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www.internationalfinancemagazine.com

October - December 2014

Volume I Issue 1

IFM AWARD WINNERS pg.74

islamic finance THE TIME HAS COME

London is slowly, but surely warming up to Islamic finance and banking

8

CYBER SECURITY THE DANGER WITHIN

60

Egypt’s New Hope

126

Designing your room away from home


MESSAGE OF Chairman

T

he start of any venture – new company, business or a magazine – is a chaotic time. Every venture starts with one person who represents the entire enterprise. He/She ideates, raises capital, initiates the business, sets up the infrastructure, hires manpower and puts logistics in place for the venture to take off. That person is the soul of the business. Whether a business thrives or withers away depends on that soul and also the strength of character of the founder. IFM began its journey in 2013 and this magazine is another step towards our aim of being a credible source of news and the most sought-after provider of financial information worldwide. The world of finance is becoming increasingly complex with each passing day. Some very complex financial instruments were exposed during the 2008 crisis. But despite the crisis

claiming at least one big bank, the desire to make a profit and the cut-throat competition are giving birth to even more complex products. In keeping with this, till a decade ago, most businesses were faceless entities. In a way, it was just a reflection of how disconnected they were from customers. But now, the trend is to give a human face to the business in a bid to connect with customers and make them feel like family. Our coverage of business all over the world and presentation of news will reflect this trend. We will present business stories in a simple and easy-to-understand manner. This is in keeping with my aim of connecting with a wider audience. We would like to hear from you on stories that need to be told and on how we are doing.

Sunil Bhat Director & Publisher director@ifinancemag.com

Oct - Dec 2014 International Finance Magazine


Note FROM EDITOR

A

s 2014 comes to an end, IFM is making a new beginning. Welcome to the print version of our magazine. And what a cover to start off with — Islamic finance and banking. Islamic banking is just about coming of age. While it is popular in the Middle East, parts of Africa and Asia, getting a solid footing in the UK means you have finally arrived. London is the financial capital of the world. When London opens its arms to you, it means that the world is ready for your business. You can expect visibility, branding, regulatory services, legal framework, accountability and the opportunity to tap new markets that would otherwise have been beyond reach due to various reasons. IFM is doing its bit to highlight the attractiveness of Islamic financé and banking through its summit on November 18-19 in London. It is the kind of new beginning that we would like to be part of and contribute to. We look for emerging businesses, opportunities and people with fire in their bellies. We will highlight their success stories, how they overcame setbacks and the lessons learnt along

Dhiraj Shetty Editor editor@ifinancemag.com

the way. Take the case of the 2014 football World Cup in Brazil. It was a proud moment for the nation. The tournament went off smoothly, but had its share of setbacks. Till some time ago, the Egyptians were struggling to find a leader. Now, they have one. And, he is trying to get his compatriots behind him by directing their energies on a new waterway besides the country’s showpiece Suez Canal. The world is watching. We will keep you updated on such interesting developments around the world in a simple and easy-to-follow format. This is our business. And, we will make IFM your business.

Director & Publisher Sunil Bhat Editor Dhiraj Shetty Production Sarah Williams, Mark Miller, Karan Belani Editorial Adriana Coopens, Jessica Smith, Lacy De Schmidt, Suparna Goswami Bhattacharya Business Analysts Dave Jones, Adam Lobo, Sharon Mendis, Ashton Ray, Tanya Jones, Sean Thomas Business Development Manager Steve Martin Business Development Newton Gois, Sunny Shah, Ashish Shenoy Accounts Angela Mathews Head of Events Basant Das Registered office INTERNATIONAL FINANCE MAGAZINE is the trading name of INTERNATIONAL FINANCE Publications Ltd 843 Finchley Road, London, NW11 8NA Phone +44 (0) 208 123 9436 Fax +44 (0) 208 181 6550 Email info@ifinancemag.com Press Contact press@ifinancemag.com Design & Layout Rahil Shaikh Miya

