Challenges and opportunities ahead for banks - Hindu Business Line

The banking industry has grown impressively in the past decade at a Compound Annual Growth Rate (CAGR) of 17-18 per cent in terms of total banking assets.

However, more than the growth story, the last decade stands out for the transformation that the industry has undergone in terms of customer orientation, product offerings, service levels, technology leverages, governance maturity as well as competitive intensity.

Even as the industry gears itself for the next decade of growth and is being challenged by a slower economy, banks will have to recalibrate their focus on “creating” growth and “sustaining” profitability as they respond to an even more dynamic and challenging environment characterised by evolving regulations, increased competition, savvier and value conscious customers, complex operating models and disruptive technologies.

The impact of slowdown is evident at an aggregate level as growth rates have moderated as compared to the past and also shown a dip in certain areas in the last couple of years. Despite economic headwinds, in such uncertain times, it is crucial for banks to maintain a competitive market position. Besides the need to protect their ‘core’ markets, banks would need to be ‘market ready’ for opportunities which such market adversities may offer. The growth opportunities can broadly be categorised as organic growth opportunities, international growth opportunities and inorganic growth opportunities.

In the past decade, India’s GDP growth provided abundant domestic growth opportunities for banks without drastically adapting its business model. Consistent high growth over the last few years has brought economic progress and prosperity — per capita income has increased and the number of millionaire households in India has now soared to 2,86,000, the 18th largest across the globe according to the Deloitte Centre for Financial Services and Oxford Economics Research.

According to the RBI data, India still has 145 million households completely excluded from banking services and this section carries tremendous social appeal and presents a great economic prospect. Banks can serve this customer segment as well as create value for themselves as financial inclusion evolves itself into a business opportunity rather than as a regulatory burden. Public sector and private banks collectively had less than 10 per cent of loans and advances and less than 5 per cent of the deposits originating outside India in FY11. Baring few top banks, most of the banks have very limited presence in major business centres or markets where there are significant bilateral trade flows.

Moreover, most of foreign business is still home-linked targeting Trade Finance and NRI population and not really targeting truly foreign business. According to the World Bank estimates, cross-border remittances stood at nearly $483 billion in FY11 and India has a fair share in these remittances and to start off, Indian banks can target increasing their share of global remittances.

The increasing global footprint of India Inc. provides Indian banks an opportunity to realize their global aspirations.

Even after realising the distant hopes of domestic consolidation, top Indian banks are unlikely to feature in the top 50 largest banks globally in the next five years. Therefore, it is an imperative to shift from the philosophy of “scale up to globalise” to “globalise to scale up”.

The RBI has come out with the phased roadmap for Basel- III framework implementation for the next five years. The need for risk capital as well as growth capital is likely to lead to higher capital requirement for the sector.

Bigger capital cushions would make the system somewhat safer, but it may challenge some individual bank’s profitability and ability to grow.

With the increased pressure on efficiencies and stakeholder demands, consolidation in the industry may provide banks to an opportunity to grow inorganically.

With the growing complexity of the market place, the industry itself may gravitate towards the following broad structure.

• Few large banks or ‘universal’ banks that serve all customers and differentiate themselves by focusing on services and offering a large product breadth. These banks will compete on size and their higher risk taking capability. These banks will develop capabilities to compete globally.

• Several ‘niche’ banks offering specific products and services adapted to the needs of their customers, or focusing on specific niches in terms of geographies, industries or even communities. These banks will compete on their knowledge edge.

• Few ‘discount/direct’ banks may emerge to offer the best prices to their customers and leverage direct channels in a cost-effective approach.

This may be relevant for new private sector banks which we may see emerge over the next few years. These banks will compete on technology edge.

Banks that fail to align to any of above three models or their variants may become marginalised over time and could become ripe candidates for acquisition by stronger banks. Similar capital challenges faced by several overseas banks may provide an opportunity for Indian banks to acquire banking assets globally.

