HSBC plans ambitious UAE growth with balance sheet of ‘billions of dollars’

And, when the world’s best golfers teed off in Abu Dhabi on Thursday, the superstars will have their caddies but also another key member of the team, the bank which been in the UAE for 75 years and which has returned to sponsor the event despite the coronavirus pandemic.

It will be the 11th year that HSBC has sponsored the Abu Dhabi HSBC Championship and for Abdulfattah Sharaf, group general manager, CEO of HSBC UAE and head of international, HSBC Bank Middle East Limited it will be with pride that the Emirati will watch the game’s greatest compete.

In 2021 the bank also intends to come out swinging with ambitious plans for the UAE, including the opening of its first its new private banking branch on the eve of the tournament. As play began the CEO spoke with Arabian Business.

You are opening a new private banking branch in the ADGM as coronavirus still rages around the world – how much is that single move a vote of confidence in how Abu Dhabi and the UAE is handling the pandemic to create a stable business climate?

We have ambitious plans for growth in the UAE this year. Our balance sheet has billions of dollars that are being put to work in support of customers across our portfolio – from governments to multinationals, to fast-growing smaller companies, entrepreneurs and individuals – and the expansion of our Private Banking business into ADGM is a very important part of those plans.

All businesses need a stable policy backdrop when they are making ambitious, long term plans and decisive policymaking is one of the many things that UAE is known for. The policy response from the Abu Dhabi and UAE governments to the economic and social impact of Covid-19 typifies that decisiveness.

From the early days of the pandemic and the introduction of the Targeted Economic Support Scheme, to today and the comprehensive vaccination programme that has seen the UAE distribute more vaccinations per capita than any other nation in the world, the UAE has worked incredibly hard to create a stable business environment.

Announcing the expansion of our private bank into the ADGM just as the HSBC Abu Dhabi Championship tees off is the perfect way to start 2021 – it shows that the recovery from the Covid-19 downturn has already started and HSBC is proud to be supporting Abu Dhabi, our customer base across the UAE, and the world of golf, in that recovery.

To build on that confidence, how much of that opening is a statement of belief that wealth and prosperity, particularly with UHNIs, will continue to flow through, and reside in, Abu Dhabi and the UAE?

We certainly believe in the UAE’s future as a global hub for wealth, which is why we have developed plans to almost double our assets under management during the coming three years and committed to make the UAE a global hub for expatriate wealth management expertise in HSBC.

The ADGM location expands HSBC’s Private Banking footprint from its current base in Dubai International Financial Centre and follows the 2020 launch of the Jade account, which significantly increased our offering to the UAE’s growing population of high net worth individuals.

Our view of the huge potential here is clearly supported by the data – Boston Consulting Group’s Global Wealth Report shows that the UAE is joint fifth in the global rankings of international wealth management hubs.

And looking at the broader region, the annual Capgemini World Wealth Report, which is the benchmark study of trends in the wealth management industry, says the growth in the number and wealth of high net worth individuals in the Middle East outstrips the global average. We think there is a very bright future for wealth management in the UAE. 

HSBC has ambitious plans for growth in the UAE this year

HSBC has been in the UAE for 75 years, that’s operating from the end of the second world war, though a number of global recessions and financial crises, how does 2020 look now that’s in the rear view mirror in comparison?

Every recession is different, they are triggered by different events, and bring their own unique challenges and policy responses. Through my career in banking, I can say that the most consistent thing about recessions is that when they end, being agile, flexible and responsive to the changing environment is what drives the most successful recoveries.

In pure economic terms, HSBC economists forecast that UAE GDP will have shrunk by around 6% in 2020. The forecast is then for growth in real terms of 3% and 3.4% year-on-year in 2021 and 2022, which would be a rate of expansion not seen since 2015 and points to the country’s strong underlying potential.

For me, as well as the government’s dynamic approach to managing the immediate impact of the crisis, I will look back on 2020 and remember the unprecedented steps taken to make the UAE an even more attractive business environment.

The new companies law is a clear example of that response, ruling that non-nationals can now own 100% of a company that is based in the UAE speaks volumes about the nation’s desire to broaden its scope of foreign investors.  This decision gives foreign investors the choice of complete ownership versus working with majority partners – psychologically, that’s important.

These positive steps will help drive the UAE economy forward in the early 2020s, benefiting all investors, both foreign and Emirati.

While much of the world continues to struggle, with lockdowns and economies in reverse, what is the opportunity moving forward for HSBC in Abu Dhabi? Is it an economic beacon lighting the way for investors?