International Finance Magazine Oct - Dec 2014


Oct - Dec 2014 International Finance Magazine


INDEX October - December 2014

54

Volume I Issue 1

22

Now, you can get an mba in Islamic Finance

69

REJIGGING THE NUMBERS

34

Capital markets losing their charm

98

Packing more into a holiday Package

Reinsurance: victim of ITS own success

ALSO ARE 140 ‘WEEKENDS EXHAUSTING BUT FUN’

International Finance Magazine Oct - Dec 2014


COVER STORY

12 Islamic Finance 50

Tricks of the trader

90

The oompH in hybrids

on Cuffs and 116 While Collars

44

When the euphoria fades

137 Page-turners

40

I’d like the global economy to work without paper Oct - Dec 2014 International Finance Magazine


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International Finance Magazine Oct - Dec 2014


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Oct - Dec 2014 International Finance Magazine


Cyber security The danger within Never mind Chinese hackers, your CEO may be the biggest threat to your organisation’s online security Tim Ring

O

rganisations now accept cyber security is one of their biggest business risks, but how many know where the greatest danger lies? Is it East European cyber criminals siphoning out your cash? Chinese hackers stealing your IP? Or, your CEO replying to an email? Despite the drama attached to spies and spivs, increasingly the finger is pointing back towards Board directors and the ‘insider’ threat in general. According to a 2013 AlgoSec ‘horse’s mouth’ survey of IT and security professionals, almost two-thirds (63%) believed the greatest risk to their organisation’s security came from within – either through accidental data leakage or malicious employees. Just one third (37%) were more afraid of

International Finance Magazine Oct - Dec 2014


byte by byte

9

outsiders, such as political or criminal hackers. In any case, Trend Micro reckons that 91% of external ‘advanced’ targeted cyber attacks on companies start with a spear-phishing email – where a careless employee gets fooled by a fake email and lets the attacker in. So whatever the nature of the threat, insiders are the crucial weak point. The evidence that these surveys are right is not hard to find. One of the biggest data breaches ever suffered was at giant US retailer Target last Christmas, when hackers stole the personal credentials of around 70 million of its customers and the payment card details of around 40 million

customers. In the fallout from this, Target’s CEO and CIO both quit and the company’s profits spiralled down 21% in the first quarter. The US Secret Service is still investigating the cause of the breach, but according to renowned cyber security blogger Brian Krebs, it all started with a spear-phishing email. Even worse – in security terms – the email was sent not to someone at Target, but an employee at one of its supplier companies, Krebs says, quoting “multiple sources close to the investigation”. Top staff are worst offenders When it comes to falling for these kinds of cons,

CEOs and other senior staff are the worst culprits, says Rohyt Belani, CEO of cyber security firm PhishMe. “Senior executives are about 25% more susceptible overall,” he said. Attacks are also getting more cunning and more targeted, often using information that the victim themselves have made public on their social media profiles and pages. The trick is to find the right emotional ‘trigger’ that means the victim can’t resist clicking on the dodgy email. Belani cites one of the most successful spearphishes ever (still doing the rounds), which PhishMe reckons has caught out more than 200 CEOs at US companies – and which

nearly snared Belani himself. “An email would come in talking about the fact that there was a lawsuit filed against your company,” Belani said, “and it had an attachment which made it look like a court document, saying ‘Attached are the details of the lawsuit filed and the defendant’. “The focus is, what is going to trigger this employee to act quickly without thinking? I received this email personally, and to be honest I’m very obviously cognizant of targeted phishing, but I almost got my mouse over it. It was a trigger to say, ‘Man who the hell sued us?’” CEOs are the most susceptible, Belani says, not because they’re dumb