Banking services are shifting from a brick and mortar dominated paradigm to one of integration and balance between multiple channels. With several technology choices emerging, the new paradigm demands a fundamental shift in the business model. New technologies will need to be evaluated in the context of how they can seamlessly integrate to provide a customer experience and last mile connectivity which can equate a ‘near-branch’ experience.

To summarise, while growth potential remains relatively high for Indian banks in the global context, growth is likely to come with its own multifarious set of challenges. Banks that are better organised around their core positioning and identified strategic initiatives will be more ‘market ready’ for realising these growth opportunities.

(The author is Senior Director, Deloitte Touche Tohmatsu India Pvt Ltd. Views are personal).

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Postal Service Cuts Provide New Revenue Opportunities For US Banks - Huffington Post

* Banks see an opening in calls to end Saturday deliveries

* Chance of slower mail argues for electronic payments

* Banks peddle check collection centers to clients

By David Henry and Rick Rothacker

March 28 (Reuters) - The U.S. bank industry, struggling to make the profits it used to, is using the struggles of another industry for its marketing: The U.S. Postal Service.

JPMorgan Chase & Co, Bank of America Corp, Citigroup Inc and Wells Fargo & Co are all using the looming threat of postal service cuts to sell bank services such as electronic payments and remittance pickups that can speed payments likely to be slowed by diminished mail service.

"It is a conversation starter," said Daniel Peltz, head of Wells Fargo's Treasury Management division.

For banks, electronic transactions save as much as one-third of the cost of processing checks, according to industry estimates. The potential savings are greatest for bigger banks, which reap additional economies of scale by running more transactions through the computer systems they have built.

Banks are looking for any chance to save money these days, as tough markets and a weak economy hit their profits, and traditional revenue streams dry up due to stricter regulations.

For bank customers, the new electronic payments and other services offer savings, too.

Greg Kerwick, a managing director in JPMorgan's Treasury Services unit, said his team is telling customers they might have to wait one to four days longer for invoices to reach customers and payments to return by mail, if Saturday postal delivery is eliminated.

His division, which helps 25,000 businesses with cash management, estimates that waiting an extra two days for payment would require a company that receives $5 billion of mail payments a year to come up with an extra $27 million of working capital.

To save that money, of course, customers must pay. For example, using lockbox services - where the bank picks up checks for businesses from postal plants seven days a week - can mean as much as $2 per check for the bank, which also can earn interest income during the maximum of three to four days they hold a payer's money before some checks are cleared, said Nancy Atkinson, a senior analyst with consulting firm Aite Group.

This "float period" could become even more valuable as interest rates rise in the future, she said.

Banks, however, may find it challenging to win more payment business because a delay in mail service is advantageous to bill payers who want to hold onto their funds as long as possible, Atkinson said. Payers typically drive the decision making around how they pay a supplier, surveys by Aite Group have found.

If more business turns to electronic payments, that could further hurt the Postal Service, which lost $5.1 billion in fiscal year 2011 and could see annual losses upward of $21 billion by 2016 if major changes are not made, Postmaster General Patrick Donahoe has said.

President Obama, in his budget proposal in February, called for an end to Saturday mail delivery and other cost-cutting by the Postal Service. The Senate is to consider a bill this week that would allow the Postal Service to consider ending Saturday mail after two years.

The service also has plans to close more than 200 mail processing plants, which would end next-day delivery of First Class Mail.

"Everybody has a desire to get away from checks and move more electronic," JPMorgan's Kerwick said. "This is placing greater urgency around making that happen."

"The mail will take longer to cycle through," Kerwick said.

To be sure, many mid-sized businesses use check-writing software and are in no rush to install new systems, said Lex Litton, a consultant with Phoenix-Hecht, which specializes in collecting paper checks at third-party processing centers.

A little more than half of payments received by larger companies still arrive by check, said Litton. For smaller companies about three-quarters are on paper.

