projects in Kenya which will be shared with Japanese companies operating in the country.

African banks become a beneficiary of such developments
As Africa becomes one of the prime investment destinations of the world, it not only lures Japanese companies for resources but also its fast-developing consumer markets. African banks have also become a beneficiary of such developments as it throws a positive light on their global reputation and potential in the banking industry. In short, the transactions seek to promote trade and investments in Africa.

The seventh Tokyo International Conference on African Development which was held last year led to the possibility of Sumitomo Mitsui signing five Memorandums of Understanding with African banks. It is reported that one of its partners will include Kenya Commercial Bank.

The Tokyo International Conference on African Development is quite beneficial to both Africa and Japan as it allows both of them to foster business collaborations on many levels. Last year it was reported that Sumitomo Mitsui offered financial services in 42 African countries and the number is expected to reach to 48 countries, or possibly even the whole continent on the back of these agreements.

According to the Bank of Japan, the data showed that Japanese banks had extended $15.5 billion in credit to African countries last March, twice the amount from a decade ago. Even Mitsubishi UFJ has played an important role as the sole arranger, bookrunner and facility agent on $280 million and JPY 2.5 billion Samurai Loan for Afreximbank. This in fact marks the largest commitment from a Japanese bank for an African issuer—and is considered ‘historic’.

During the period between 2005 and 2014, Japan had announced $3 billion for the bank to support co-financing of projects in agriculture, water, health and infrastructure. Some of those examples include the Bujagali hydropower plant in Uganda, the Sahanivotry hydropower plant in Madagascar, the Lekki toll road in Nigeria and the Takoradi II gas-fired plant in Ghana. The relationship between Japan and Africa is long-standing with Mitsubishi UFJ’s involvement on the continent dating back to 1926. And that’s not all. Even Japan and African Development Bank are known for their profound relationship over the years.

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The chief executive officer of the Land Bank of Philippines, Cecilia C. Borromeo said that it is co-ordinating with Bangko Sentral Pilipinas (the central bank of Philippines) to create rules and regulations for the Overseas Filipino bank to operate as a digital bank in the Philippines as there are no existing rules yet.

The CEO further stated that the Overseas Filipino Bank will have no branches, which is the first time in Philippines that a bank will operate without branches.

Carlos G.Dominguez, the financial secretary of Land Bank announced that after digitalisation, Overseas Filipino bank would not only be lending money but will offer other financial services such as insurance, loans, and helping the customers in investing their money. The bank will also act as payments platform.

Overseas Filipino Bank has more than 10 million customers working and living overseas. Digitalisation of the bank can help easily reach out to a larger number of customers than going through the traditional way of setting up separate branches.

As Overseas Filipino Bank is a Land Bank of Philippines subsidiary, the digital bank will be treated as a branch of Land bank. This will help reduce huge investment required for the process of converting the bank into a digital bank as the digital bank can make use of Land Bank’s digital system. The digital bank can also use Land Bank’s licence to offer financial services to the customers.

Overseas Filipino Bank was supposed to begin its services in January 2019, but the plans did not materialise due to concerns regarding the mandate of the bank.

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“Despite the tough operating environment, we have been able to maintain revenue momentum in our key target areas, with total revenue growth improving to 6 percent,” Jason Quibb, Absa Group’s financial director told the local media.

The company has stated that its retail unit in South Africa gained market share which led to an increase in its earnings. The South African retail business which was lagging behind earlier, grew its earnings by 4 percent in the first half of 2019, in spite of a 20 percent spike in impairments and higher costs.

The group confirmed that its earnings increased from R8.04 billion in the first half of 2018 to R8.3 billion in 2019 over the same time period.

The bank recently finalised its CEO after the resignation of ex- CEO Maria Ramos in February.

Absa, which was a market leader earlier, faced financial instability following its split from former parent Barclays in 2017.

Absa Group reported that its retail deposits grew 12 percent while the retail market increased 9 percent. There was also a 20 percent increase reported in new personal loans.

A higher non-interest income and growth in everyday banking and car finance also influenced its performance.

In contrast, its earnings from corporate and investment banking fell by 10 percent.

Absa Regional Operations (ARO), which holds Absa’s subsidiaries outside South Africa, showed an 8 percent increase in its earnings during the first half of 2019. Increase in ARO’s earnings contributed to a fifth of Absa Group’s total earnings.

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Jim Haney, Executive Vice President, Head of Commercial Banking, said:. “James and Chris are highly regarded banking veterans who share Opus’ approach to relationship-based commercial banking and have a tremendous depth of experience providing tailored solutions to entrepreneurs, business owners, and middle market companies.