Oct - Dec 2014 International Finance Magazine


byte by byte

10

When it comes to falling for these kinds of cons, CEOs and other senior staff are the worst culprits Rohyt Belani CEO of cyber security firm PhishMe

but because they’re busy. “A lot of these folks, they’re acting on so much so fast that they lack this awareness. They’re just not taking that pause and saying could this be something that’s not legitimate. It’s that rush, the feeling that ‘I need to act on something’. It’s that factor, and their high visibility, that leads to all these attacks being more successful.” The best safeguard companies can take is to exhaustively train senior and other staff to “have their suspicion radar on”, Belani said. “With customers, we often spend the first four to six months going through simulation and training exercises just getting two messages across to people: email is an attack vector; you are a target.” He also suggests regularly immersing staff in simulation exercises where the organisation’s own IT department sends out an imitation spear-phishing email, to test readiness.

threat is under-reported,” said Randy Trzeciak, technical manager of the University’s CERT Insider Threat Center, quoting surveys that show around 50% of respondents suffer one or more malicious cyber security incidents per year, yet 70% of those respondents do not report it or take legal action. So how can you protect your company against this malicious threat? Carnegie Mellon offers a checklist of actions, but in summary Trzeciak suggests starting by identifying your critical assets. Then, to protect your IP, track who has access to this data and what are they allowed to do to it. To prevent fraud, look at dual-control, separation of duties and don’t let privileges accumulate as people move from job to job. And to stop IT sabotage, again look at dual controls, and introduce alerts when people create or disable accounts or change privileges.

Malicious insiders Of course, CEOs — and the admins who open their email — are not the only weak point, and the ‘insider threat’ is not just about employees being conned by outsiders. There’s also malicious insiders: employees gone bad who steal their own organisation’s IP, commit fraud for financial gain, or sabotage their IT systems. Carnegie Mellon University in the US has studied close to 1,000 insider incidents, and says malicious attacks are a hidden menace. “We think the malicious

Get the board involved For many experts though, the crucial thing is for board directors to get involved, rather than assume it’s just an IT problem. As Dave King, UK CEO of reputation management firm Digitalis, wrote in SC Magazine in July: “Since the most sensitive information often resides at chairman or CEO level, that’s where the biggest vulnerability lies too. “So until cyber is fully understood at the board table — in terms of what the threat looks like and from whom — the enterprise is working with a great big

International Finance Magazine Oct - Dec 2014

IT-shaped sticking plaster when the patient is potentially bleeding out from another artery.” Rohyt Belani agrees: “The number one hurdle is the attitude — ‘why can’t the IT guys just take care of this stuff?’ That’s the biggest thing to shake out of people.” Belani says there has been progress, with breaches like Target finally bringing the cyber threat to the attention of the boardroom. “Several of our customers’ security officers have said ‘I’ve presented to the board recently, I never did in the past’. The conversation has been elevated to the highest level. That’s probably the biggest piece of inertia that needs to be overcome, and we’re seeing it happen gradually.” Belani draws a parallel with soccer, where the organisations’ security officer is the goalkeeper, and the criminal is the attacker taking a free kick against them. “The goalie doesn’t stand a very good chance of stopping the ball unless he has defenders in front of him — the employees. If the employees are really good, then you have a solid wall of defenders blocking the large majority of attacks before they even get to the goalie.” That is not to say the money lavished on security technology is unnecessary, just that it’s wasted if it can be easily bypassed through the mistake or malice of an employee. To prevent that, companies need to educate everyone from the CEO down to ‘have their suspicion radar on’.