Overall, paper payments to businesses are decreasing by a couple of percentage points a year, Litton said, citing surveys by his firm.

One reason for slow adoption is convenience. Sending checks in envelopes can allow businesses to easily add information that clarifies what they are paying and what discounts they might be applying.

"I'm an advocate of both" paper and electronic payments, said Ron Tauscher, a senior product manager in Citigroup's Global Transaction Services business.

Tauscher said he is discussing the Postal Service issues with Citigroup's customers. "It is clearly an opportunity to talk about their receivables," he said.

For payments still sent by check, some banks offer lockbox processing centers across the United States. Citigroup, JPMorgan and Wells Fargo together account for 35 of them. Crews from the centers go to nearby Postal Service sorting facilities around the clock to pick up envelopes with checks to be deposited quickly.

Known as remittance mail, the envelopes would get special treatment under the Postal Service's plans to cut costs, noted Litton. Banks would be able to continue to pick up those envelopes seven days a week even as first-class deliveries to businesses would become less frequent.

As a result, businesses may sign up for the lockbox services, Wells Fargo's Peltz said.

Litton said remittance mail would still likely move more slowly than today, though that is not certain. Regardless, the threat of delays is useful to the banks. "This looks like an opportunity to say there is one more advantage to electronic payments," said Litton.

At Bank of America Merrill Lynch, Paul Simpson, head of global transaction services, said the bank is talking to clients about electronic payment options as well as looking at new ways to enhance and speed up deposit and lockbox services. Depending on the postal service's consolidation plans, the bank could look at partnership opportunities at post office locations, where the bank could process checks and immediately capture electronic images of these payments.

A partnership with the U.S. Postal Service could help "create revenue streams that benefit both parties," Simpson said.

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Postal Service Cuts Provide New Revenue Opportunities For US Banks - Huffington Post

* Banks see an opening in calls to end Saturday deliveries

* Chance of slower mail argues for electronic payments

* Banks peddle check collection centers to clients

By David Henry and Rick Rothacker

March 28 (Reuters) - The U.S. bank industry, struggling to make the profits it used to, is using the struggles of another industry for its marketing: The U.S. Postal Service.

JPMorgan Chase & Co, Bank of America Corp, Citigroup Inc and Wells Fargo & Co are all using the looming threat of postal service cuts to sell bank services such as electronic payments and remittance pickups that can speed payments likely to be slowed by diminished mail service.

"It is a conversation starter," said Daniel Peltz, head of Wells Fargo's Treasury Management division.

For banks, electronic transactions save as much as one-third of the cost of processing checks, according to industry estimates. The potential savings are greatest for bigger banks, which reap additional economies of scale by running more transactions through the computer systems they have built.

Banks are looking for any chance to save money these days, as tough markets and a weak economy hit their profits, and traditional revenue streams dry up due to stricter regulations.

For bank customers, the new electronic payments and other services offer savings, too.

Greg Kerwick, a managing director in JPMorgan's Treasury Services unit, said his team is telling customers they might have to wait one to four days longer for invoices to reach customers and payments to return by mail, if Saturday postal delivery is eliminated.

His division, which helps 25,000 businesses with cash management, estimates that waiting an extra two days for payment would require a company that receives $5 billion of mail payments a year to come up with an extra $27 million of working capital.

To save that money, of course, customers must pay. For example, using lockbox services - where the bank picks up checks for businesses from postal plants seven days a week - can mean as much as $2 per check for the bank, which also can earn interest income during the maximum of three to four days they hold a payer's money before some checks are cleared, said Nancy Atkinson, a senior analyst with consulting firm Aite Group.

This "float period" could become even more valuable as interest rates rise in the future, she said.

Banks, however, may find it challenging to win more payment business because a delay in mail service is advantageous to bill payers who want to hold onto their funds as long as possible, Atkinson said. Payers typically drive the decision making around how they pay a supplier, surveys by Aite Group have found.

