KUWAIT: Consolidation in the banking sector is a must to make the industry more competitive, says James Carrigy, Group Financial Controller for the National Bank of Kuwait, who was talking to a pack of students in the American University of Kuwait yesterday evening. The lecture titled: Banking and Financial Institutions in the MENA region was held at the American corner of the AUK's library.
Carrigy, a chartered accountant by training, is a senior banker with over 25 years of experience in the financial services industry. He has worked in Dubai for over two decades. He joined NBK seven months ago. During the lecture he provided an insight into the features of the banking sector basing his talk on a presentation prepared by NBK's CEO Ibrahim Dabdoub.
He dwelled on the sector's new regional boom saying that the economic and investment boom is expected to continue through 2010. He identified possible areas for future growth. Namely: corporate banking opportunities, real estate finance, Islamic banking and brokerage. He also focused on the wealth management, investment banking and project finance. According to him, the size of a bank "matters." "Smaller banks cannot compete with the larger players, he said.
Foreign banks, it turned out, offer better access to capital markets. He then explained that transformation of regional banks has already begun. "Some business lines were liberalised," he said providing examples with the investment banking in Saudi Arabia and Islamic banking in Kuwait. "Islamic banking is booming in all the regions. It is nice to see a couple of Islamic banks in Kuwait," he said.
He then remarked that foreign banks were allowed entry in Kuwait, Saudi Arabia and the United Arab Emirates. There are at least 25 banks in the UAE, he said elaborating that it is healthy to have competition. He stressed that Kuwait was the first country in the world to implement Basel II regulations. He also noted that some banks in the region began to merge with bigger partners while other banks opted to diversify revenues through a specialised niche strategy (for instance Islamic banking).
It is fair to say that now we have some consolidation taking place in the region, he said adding that some banks are realising that "small is not good any more." Other banks, he observed, adopted effective IT platforms and good process control as a major differentiating factor. Some countries have made progress in implementing corporate governance standards at bank level, he added.
Emphasising that only the fittest will survive, he concluded, that banks must develop capabilities to compete effectively, that consolidation is a must and that success will hinge on having an appropriate economic, financial and institutional environment.
By Velina Nacheva
© Kuwait Times 2007