EU Islamic Finance And Banking Summit

“Showcasing the European Union as a Hub for Islamic Finance” Jumeriah Carlton Tower Hotel, London, UK 18th & 19th November, 2014 Special Address by

Honourable Chairman

Lord Mohamed Sheikh

Sheikh Bilal Khan

Baron Sheikh of Cornhill, House of Lords

UK Catalyst at UKTI Co Chairman of Dome Advisory

SUPPORTED BY

STRATEGIC PARTNER

ASSOCIATE PARTNER

OFFICIAL CSR PARTNER

MEDIA PARTNERS

www.internationalfinancemagazine.com/events | Ph: +44 (0) 2071936304 | E-mail: bdas@ifinancemag.com


COVER STORY

The UK was the first country to realise the potential, and now London is slowly but surely achieving its ambition of becoming a hub for Islamic finance and banking Danish Khan

I 14

n 2001, the Bank of England established the Islamic Finance Working Group to look into the development of Islamic Finance in the United Kingdom. It was a major step in the ongoing evolution of Islamic Finance in the UK. In 2013, London became the first city outside the Muslim world to host the prestigious World Islamic Economic Forum (WIEF). This, in essence,

captures the confidence and the importance that UK enjoys as an aspiring global centre for Islamic Finance and Banking. The WIEF represents a wide conglomeration of stakeholders whose primary objective is to use business and trade as a means to improve the economic wellbeing of Muslim nations and communities. The choice of London was a major boost to the city’s image as a seri-

International Finance Magazine Oct - Dec 2014

ous partner and a welcoming destination for sharia compliant finance. Going beyond such landmark events, the UK’s success story in Islamic finance is marked by equally impressive numbers. Till 2013, $34 billion had been raised through 49 issues of sukuk on the London Stock Exchange (LSE). The London Metal Exchange (LME), which sets global benchmarks, is witness-

ing increasing presence of Islamic finance institutions and sharia compliant firms. The presence of Baroness Sayeeda Warsi, a prominent politician who was till recently a cabinet minister, has added considerable charm and expertise to the Islamic Finance Working Group. “It’s about making Britain the preferred choice for the Muslim world to invest in and do business with,” she declared at a con-


COVER STORY

15

Oct - Dec 2014 International Finance Magazine


COVER STORY

16

ference in Oxford University promoting Islamic finance a year ago. The UK pulls every string possible to attract investors and customers through its Islamic finance offerings. While the primary consumers of Islamic banking are Muslims, a 2013 survey to map the attitude of people towards Islamic finance revealed some interesting findings. The survey was conducted by an independent research company on behalf of Islamic Bank of Britain (IBB). Around 66 per cent of those surveyed said that sharia compliant finance is appropriate in UK and 60 per cent agreed that sharia compliant finance is relevant to all faiths. A majority (58 per cent) understood that Islamic finance is based on ethical system of finance.

Sukuk As the demand for Islamic finance grows, Western countries are adding new sharia complaint products to their offerings. In June this year, the UK became the first non-Islamic European country to issue sukuk, an Islamic bond, which is now being seen as an important tool to attract wealthy Muslim investors. In August, South Africa announced plans to issue $500 million sukuk, making it the second non-Muslim country to do so. This follows the success of Britain that drew bids 10 times more from global investors than the £2billion ($3.2 billion) on offer. Till date, around £23 billion has been raised through 53 issues of Islamic bonds on the London

International Finance Magazine Oct - Dec 2014

Stock Exchange. South Africa has hired BNP Paribas, Standard Bank and KFH Investment to meet potential investors in the Middle East, Asia and Europe. Other African countries, like Gambia and Sudan, have issued sukuk but the amount was insignificant. Nigeria issued sukuk last year and raised $62 million, followed by Senegal that raised $208m this June. With South Africa entering the African market with sukuk, the investment in the continent, especially from cash rich Middle Eastern & Asian investors, is bound to increase. This will provide a huge boost to South Africa to finance some of its infra-

structure projects. Other countries, like Luxembourg, and the financial hub of Hong Kong are not far behind. Luxembourg plans to issue sukuk worth €2 billion by Septemberend while Hong Kong has begun talk