If more business turns to electronic payments, that could further hurt the Postal Service, which lost $5.1 billion in fiscal year 2011 and could see annual losses upward of $21 billion by 2016 if major changes are not made, Postmaster General Patrick Donahoe has said.

President Obama, in his budget proposal in February, called for an end to Saturday mail delivery and other cost-cutting by the Postal Service. The Senate is to consider a bill this week that would allow the Postal Service to consider ending Saturday mail after two years.

The service also has plans to close more than 200 mail processing plants, which would end next-day delivery of First Class Mail.

"Everybody has a desire to get away from checks and move more electronic," JPMorgan's Kerwick said. "This is placing greater urgency around making that happen."

"The mail will take longer to cycle through," Kerwick said.

To be sure, many mid-sized businesses use check-writing software and are in no rush to install new systems, said Lex Litton, a consultant with Phoenix-Hecht, which specializes in collecting paper checks at third-party processing centers.

A little more than half of payments received by larger companies still arrive by check, said Litton. For smaller companies about three-quarters are on paper.

Overall, paper payments to businesses are decreasing by a couple of percentage points a year, Litton said, citing surveys by his firm.

One reason for slow adoption is convenience. Sending checks in envelopes can allow businesses to easily add information that clarifies what they are paying and what discounts they might be applying.

"I'm an advocate of both" paper and electronic payments, said Ron Tauscher, a senior product manager in Citigroup's Global Transaction Services business.

Tauscher said he is discussing the Postal Service issues with Citigroup's customers. "It is clearly an opportunity to talk about their receivables," he said.

For payments still sent by check, some banks offer lockbox processing centers across the United States. Citigroup, JPMorgan and Wells Fargo together account for 35 of them. Crews from the centers go to nearby Postal Service sorting facilities around the clock to pick up envelopes with checks to be deposited quickly.

Known as remittance mail, the envelopes would get special treatment under the Postal Service's plans to cut costs, noted Litton. Banks would be able to continue to pick up those envelopes seven days a week even as first-class deliveries to businesses would become less frequent.

As a result, businesses may sign up for the lockbox services, Wells Fargo's Peltz said.

Litton said remittance mail would still likely move more slowly than today, though that is not certain. Regardless, the threat of delays is useful to the banks. "This looks like an opportunity to say there is one more advantage to electronic payments," said Litton.

At Bank of America Merrill Lynch, Paul Simpson, head of global transaction services, said the bank is talking to clients about electronic payment options as well as looking at new ways to enhance and speed up deposit and lockbox services. Depending on the postal service's consolidation plans, the bank could look at partnership opportunities at post office locations, where the bank could process checks and immediately capture electronic images of these payments.

A partnership with the U.S. Postal Service could help "create revenue streams that benefit both parties," Simpson said.

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African banks see opportunity in slums - Monterey County Herald

JOHANNESBURG — For Princess Moyo, who lives in a shack in a Johannesburg settlement infamous for poverty and crime, the bank account she opened several months ago means security.

"In Diepsloot, there's lots of criminals," she said. "If they break into my house, they won't find money. The money's in the bank."

Not long ago, banks here were unconcerned with providing services for people like Moyo, a 34-year-old with an easy smile. But banks across Africa increasingly see opportunity in the slums.

The spread of mobile phones has made it easier for the poor of the continent to maintain bank accounts. Africa's middle class is growing, too, and millions of people need a way to amass and maintain their money.

African banks, which have attracted international attention for resilience in the difficult global economy, are also providing advice on multi-billion-dollar deals involving foreign companies looking for business on the continent.

Late last year, one of Africa's largest banks, Standard Bank of South Africa, announced it had secured a $125 million loan from 18 banks around the world, a demonstration of the confidence of foreign investors.

