Mashreq eyes N.Africa trade flows with UAE

By Nicolas Parasie

DUBAI (Reuters) – Dubai’s Mashreq, the bank owned by the billionaire Al Ghurair family, is pursuing growth in North Africa hoping to tap the business flow between that region and the United Arab Emirates, an executive said.

The lender is betting on Egypt and Libya, where it is still in the race to obtain a banking licence, to find new revenue sources beyond the UAE and Gulf region, John Iossifidis, Mashreq’s head of international banking, told Reuters in an interview.

“Our strategy is built around linking the geographies in which we operate in, our UAE home base, a strong GCC presence with Egypt and Libya also being compelling, the latter is more a long-term opportunity,” Iossifidis said.

“Egypt, the links the country has with the GCC are phenomenal, there are links in terms of trade and investment flows, as well as migration and labor flow. The other thing is that 2 million Egyptians are living and working in the Middle East,” he said.

“There’s a natural flow in trying to capture some of that business,” Iossifidis said.

Food and cotton from Egypt flow to the UAE, one of its biggest trade partners.

In Libya, Mashreq is one of six banks shortlisted for one of two new joint-venture banking licences.

HSBC, Standard Chartered, UniCredit, Emirates NBD and Qatar Islamic Bank are also on the list.

“We’ve been informed by the Central Bank of Libya there will be a decision by the end of the summer,” said Iossifidis. “As their economy further integrates, you will see benefits on the ground.”

Libya, which holds Africa’s largest oil reserves, in recent years has been opening up its banking sector to foreign investors as part of an economic reform programme.

Early entrants were France’s BNP Paribas and Jordan-based Arab Bank which bought stakes in local banks.

The licence would allow two foreign banks to own 49 percent of the new lenders with Libyan investors holding the rest.

“The way it works is to increase the capital to 250 million dollars over a 5-year period,” said Iossifidis, who in his spare time is an avid race car driver and participated in the UAE touring car championship.

Mashreq is 80 percent owned by members of the rich and influential Al Ghurair family.

Chief Executive Abdul Aziz Abdulla Al Ghurair, who himself has a 12-percent stake, is also speaker of the house at the UAE parliament.

Mashreq’s second-quarter net profit more than halved as it took provisions against bad loans.

It was also hurt by its exposure to two large Saudi Arabian defaults and the downturn of the UAE real estate market and indebted Dubai World’s restructuring.

“We can now see light at the end of the tunnel,” Iossifidis said.

He said the bank was conservatively managing its balance sheet and costs and might see some small loan growth.

“We will also see that the digestion of problems of the past having been dealt with by the end of the year.”