COVER STORY

with investors for sharia compliant offerings that could be around £600 million. The sukuk market last year was over £26 billion and, this year, is projected to top that. With Islamic banking expected to reach £1.2 trillion in assets by the end of the year, shariah compliant bonds are expected to exceed last year’s £26 billion with sales so far around £27.7 billion. The UK is already a preferred getaway for wealthy Arabs. Their arrival is announced by flashy, custommade cars that they parade on the roads of London. This familiarity and comfort

lends itself to an ease in attracting investments for big infrastructure projects through Islamic instruments. Pension scheme Much significant is the expansion and percolation of the scope of Islamic finance to various spheres of public life. In July 2014, the Islamic Bank of Britain (IBB) guided the development of a new sharia compliant pension scheme. The Islamic Pension Trust was developed by Carey Pensions UK and has been accredited by IBB as a sharia compliant pension scheme. This is a testimony to the intellectual capital and encouraging regulatory framework that allows the creation and structuring of unconventional financial products of Islamic denominations. There was a demand for an Islamic pension scheme in the UK, as legislative changes made it mandatory for certain companies to have a pension scheme for their employees. This presented an opportunity to tap into a niche business sector, shaped particularly by the presence of a large proportion of Muslim population in employment. Sultan Chaudhury, CEO and Director of IBB, said: “We can all appreciate the importance of sensible financial planning for our future, but until now it has not been possible for

employers in the UK to enroll their Muslim employees into a workplace pension scheme without compromising their beliefs. The launch of the Islamic Pension Trust has changed that, as it enables British Muslim employers and charities to provide a fully sharia compliant workplace pension that meets all of the government’s criteria for an auto-enrolment scheme.” But besides the demand from Muslims and wealthy investors from the Middle East, there are other reasons too for the growing popularity of Islamic Finance. Education With Islamic finance expected to grow to £1.1 trillion by the end of 2014 and with 1 million professionals required to fill the jobs that the industry is expected to generate by 2020, courses in the subject are much sought after. Keeping this in mind, the UK has positioned itself to provide some of the best courses in Islamic finance. The London School of Business and Finance and other business schools, like Ashton at University of Birmingham, Henley at University of Reading and Judge at University of Cambridge, offer special postgraduate courses in Islamic finance. Universities, like Durham, Cardiff, Bolton and Bangor, have dedicated centres offering courses and degrees in Islamic finance. Bangor University was the first in the UK to introduce an MBA in Islamic Banking & Finance in partnership with Bahrain Institute of Banking and Finance (BIBF).

17

It’s about making Britain the preferred choice for the Muslim world to invest in and do business with Baroness Sayeeda Warsi, a prominent politician

Oct - Dec 2014 International Finance Magazine


COVER STORY

18

International Finance Magazine Oct - Dec 2014


COVER STORY

Recently, BIBF signed an MoU with University of Bolton to offer an MBA in Islamic Banking. In July, the University of Durham appointed two new professors to strengthen the faculty of Islamic Finance and Banking. The Universities of Oxford and Cambridge have dedicated faculties for the study of Islam and Muslims, and can serve as centres for further research and guidance. In a promotional video, Dr Kamal Munir of Cambridge Judge Business School outlines the reasons for the growth of Islamic finance and demand for courses. He says: “The reason Islamic finance has been growing so rapidly is perhaps rooted in the financial crisis. Islamic banks outperformed conventional banks during the financial crisis because of their greater stability, and that really put them on the map. High levels of uncertainty are prohibited in Islamic finance. You cannot buy and sell things that you do not own. You must own something in order to sell. You can only invest in ethical projects; for example you cannot invest in gambling or alcohol. The future for Islamic finance is great.”

With Islamic finance expected to grow to £1.1 trillion by the end of 2014 and with 1 million professionals required to fill the jobs that the industry is expected to generate by 2020, courses in the subject are much sought after. Keeping this in mind, the UK has positioned itself to provide some of the best courses in Islamic finance.