Most African banks had little exposure to the global risks that have weakened Western banks, said African Development Bank chief economist Mthuli Ncube. Instead, he said, they have expanded beyond their borders within the continent.

They have found plenty of business. The economies of sub-Saharan Africa

are expected to grow 5.5 percent this year. That is second only to Asian developing countries, which are expected to grow 7.3 percent. The global average is 3.3 percent.

The number of Africans with enough disposable income to be called middle-class has been increasing about 3.8 percent a year since the 1980s, Ncube said, slightly ahead of population growth. Banks and other business see a market there.

Among the poor, Kenya has been a hub for financial innovations. When the telephone company Safaricom introduced M-Pesa in 2007, it was the first mobile money transfer system of its kind.

Now M-Pesa — pesa means money in Swahili — "is part of the local parlance, and it means money transfer," said Anthony Mwai, IBM's manager for East Africa. IBM has been expanding business with African banks.

In a practice now common around the world, users load money onto their phones at small brokers or from bank accounts. Then they use it to pay rent or bills, or send money to another M-Pesa user, who can visit a broker to get cash.

Banks that once saw M-Pesa as competition have gone into partnership with Safaricom. Such innovations have allowed banks to reach customers without building branches in places like Diepsloot.

For the most part, African banks haven't experienced problems that befell their Western counterparts.

Ncube, of the African Development Bank, said African central banks are generally cautious, perhaps because many African economies have been through painful restructurings at the hands of the International Monetary Fund, something some European economies are now confronting. Banking regulations reflect the caution, and African banks have kept a tight rein on lending.

The poverty of many African countries has meant their economies and banks are somewhat isolated from global trends, while China's growing appetite for raw materials has benefited African producers of minerals and timber.

Still, in 2009, Nigeria's central bank had to provide a $2.55 billion bailout for troubled banks. Analysts blamed lax regulations exploited by corrupt bankers. Ncube insisted that Nigeria's central bank did the right thing in the end.

The banks are healthier today and preparing for more growth.

Last year, IBM signed 20 deals worth $200 million to provide services for banks across Africa. IBM's Africa business has grown by double digits over the past three years, "and the growth we see, we see continuing," spokesman Jonathan Batty said.

Banks have asked for IBM's help modernizing their computer networks to handle more customers and to connect with customers through mobile phone banking and other technology, said Mwai, IBM's manager for East Africa.

In 2009, a government-backed project culminated in a high-speed undersea cable connecting East Africa with the rest of the world, and banks were among those to benefit from increased Internet speeds and lower costs.

Zweli Manyathi, an executive with South Africa's Standard Bank, says banks now need to put their ingenuity to work developing small business, to ensure more of the economic growth that has made the African financial sector attractive.

Manyathi is calling on banks, government and aid groups to find innovative ways to train fledgling businesspeople, many of whom in Africa lack the skills to identify markets, predict costs or take other steps to turn their ideas into thriving enterprises.

For Manyathi, it's not just a matter of business, but part of what he says should be a national and even continentwide campaign against poverty to match past victories over colonialism and despotism.

Manyathi said banks have been complacent, satisfied with their existing business clients.

First National Bank executive Line Wiid said a similar complacency at first kept banks from reaching out to consumers with low incomes. When room for growth in the middle and upper classes was exhausted, not everyone saw opportunity among the poor, or understood how to exploit it, she said.

Wiid remembers that in 2004, when she took over a new unit of the South African bank that targeted low-income earners, colleagues asked, "Are you insane?"

The unit Wiid leads was created out of parts of other bank divisions that had been losing money. Last year, Wiid's profits were 1.45 billion rand, or about $190 million. And with an estimated one-third of adult South Africans still without bank accounts, the potential for more growth is clear.

Lebo Motshegoa, a South African market researcher who specializes in black consumers, said the poor have been waiting for banks to reach out to them. For some, he said, a bank card is a status symbol. But banking charges are a barrier, perhaps more psychological than financial, he said.

