Published: June 01, 2010
J.P. Morgan has a long-standing history of serving our clients in the MENA region dating back to the 1950s. Our philosophy in serving our clients is quite simple: be where our clients need us to be. MENA is a hugely diverse region, both geographically and economically. Some countries within the region are large economies in their own right, such as Saudi Arabia, with a population of over 29 million, and Egypt with over 80 million. Many of our clients from North America, Europe or Asia have a presence in MENA, such as companies engaged in the oil and gas sector, infrastructure development, and providing the housing and social care required for the huge influx of immigrant labour. For example, in the United Arab Emirates, expatriates represent over 85% of the workforce.
To leverage the opportunities in such a dynamic region, companies need their banks to provide a broad base of expertise and flexible, high quality solutions. Increasingly therefore, our clients who are already active there, or are expanding their business in the region, are looking to J.P. Morgan for support.
Our focus is on serving the regional needs of our international customer base. These can either be heritage European, American or Asian companies operating in the region, or a local institution doing regional and international business. To meet that goal, we are continuing our commitment of increasing our capability and presence to help serve their transaction banking needs. In Saudi Arabia for example, we are building on our long-standing involvement in the region and our relationship with the Saudi Arabian Monetary Agency.
We recognised that with a large population, ongoing economic reform and diversification, as well as increased foreign investment, there was a significant requirement for high-quality banking services. J.P. Morgan is currently the only US bank offering services in the country and by taking advantage of our dual licences in Saudi Arabia we are able to deliver a platform of end-to-end corporate banking capabilities for our clients. In turn, this allows us to respond to our clients’ strategic and day-to-day needs while delivering our global reach and product expertise to their door. Throughout 2010 and 2011, J.P. Morgan will be continually investing in our capabilities and broadening our product range available in Saudi Arabia. [[[PAGE]]]
In Iraq, we have had a successful association with Trade Bank of Iraq (TBI) since 2003 and recently finalised a new bilateral agreement with TBI to continue to facilitate Iraqi trade business with our corporate clients globally. Our clients have demonstrated an acute interest in participating in trade with Iraq and this facility means that J.P. Morgan continues to be the leading international bank doing business with Iraq.
GDP dropped by nearly 4% in 2009 in the United Arab Emirates (UAE) as a result of the global financial crisis; Dubai was hit hardest, as it had the greatest exposure to real estate prices. In February 2009, Dubai launched a $20bn bond programme to meet its debt obligations, most of which was bought by the UAE Central Bank and Abu Dhabi-based banks, followed by an additional $10bn loan from the Emirate of Abu Dhabi in December 2009. Dubai was once again in the headlines in May 2010 as Dubai World, the state-owned investment vehicle, agreed with investors to restructure debt worth $23.5bn. Although there are clearly ongoing challenges in Dubai, the government is seeking to reduce dependence on the oil sector and its large expatriate workforce to create a more sustainable long-term economic future. However, the wider impact has been less significant and is largely confined to a limited number of industry sectors. Credit is inevitably in short supply, but local banks remain bullish, supported by international banks which are providing liquidity.
Despite the crisis affecting investor confidence to a degree, there are a number of positive trends that are encouraging investment both in Dubai, across the UAE and beyond. We are seeing a relaxation in the regulatory environment and business reforms, making it easier to do business in the Middle East. This is further encouraged by competition between countries and emirates which is helping to reduce bureaucracy and facilitate exports. These developments are encouraging international companies to locate operations in the region, which will in turn contribute to economic stability and growth.
To leverage the opportunities in such a dynamic region, companies need their banks to provide a broad base of expertise and flexible, high quality solutions.
Absolutely. In fact, North Africa is just as an important region for J.P. Morgan as the Middle East, but in different ways. Countries such as Algeria and Egypt, for example, have significant potential but are often overlooked by the international banks. Although they are smaller in economic terms today, these countries are rich in resources with large populations, and multinational corporations are focusing increasingly here, both as sourcing and export markets. For example, Chinese companies are becoming more active in North Africa, supported by J.P. Morgan’s international trade services.
It has been over 50 years since the bank opened its first branch in Beirut; almost 40 in Bahrain; 35 in Cairo; in 2006 we set up a new office in Riyadh and in 2007 opened an office in Dubai. This year we have opened an office in Abu Dhabi and a branch in Riyadh. Across the Gulf Cooperation Council (GCC), the Levant, and North Africa, we have developed and continue to hold long-standing relationships with governments, financial institutions and corporations. Our local offices provide both sales and client services, supporting a wide spectrum of solutions across the treasury, trade and procurement functions: in addition we have a large securities services franchise as well as our Investment Banking, Asset Management and Private banking businesses. J.P. Morgan Treasury Services made a public commitment in 2008 that we were, and will continue to be heavily investing into our capabilities and presence around the world. The Middle East and North Africa is an integral part of that strategy. We’re going where our clients want us to be, and striving to deliver the innovative solutions they have come to expect from us.
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