Oct - Dec 2014 International Finance Magazine

19


COVER STORY

The growth in

Islamic finance HOW MUCH SUKUK WAS ISSUED IN 2014

Which countries issued Gambia Bahrain

South Africa

Saudi Arabia

Turkey

Number of issuers

102 Number of sukuk

20

567 Amount raised

$95

bn

(Up to Oct 2014)

SUKUK IN LSE

$38

bn

raised through 53 issues

[According to the latest World Islamic Banking Competitiveness report by Ernst and Young, the assets of Islamic banks grew at an average rate of 17 per cent per year between 2008 and 2012. This is two to three times faster than the rate at which conventional banks grew over the same time. Iran accounts for half of the assets in Islamic banks. Other countries with significant quantum of assets in Islamic banks are Indonesia, Malaysia, Qatar, Saudi Arabia, Turkey and UAE. ]

LATEST DEAL In August 2014, London-based shariah-compliant investment bank Gatehouse Bank purchased the 17-storey Marriott Residence Inn in New York, US in partnership with a US-based hotel operator.

According to ICD Thomson Reuters Islamic Finance Development Indicator (IFDI) for 2013: a. There are 68 institutions offering training courses on Islamic Finance b. 25 institutions offering degrees in Islamic Finance (The respective figures for Malaysia are 44 and 19, and for US 25 and 2) International Finance Magazine Oct - Dec 2014


COVER STORY

LANDMARKS FINANCED BY ISLAMIC FINANCE

The Shard, Chelsea Barracks, Harrods and the Olympic Village. With an investment of US$2.4 billion, Chelsea Barracks is the biggest shariah-compliant real estate project in the UK. The UK is keen to attract investment in education, social housing and healthcare too from Gulf-based sovereign wealth funds.

d sukuk in 2014 Brunei Darussalam

Singapore Qatar

TOTAL ASSETS GLOBALLY UNDER ISLAMIC FINANCE Worth around

Indonesia Malaysia

$1.3

tn

up to October 2013 which represents approximately 1% of global banking assets. In 2015, the industry is expected to be worth

$2.5

tn

ASSETS IN UK UNDER ISLAMIC BANKING

$19

bn

(up to October 2013)

ENCOURAGING STEPS Encouraging steps Removal of double tax on Islamic mortgages Extending tax relief on Islamic mortgages to individuals as well as companies.

Iran has the maximum assets under Islamic finance

c. UK has five Islamic banks and 64 Islamic funds, while the US has four Islamic banks and six Islamic funds. However, the net asset value of Islamic funds is higher in US than the UK. d. The number of seminars on Islamic banking/finance in UK was 19 while for US it was 5. The UK had eight conferences with more than 100 participants while US had just one. Oct - Dec 2014 International Finance Magazine

21


INTERVIEW

Now, you can

MBA Islamic Finance get an

IN

The course will be offered in the UK, but the spotlight is on Bahrain Institute of Banking & Finance Danish Khan

International Finance Magazine Oct - Dec 2014


INTERVIEW

23

Solveig Nicklos, Director, The Bahrain Institute of Banking & Finance (BIBF)

Oct - Dec 2014 International Finance Magazine


INTERVIEW INTERVIEW

T he growth in Islamic finance and banking has led to a steady increase in courses and qualifications related to the subject. This has prompted forging of relations between institutions of learning across continents. To draw upon their relative strengths and benefit from a shared interest in developing exciting courses, several universities and colleges have inked deals to widen the options available to students. The Bahrain Institute of Banking & Finance (BIBF) recently signed an MoU with the University of Bolton to offer an MBA in Islamic Finance. Solveig Nicklos, Director, BIBF, spoke to IFM about the MoU and the general trend in the study of Islamic finance.