"People are saying, 'Why is the bank taking my money? They aren't helping me earn it?'" Motshegoa said. "The corporate answer is, 'You are assessing my infrastructure.' But people don't see it that way."

Moyo, the Diepsloot shack-dweller, pays 11 rand (less than $2) a month for her account, plus 5 rand for every withdrawal. Her family income is low and uncertain, depending on how many day jobs her husband, a plasterer, can find and her own occasional earnings as a seamstress. She says her family earns about 2,800 rand (less than $400) a month.

Her account isn't just safe. It's convenient. Moyo said her husband sometimes finds work far from home, and will camp out at a construction site instead of coming home every evening. Before she had an account, he had to come home to give her his cash earnings. Now, he can make electronic deposits from wherever he is.

Moyo is thinking about opening a savings account for her 5-year-old son, so the family can put money aside for him.

"My dream is to educate my son," she said.

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Investment and insurance products offer significant opportunity to banks - StreetInsider.com

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March 1, 2012 10:30 AM EST
New national study says financial institutions can reach and retain more affluent clients

NEWARK, N.J.--(BUSINESS WIRE)-- Customers who purchase investment and insurance products where they bank have on average $348,000 of investable assets, 84 percent more than financial assets held by other banking customers. However, only two out of every 10 affluent customers have purchased these products from their bank or credit union, according to The Value of an Investment and Insurance Customer to a Bank, a study by Kenneth and Christine Kehrer and Peter Bielan. The study was co-sponsored by Prudential Financial, Inc. (NYSE: PRU) and Western National Life.

“Overall, banks and credit unions have a terrific opportunity to market to households likely to buy investment and insurance products,” said John Gies, vice president and national sales manager, Prudential Annuities. “While many of these institutions are focused on banking products and services as their primary source of fees, a potential strategy for boosting profits – especially among highly desirable customers – is hiding in plain sight.”

The study also found that investment and insurance customers are 34 percent more likely than other households to stay with their current financial institution – even if they receive better offers. By contrast, selling the typical customer additional banking products did not yield meaningful increases in customer loyalty.

“The research confirms that the number of products is much less important than the type of product in predicting how ‘sticky’ a customer is likely to be,” said Gies. “Nevertheless, banks and credit unions have a significant opportunity to redeploy resources and cross sell strategies. Those strategies work well today on core banking products, but research shows a far greater return by repurposing those efforts to focus on investment and insurance products for existing bank customers.”

“The results provide the proof needed for banks and credit unions to seize the opportunity for developing investment and insurance relationships with existing customers,” said Kenneth Kehrer, Ph. D, founder of Kehrer-LIMRA and co-author of the study. “The ones that commit to these relationships will clearly have a competitive advantage.”

According to Bruce Abrams, president and CEO of Western National Life "Dr. Kehrer's research highlights the untapped potential among affluent bank and credit union customers, who have a tendency to concentrate their financial services at the same places where they bank. We hope that these findings prove useful to the banks and credit unions with whom we do business, and Western National is proud to have been involved with this study.”

The Value of an Investment and Insurance Customer to a Bank also found:

Consumers who have purchased an investment or insurance product from their primary bank or credit union have checking account balances that are 16 percent higher than households without a brokerage or insurance relationship. Brokerage customers have savings account balances that are on average 85 percent higher than non-brokerage customers. Brokerage and insurance customers have more than twice as many credit products and 11 percent more remote banking products than customers who have not purchased an investment or insurance product from their primary bank or credit union.

The study draws on data from the MacroMonitor, the largest comprehensive retail financial-services and marketing database that has measured, analyzed, and interpreted consumer attitudes, behaviors, and motivations continuously since 1978. The 2010/2011 MacroMonitor is a national sample survey of 4,374 households, with an oversample of 1,500 affluent households, reweighted to be representative of the U.S. population. This comprehensive survey is conducted every other year by the Consumer Financial Decisions Group of Strategic Business Insights, formerly part of SRI International.