“Throughout his banking career, Jim has experienced considerable success providing growth capital and treasury management solutions to privately held companies and middle market corporations in San Diego. We look forward to San Diego-based companies benefiting from Jim’s local market knowledge as we grow the division’s client base across Southern California and the other major metropolitan markets on the West Coast.

“Chris brings to Opus’ Business Development team his 20 years of experience and success in San Diego County providing sophisticated and tailored client centric financial solutions to small to mid-sized businesses, middle market companies, and real estate investors. His addition better positions Opus in San Diego County to deliver the full force of the firm and accelerate Opus’ organic growth by further leveraging existing client relationships, our strategic business partners, our market presence, and brand recognition.”

Stephen H. Gordon, Chief Executive Officer and President of Opus Bank, commented, “Opus holds a strong commitment to San Diego County, having opened our first banking office in the county in 2012. Today, we serve our San Diego-based clients through a team of 17 deeply rooted bankers in four banking offices, which collectively hold over $200 million of deposits and approximately $1.0 billion of loans. We appreciate how critical it is to have strong local banking talent from San Diego, serving our clients in San Diego. Jim and Chris both have strong ties to the region, each having two decades of banking and finance experience serving clients in San Diego and as alumni of San Diego State University.”

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Dirk Schoenmaker & Charles Goodhart

October 25, 2016: The European banking system is downsizing. As a consequence, the big US investment banks are on the rise in Europe. This article argues that US investment banks are about to surpass their European counterparts in the European investment banking market. We discuss why leaving global investment banking to the big five American banks might be problematic and offer recommendations for a policy response.

1.        Introduction

Europe’s banks are in retreat from playing a global investment banking role. It is a consequence of the regulatory impositions of recent years, notably of the ring-fencing requirements of the Vickers Report (2011) and the ban on proprietary trading by Liikanen (2012). The main concern has been that a medium-sized European country, such as the United Kingdom or Switzerland, or even a larger country like Germany, would find a global investment bank to be too large and too dangerous to support, should it get into trouble. So, one of the intentions of the new set of regulations was to rein back the scale of European investment banking to a more supportable level.

The European Union, of course, has a much larger scale than its individual member countries. If the key issue is the relative scale of the global (investment) bank and state that might have to support it, could a Europe-based global investment bank be possible? We doubt it, primarily because the EU is not a state. It does not have sufficient fiscal competence. Even with the European banking union and European Stability Mechanism, the limits to the mutualisation of losses mean that the bulk of the losses would still fall on the home country. Moreover, there would be intense rivalry over which country should be its home country, and concerns about state aid and the establishment of a monopolistic institution. While the further unification of the euro area might, in due course, allow a Europe-based global investment bank to emerge endogenously, we do not expect it over the next half-decade or so.

So the withdrawal of European banks from a global investment banking role is likely to continue. That will leave the five US ‘bulge-bracket’ banks, (Goldman Sachs, Morgan Stanley, JP Morgan, Citigroup and Bank of America Merrill Lynch) as the sole global investment banks left standing. That leaves the European and Asian banks in the second tier, as strong regional players. Examples are Deutsche Bank, Barclays and Rothschild in Europe and CITIC in the Asia-Pacific region. HSBC is in between, with both European and Asia-Pacific roots.

2.       The rise of US and decline of European investment banks

While the US investment banks are the global leaders, what is their share in the European investment banking market? In a new paper (Goodhart and Schoenmaker, 2016), we use the Thomson Reuters investment bank league tables to calculate the investment banking proceeds of the top 20 players (see, for example, Thomson Reuters, 2016). Figure 1 shows that the market share of EU and Swiss investment banks has declined since 2010/11, while the share of US investment banks (the big five and Lazards) increased from 35 percent in 2011 to 45 percent in 2015. If the trend were to continue, US investment banks would take the prime spot from their EU counterparts soon, possibly already in 2016.

Figure 1: Investment banks by origin, European market shares (%)

Source: Goodhart and Schoenmaker (2016)

3.       Concerns for Europe

Why should it matter if in all the European countries, the local banks’ investment banking roles retrench to a more limited local role? There are three arguments why leaving global investment banking to the big five American banks might be problematic. The first is that this could leave Europe at greater risk from possibly ill-advised American political or regulatory intervention. A case in point is in the last crisis, when US banks came under pressure to reduce their foreign (including European) assets. While this danger exists, it was already present before the withdrawal of European banks from global investment banking. Since the US dollar and US financial markets play the central role in the financial system, the US is in a position to enforce its demands on acceptable counterparty transactions and to dominate, for good or ill, the international monetary policy scene.

