Abu Dhabi Commercial Bank (ADCB), the third largest bank in the United Arab Emirates (UAE) by market value, is positioning to capture the global sukuk (Islamic bond) market.
Chairman Saeed Mubarak Al Hajeri said Islamic banking in the UAE was not as developed as in Malaysia.
“We are positioning with someone who has the know-how, and creating vehicles to bring our sukuk business to No. 1 position with a 30% market share,” he told a press briefing yesterday.
According to the Islamic Finance Information Service, the global volume of sukuk issued rose by 73% last year to US$47.1bil.
The Malaysian sukuk market over the last five years has registered an average 33% growth, with sukuk comprising 45% of bonds issued last year. This sukuk issuance was valued at US$17.5bil compared with just 17% or US$5.6bil years ago.
ADCB finds the appeal in RHB Capital Bhd’s restructuring story, which was similar to what it went through a few years ago.
It also likes RHB’s plan to double profits in three years and to become the top bank in South Asia in 10 years.
“We will support that vision,” he said, adding that the RHB investment would be under the radar of ADCB’s top management.
“We also have a structure in place to retain talent. The top 10% of our talent base has not left us and we intend to bring that to RHB so that people will regard that as the job to be in.”
ADCB did not consider its purchase of the RHB stake expensive, seeing that RHB had yet to unleash its full potential.
“Given the opportunity, we would like to own a bigger stake,” said Saeed Mubarak, who is also a board member and head of the emerging markets department of the Abu Dhabi Investment Agency.
Iskandar Malaysia in Johor represents huge opportunities for ADCB, whose client and shareholder is the Mubadala group.
Among the master concessionaires and developers for the five zones in Node 1 of Iskandar Malaysia are Mubadala Development Co, Millenium Development Inter-national Co and Kuwait Finance House (KFH).
In line with the plan to strengthen and liberalise the local banking sector, the country has witnessed an influx of foreign banks lately.
Big names such as KFH, Al Rajhi Bank and Asian Finance Bank are already making their presence felt in the Islamic banking scene.
More Middle Eastern banks are also said to be eyeing Islamic subsidiaries of local banks.
“There is a huge interest in Malaysian assets and their potential,” said Saeed Mubarak.
“Malaysia has stable regulations and a business-friendly environment. We aim to be the Warren Buffet-type of long-term investors and are here for investments, regardless of politics.”
Among recent global banking groups, ADCB will also contend with Australia and New Zealand Banking Group (ANZ), which has a stake in the AmBank banking group.
ANZ is already working quietly to transform the commercial banking operations and moving into investment banking. The results of these changes are believed to be evident in the coming financial results.