Prudential Financial, Inc. (NYSE: PRU), a financial services leader with approximately $901 billion of assets under management as of December 31, 2011, has operations in the United States, Asia, Europe, and Latin America. Prudential’s diverse and talented employees are committed to helping individual and institutional customers grow and protect their wealth through a variety of products and services, including life insurance, annuities, retirement-related services, mutual funds and investment management. In the U.S., Prudential’s iconic Rock symbol has stood for strength, stability, expertise and innovation for more than a century. For more information, please visit www.news.prudential.com.

Prudential Financial, Inc.Darrell Oliver, 973-802-9627darrell.oliver@prudential.com

Source: Prudential Financial, Inc.

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Itqan Capital banks on Saudi opportunities - Arab News

By MAHMOOD RAFIQUE

Published: Jan 15, 2012 23:04 Updated: Jan 15, 2012 23:04

MANAMA: Bahrain-based Al-Baraka Banking Group (ABG) has announced the launch of Itqan Capital, formerly known as Altawfeek Financial Group, in Saudi Arabia, through its fully-owned subsidiary Al-Baraka Islamic Bank Bahrain (ABIB).

ABIB owns the majority of shares of the newly launched company.

ABIB Chairman Khaled Al-Zayani, while underlining the importance of the business model of the newly launched firm, said it would focus on four areas including asset management, principal investment, investment banking, and custodial services — all supported by centralized advisory, research and business development capabilities.

"We aspire to be Saudi Arabia's pre-eminent provider of investment offerings to pension funds, foundations, charity organizations, endowments, private and public companies, high-net worth individuals, and family offices," Al-Zayani said in a statement.

"We have an extensive base of investors, both within the Kingdom and regionally, seeking specially tailored services and truly innovative Shariah-compliant investment products."

Adnan Ahmed Yousif, president and chief executive of Al-Baraka banking Group and the vice-chairman of Al-Baraka Islamic Bank, termed the Itqan Capital launch as an excellent move that reflects ABG's strategy to enter key regional markets, especially Saudi Arabia which is the largest Arab economy with strong fundamentals and a stable financial and investment environment.

"Saudi Arabia being the largest economy in the region offers significant business and investment opportunities for Itqan Capital," he added.

"We look to this step as a strategically vital initiative for the group," he added.

“Our founding shareholders have a strong base in the Saudi market so the launch of the company will strengthen that presence,” he said.

He said the Saudi market represents a key enter-point for us to access the extensive base of investors and provide them with a wide range of Sharia compliant products that have been developed by the company and the group for the past many years.

The ABG Group has the unique advantage of a large and geographically diverse network in many countries, whose experience and track record we will draw upon to strengthen our business presence in the Saudi market

Mohamed Isa Al-Mutaweh, board member and chief executive officer of ABIB, said Itqan would soon become a new force in the regional investments sector.

“We are acutely focused on serving the needs of a sophisticated clientele who we believe are somewhat under-served at present," he said.

"We have moved away from standard services for the mass-affluent market, such as securities brokerage, towards differentiated and valued added offerings. We intend to create and manage a growing number and broad array of open-end and closed-end funds tailored to the requirements of institutional, corporate, and individual clients."

He added: "As well as private and mutual funds, Itqan Capital will identify, develop, and co-invest in distinctive opportunities in sectors that offer genuine potential for growth and benefit from both a financial and social perspective. Examples are the education, healthcare, and food sectors that are all benefiting from heightened demand due to the region's rapid population growth. Another example of our unique approach is offering custodial services — a first in the Saudi market. Our menu of custody services for real estate, private equity, and portfolio and fund holdings will add outstanding value for our clients," he added.

The authorized capital of ABG is $1.5 billion, while total shareholders' equity amounts to about $1.8 billion.

© 2010 Arab News

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