Commonplace Chartered’s relationship with Saudi Arabia is getting nearer by the month, and Sunil Kaushal, the financial institution’s regional CEO for Africa and the Center East, has been instrumental in driving the financial institution’s new affinity with the Kingdom.
“It (Saudi Arabia) is a big, enticing market, and one which we have now all the time been involved in,” Kaushal instructed Arab Information.
Earlier this month, Commonplace Chartered (SC) introduced the appointment of a brand new CEO for Saudi Arabia; skilled banker, Yazaid Al-Salloom, with plans to open a full workplace in Riyadh, in all probability a while in 2021.
Final 12 months SC gained a full banking license from the Saudi Arabian Financial Authority, enabling it to supply the total vary of providers within the Kingdom, upgrading the license from the Capital Markets Authority beneath which it had been working beforehand.
The brand new standing permits SC so as to add to the funding banking actions it beforehand ran, giving it capability to supply industrial banking and deposit-taking within the Kingdom. It may in principle open a retail department system there, however that isn’t a high precedence for Kaushal, particularly within the at present altering banking sector within the Kingdom, the place some huge mergers have been accomplished and extra are considered into account.
“Retail is a phase the place you require scale and it’s a gradual burn, so from our standpoint we see ourselves as a bridge to accessing capital from abroad into Saudi,” he mentioned.
The “bridge” idea sees SC performing as a conduit for two-way capital flows between Saudi Arabia and the remainder of the world.
“It’s about facilitating commerce flows out and in of Saudi, and likewise capital flows from Saudi into the surface world, as a result of Saudi is trying to diversify. We already performed a task in a few these transactions, so I believe from our standpoint it was an space the place we needed to have experience and have a centered method for our prospects who’re already there,” Kaushal mentioned.
“We have to deal with our areas of experience, which embrace challenge finance, capital markets, commerce finance, money administration with prospects, native prospects who’ve already current giant operations in Saudi.
“We additionally cope with regional prospects who’re in Saudi, like giant teams from the UAE and different GCC international locations who’re already in Saudi. So, we’re actually supporting them and offering a continuum in providers which is sort of seamless. That’s the place we consider we will get an actual bang for the buck,” he mentioned.
Kaushal has been concerned in banking within the area and in Asia for the previous 30 years, in quite a few completely different establishments, however took excessive regional job for SC in 2017. He has sufficient experience to ship a simple evaluation of the Kingdom’s financial and monetary prospects within the age of the pandemic, when it has been affected by financial dislocation due to lockdowns and the budgetary results of the autumn in oil costs.
“From our perspective, getting right into a market like Saudi is about taking a longer-term view, and what’s actually necessary are the drivers of the financial system. We consider that the vitality sources aren’t out of the blue going out of vogue. Sure, you possibly can have extra renewables, extra climate-friendly fuels. However there may be going to be a core a part of the financial system that’s counting on oil and gasoline,” he mentioned.
BORN: India 1965.
- Bachelor of commerce, Bombay College.
- Certified accountant, Institute of Chartered Accountants, India.
- Varied roles with Commonplace Chartered in Singapore.
- CEO, Commonplace Chartered Taiwan.
- Head of Company Banking, UAE.
- CEO, Africa and Center East, Commonplace Chartered.
“We’re primary for tech capital markets within the area, whether or not you take a look at standard or Islamic — and never many worldwide banks have the experience to supply you each. So we will entry capital for the sovereigns and for the corporates.
“We additionally consider that the Saudi financial system is opening up and can encourage personal sector participation, which is able to imply our international and regional prospects may have the chance to take part in sectors like well being, training, leisure, infrastructure,” he mentioned.
These sectors have been largely the area of public sector funding, however that’s altering as they speak in confidence to personal sector funding beneath the Imaginative and prescient 2030 technique, Kaushal defined.
The opposite job SC can do is to assist Saudi traders to look outdoors the Kingdom. The Public Funding Fund’s multibillion-dollar forays into Western fairness markets have caught the headlines, however Kaushal believes there might be much more outward funding by expansionist Saudi traders.