Abu Dhabi has truly emerged over the last 10 years as a global business, finance and leisure hub. Its fiscal strength is obviously rooted in its world-class oil industry, but the economy is has been expanding in exciting new directions for a number of years, setting a tone of diversification, development and investment in the future.

You only need to look at twofour54 and Abu Dhabi Global Market, the opening of the Louvre Abu Dhabi and New York University Abu Dhabi on Saadiyat Island, and the tremendous investment in developing world class leisure experiences on Yas Island, to get a real sense of the ambition in the UAE’s capital, which already enjoys a reputation as being a global city of the future.

Our own research, which we published just a few months ago, suggests that Abu Dhabi will be one of the region’s most important cities for driving growth, sustainable innovation, empowering human capital, and promoting new flows of trade in the post-Covid-19 environment.

Our Future Cities report concludes that the events of the last year will turn out to have been a catalyst for more diversified, more digitised, cleaner and greener cities. We think there will be five cities in the Middle East that really drive that change and the UAE has two of them – Abu Dhabi and Dubai.

They are cities that are recognised as epicentres of connectivity, diversity, and innovation. They have often served as bridges between East and West, offering internationalists the perfect place to seed and grow their ideas. Their next cycle has the potential to see them become global centres for reinvented flows of trade, more resilient supply chains and revised business models led by digital transformations, which dovetails with HSBC’s priorities in supporting our clients and communities to build back better across the region.

Golf is a wonderful game that connects people of all ages, skills and backgrounds

What can golf teach business?

Golf certainly keeps you humble! It’s a wonderful game that connects people of all ages, skills and backgrounds. The time spent on the golf course without interruptions is precious. In playing the game it teaches you the values of being committed to put in the work and have a routine you trust, of being patient no matter the ups and downs and of the need for perseverance. These are traits and life skills that we can never have enough of in business, especially in times of adversity.

Is it purely a business relationship, a transactional gain of mutual benefit, between HSBC and Abu Dhabi, or over the years has that evolved into something deeper?

It has been fantastic being involved with the Abu Dhabi Championship over the last decade. In that time, we’ve seen the tournament grow into the “jewel in the crown of Middle Eastern golf”, a reputation it has earned for not only its world class field, venue and hospitality, but also its location in Abu Dhabi. 

Investment banking is all about predicting and capitalising on future growth, so for HSBC what’s the significance of the Future Falcons Junior Golf Programme? 

HSBC believes in the power of togetherness. When we all come together, we can achieve incredible things and that starts with the youngest members of society. That is why the HSBC Future Falcons is so important to us.

It is a joint initiative with the Abu Dhabi Sports Council, and aims to educate, engage and inspire youngsters in a bid to unearth the next generation of UAE golfing talent. Regardless of skill, ability or ambition the HSBC Future Falcons guides children on their first steps in the sport in a fun way and already over 80,000 children have been introduced to this wonderful game.

The Abu Dhabi HSBC Championship is a European Tour golf tournament

You’ll have the likes of Rory McIlroy, Justin Thomas, Justin Rose, Shane Lowry and Lee Westwood defending his title, all competing for a prize fund of US$8 million. How important a message is it to show that sport is back, events are back, sporting stars are back in Abu Dhabi? 

As a keen golfer and proud Emirati, it is a fantastic feeling to have the very best events back, here in Abu Dhabi.  Not only because our tournament marks the start of the global golfing season, but because I believe it is a significant step on the road to recovery from the coronavirus pandemic – sportingly, socially and economically.

What are going to be defining trends for business and investment in 2021, in HSBC’s view, both globally and for this region?

There are three big themes for me – and these apply as much to the UAE and the region as they do to the global economy.

Firstly, Sustainability. It is centre stage and the sustainable finance market is a clear area of focus for us and our customers. Green bond and sukuk issuance almost doubled in the Middle East last year and there is still a lot of room for growth.

The Middle East and North Africa region will need around US$200 billion in clean energy investments alone by 2030 – according to The International Renewable Energy Agency. So that is obviously a major opportunity for companies and investors in this region.

Another trend is evolving supply chains. The global trade landscape has been completely redrawn by Covid and it will not be business as usual for trade and supply chains in the post pandemic world.

Some supply chains are moving closer to the end consumer and companies that were not digital before went digital during lockdown, which has fundamentally changed paper-based trade.

This brings me onto my third theme – digital. Digital technology has proven vital for the trade of essential goods during lockdowns.

Applying digital analytics to supply chains is helping to improve transparency and agility, and to eliminate waste and inefficiency.

We think that sophisticated use of data will also be a catalyst for corporate restructurings and vertical and horizontal business integrations.