24

What do you see as the reasons for the interest among students for Islamic finance? Islamic Finance is the fastest growing segment within global financial markets. This has resulted in a clear shortage of skilled and qualified Islamic Finance professionals, and has stimulated interest from students. BIBF, with this MoU signed with the University of Bolton, will work on designing and developing one of the first MBA degrees in Islamic Finance in the world. We are going to market it globally through the University of Bolton’s network, as they have satellite campuses in several countries around the world. However, we expect that most of the students will initially and extensively come from the MENA region, due to the large activity of Islamic Finance in this region. What are the benefits of this MoU to the students, and the University of Bolton and BIBF? Students will have ac-

cess to the first MBA of its kind in Islamic Finance. With BIBF’s long history in terms of the quality of its outcomes and proficiency in meeting the requirements of the business sector, students will be offered an international degree of high standard that is accessible from the MENA region, and recognised and supervised, along with BIBF, by the UKbased University of Bolton. BIBF will be developing the Islamic Finance subjects while University of Bolton will cover the core MBA subjects of the programme. The MBA will, therefore, combine the strengths of University of Bolton’s longstanding MBA programme, with the knowledge and practical insights of BIBF’s Islamic Finance capabilities, and students will be the ultimate beneficiaries. In addition to this, one of the major strategic goals of BIBF is to establish the Institute’s strong position as a Thought Leadership institution. Being involved in the development of this programme in terms of

International Finance Magazine Oct - Dec 2014

preparing its academic content, stresses the institute’s heritage in Islamic Finance, which goes back to 1997. What other partnerships do you have in UK, Europe and other places? One of the key points of strength of BIBF is the wide partnerships at both professional and academic levels. BIBF is known for its wide range of courses that are designed and tailored to meet the immediate requirements of the local and regional labour market. Yet, it offers a huge range of professional qualifications with the most internationally recognised

BIBF will work on designing and developing one of the first MBA degrees in Islamic Finance in the world


INTERVIEW

25

Âť

Front row: (left to right ) Baroness Morris of Bolton (University of Bolton, Chancellor) and Solveig Nicklos (BIBF, Director). Back row: (left to right) Professor Mohamed Abdel-Haq (University of Bolton, Chairman of Centre for Islamic Finance), Hani Redha (BIBF, Head of Islamic Finance), Burhanu Deen Jayah (BIBF, Head of Accounting & Finance, Information Technology, and Research & Advisory).

associations and institutions. BIBF continues to exceed global results in many of the qualifications it offers with its affiliates. On the academic level programmes, BIBF has been collaborating with some of the best-inthe-field universities as part of an international programme service, for around 12 years. We partner with Bangor University in the UK for undergraduate programmes and DePaul

University in the US for graduate programmes. Students get access, from BIBF campus, to academic education in line with standards of international universities and upon completion of the programmes, qualifications that are recognised by these universities as well as the Higher Education Council of the Kingdom of Bahrain. How do you see the future of Islamic Finance in UK and globally?

Islamic Finance has a promising future as one of the financial solutions now being introduced to the world of finance. However, the future growth and prospects of the industry hinge on the development of its human capital, and this leads to the importance of the MBA that we are launching. The UK is playing a growing role in the global Islamic Finance market and is benefiting from its

partnerships with Bahrain by leveraging Bahrain’s rich heritage and leadership position in Islamic Finance. We expect this programme, which brings together the strengths of the UK and Bahrain, to grow rapidly, once launched. However, once started in Bahrain and the UK, the plan is to maximise its geographical scope by offering it in other countries within the network of the University of Bolton.

Oct - Dec 2014 International Finance Magazine


‘High operational cost and lack of expertise may be

hampering growth in UK’ Bahrain Islamic Bank (BisB) was the first Islamic commercial bank to be established in Kingdom of Bahrain. Since 1979, BisB has been constantly upgrading its services to match the diversifying needs of customers. Their stated vision is to be the “best shariah compliant financial solutions provider”. IFM spoke to Abdul Rahman Turki, General Manager, Retail Banking, BisB on the global scope of Islamic finance and banking. Deriving from his rich experience in retail banking, Mr Turki spelt out what Islamic banks in UK could do to increase customer base. Danish Khan