“Saudi entities now wish to diversify by going into markets abroad; so that they’re going into markets within the area, they’re going into markets in South Asia, they’re going into markets in Southeast Asia and, after all, the Western world and in China. Not many banks have a presence throughout Asia, South Asia, the Center East and Africa,” he mentioned.
He believes that the funding momentum for the Kingdom is more and more eastwards, particularly within the oil and petrochemicals market, the place Saudi Arabia has been concerned in some high-profile offers in refineries and petrochemical vegetation.
SC has already been concerned within the energy sector within the Kingdom, as a part of the banking crew that helped Saudi Aramco to lift $6 billion for a three way partnership with ACWA Energy and Air Merchandise within the Pink Sea port of Jazan.
Kaushal additionally expects to be actively concerned within the capital-raising program that the Kingdom must make use of this 12 months to bridge the hole in its public funds left by the autumn in oil income. SC estimates this might be as a lot as $75 billion, to be raised on worldwide as nicely a home capital markets.
He estimated the cut up between home and international capital elevating was roughly 60-40 percent-inclined towards home lenders.
SC has taken half in a few of the huge capital elevating workout routines already accomplished this 12 months, as joint international co-ordinator and guide runner on two consecutive sovereign debt issuances totaling $7.5 billion, in addition to on multibillion-dollar issuances for the banking sector.
“Native home markets are very liquid, so I believe the cut up might be roughly 60 % of the overall raised regionally and the steadiness on worldwide markets. It’s a great alternative for the native banks, and so they have been doing that just lately — deploying surplus liquidity into authorities securities,” he mentioned.
Kaushal additionally believes that there are huge alternatives in all points of the privatization program that’s going forward regardless of the financial uncertainties of the pandemic.
“We see personal sector participation and capital coming into infrastructure, training, well being and leisure. Saudi was one of many fastest-growing leisure markets on the planet earlier than COVID hit, and as soon as that settles down, I actually assume that the sector will open once more. And also you’ve received the giga tasks which might be opening up within the Kingdom and, after all, Neom. So we consider that the pipeline stays very strong,” he mentioned.
“Expertise goes to be one other one which goes to select up velocity, and you will see a whole lot of entrepreneurial exercise in addition to investments coming in that sector,” he mentioned.
Some analysts have pointed to a latest rise in non-performing loans within the area as a warning signal for the banking system and a re-emergece of debt issues throughout all regional economies.
“As with the Western banks and, as with the banking sector globally, the final couple weeks of March have been difficult, however in case you take a look at the best way the central banks responded I believe liquidity was ample, and in case you take a look at the capital ranges they’re considerably larger than the regulatory requirement,” Kaushal mentioned.
Within the case of Dubai and the UAE, the place some specialists have highlighted the necessity for giant debt repayments in coming years, he seems to be snug. “The UAE and Dubai have been very conservative. Sure there are internet servicing necessities that may come alongside the best way, however there are excellent classes learnt from the 2008 disaster. And I believe Dubai is provided to tide over the financing necessities, and they’re pondering far forward,” he mentioned.
A very good instance of the UAE’s progressive angle towards capital elevating got here with the latest transfer by the Abu Dhabi Nationwide Oil Firm to spin off its gasoline pipeline to a consortium of traders, on which SC suggested.
However for the subsequent few months, Saudi Arabia will proceed to be Kaushal’s essential focus within the area. He had deliberate to open the brand new Riyadh workplace with between 30 and 40 workers to coincide with the Future Funding Initiative discussion board in October, however the journey restrictions of the pandemic put these plans on maintain for some time. A proper opening will in all probability happen a number of months after journey is eased between the UAE and the Kingdom.
“All I’d say is that we’re extraordinarily excited in regards to the Saudi market. There’s a large quantity of curiosity from our purchasers and from our prospects. It fills in a niche that we have now in our community proposition and that’s important for us.”