The second argument is that this will leave global investment banking much more concentrated. Is this not potentially dangerous? Perhaps, but the five American investment banks still compete quite ferociously, so margins are not rising all that much.

Finally, the third argument is that current developments are inducing European banks more and more to concentrate on their national roles and clients in their investment banking operations, rather than taking a wider European stance. Deutsche Bank and Barclays are the only Europeans left in the top seven for the European market. But they are likely to lose their positions, because Deutsche Bank is currently undergoing a major reorganisation and Barclays is in the process of executing the Vickers split. In the investment banking field, the only pan-European banks will all soon be American.

There are concerns about US dominance in European investment banking. These are related to information advantages and soft relationships. The question arises whether US investment banks, as outsiders, are sufficiently knowledgeable about European corporates. Moreover, what is the loyalty of these US banks to European corporates in times of distress?

4.       Policy response

The European banking system is downsizing, partly because of on-going problems, partly because Europe is overbanked (Langfield and Pagano, 2016). That should run its course. The consequence is that the big US investment banks will be the sole leaders in the global investment banking market, as the Europeans, including the Swiss, are in retreat. Thus, the big five Americans are getting into pole position in the European investment banking market.

What should be the policy response? First, we look at the political side. With the decline of European banking (both in general and specifically investment banking), Europe’s hand in the EU-US Regulatory Dialogue is diminishing. Nevertheless, the European Commission is advised to strengthen its position in the EU-US bilateral negotiations and keep on viewing its banking industry as a strategic sector. The emerging role of the European Central Bank (ECB), on both the monetary and supervisory sides, can be used in these negotiations. The European Commission and the ECB should therefore jointly develop a strategic agenda with European priorities for their dealings with the US authorities. As in the US, this strategic agenda should be discussed with, and supported by, the industry.

Second, we turn to the supervisory side. While Europe may lose some political clout, the supervisory implications are not a problem for Europe. With the move to capital markets union, the European supervisory architecture can handle the gatekeepers, which are becoming more US-dominated. The European Securities and Markets Authority (ESMA) has powers under the Regulation on Credit Rating Agencies to licence and supervise the European operations of the primarily US-based credit rating agencies. Similarly, the relevant directives (Capital Requirements Directive and Markets in Financial Instruments Directive) give the relevant supervisors in Europe (in this case the Prudential Regulatory Authority and the Financial Conduct Authority in the UK) powers over the London-based European operations of the US investment banks. After Brexit, the US investment banks might move (part of) their business to Frankfurt and Paris. In that case, the ECB – the new supervisor in the banking union – would become the supervisor of these continental European operations.

Third, the large corporates could themselves take precautions. For the bigger financing operations, a corporate typically hires a banking syndicate, which is a group of investment banks that jointly underwrite and distribute a new security offering, or jointly lend money to the corporate. European corporates would be well advised to include at least one (large) European investment bank in this syndicate, also in good times when they do not need them. That could help them in bad times, when US banks might be reluctant for whatever reason (including more detached decision-making). The involvement of a (local) European investment bank in the syndicate is not only useful for loyalty but also information reasons. Because of their local roots, the European banks have an information advantage over their US peers, which keep offices in New York and London (and after Brexit, Frankfurt or Paris). The practice of giving a European investment bank at least one place in further US-dominated banking syndicates could help to avoid complete dependence on the whims of the big US investment banks.

Dirk Schoenmaker is Professor of Banking and Finance at Rotterdam School of Management, Erasmus University and Charles Goodhart is Emeritus Professor of Banking and Finance at London School of Economics

References

Goodhart, C. and D. Schoenmaker (2016), ‘The United States dominates global investment banking: Does it matter for Europe?’, Policy Contribution 2016/06, Bruegel.

Langfield, S. and M. Pagano (2016) ‘Bank bias in Europe: effects on systemic risk and growth’, Economic Policy 31(85): 51-106.

Liikanen Report (2012) High-level Expert Group on Reforming the Structure of the EU Banking Sector, Final Report, Brussels.

Thomson Reuters (2016) ‘Global Investment Banking Review, Full Year 2015’, Thomson Reuters Deals Business Intelligence, New York.

Vickers Report (2011) Final Report: Recommendations, Independent Commission on Banking, London.

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