International Finance Magazine Oct - Dec 2014


INTERVIEW

27

Abdul Rahman Turki, General Manager, Retail Banking, Bahrain Islamic Bank (BisB)

Oct - Dec 2014 International Finance Magazine


INTERVIEW INTERVIEW

28

What are the major challenges to the growth of Islamic finance and banking in the UK? Islamic Banking has started to become a banking model that is necessary to be offered at all the major banking centres in Europe and other parts of the world. UK is one of the main European centres that has to have strong and broad Islamic financing services. Islamic banking industry is built on ethics and commitments towards the community’s well being, gaining profit in a socially responsible manner, unlike conventional banking which is, in general, focuses on economic outcomes. With its relatively sizable Muslim population of approximate 3 million, UK has the potential to see more Islamic financing transactions than what is taking place. The global industry is

estimated to be $1.5 trillion and projected to reach $2.6 trillion by 2017(PWC sources) and it is growing above 15%, outpacing the conventional banking growth, which is 13%, and interest in the industry is still growing. The challenge for Islamic banking in the UK is to have clear rules and regulations that is not contradicting the shariah principle when entering in to a contract or producing Islamic products. Expectation of Islamic banking in UK and other European countries would require changes in the regular environment to allow implementation of Islamic banking schemes, but not compare it similarly with rules of conventional banking, which has been tested much earlier and is working well. Although Islamic products appeal to Muslims and

International Finance Magazine Oct - Dec 2014

other ethical customer segments, its high operational cost and not having the expertise may be the reason for some banks to not open in UK or for local banks in UK to not have Islamic windows. The availability of scholars in the bank is a must; in order to fulfil customer inquiry on the spot; shortage of expertise in the field may be another challenge that has to be addressed. An Islamic product approved by one shariah board may not be recognised by another. Therefore, having a common regulation of shariah scholars at the central bank or an authority body in the system is necessary. Lack of standardisation may not be the only hurdle; public awareness of the product and services is a key factor for promoting Islamic banking financing and services. Moreover,

Islamic banking operations prove to be slightly costly to operate compared to the conventional way of banking, hence lower return may hinder investors from invest in such a different banking model. However, in the long run, the rewards will be worthwhile What are the major gaps you see for retail customers who are interested in shariah compliant financial and banking services in UK? There is a positive relationship between service quality and customer satisfaction for both Islamic as well the conventional banks. The existence of Islamic and conventional banks creates competition among banks to meet customers’ expectations for long term benefits. Customer’s perceptions about Islamic banking can play a big role in the


INTERVIEW

The global industry is estimated to be $1.5 trillion and projected to reach $2.6 trillion by 2017(PWC sources) and it is growing above 15%, outpacing the conventional banking growth, which is 13%, and interest in the industry is still growing. growth of this industry in UK. Not long ago, Islamic financing was thought to be more complicated, slow in delivery and very costly when a customer decides to make an early settlement, and with limited product range .To some extent this was true, but today most of the Islamic banks around the globe, including UK, offer full range of products through sophisticated delivery channels at a very competitive pricing compared to the conventional banks. Public awareness plays a big role in promoting Islamic finance services in UK; hence the gap can be filled with clear and productive communication approach. A large percentage of the UK Muslim population is young; usually, these customers do not appreciate between Islamic and commercial banking when it comes to price and fast delivery. More mature, or let’s say older customers at the age of 40 and above, tend to have more respect towards faith or religion rules; therefore, these type of customers and specially being Muslims prefer Islamic financing to conventional banking financing, as they tend to be more aware and comfortable with Islamic products and services when it comes to their financial needs. A very important factor is the trust of the public

or customers in the shariah board and the product being approved by them. And last but not least, the public should be aware that Islamic banking services is not restricted to Muslims. Outside the QISMUT and Bahrain, which countries or regions you think have great potential for Islamic Finance and Banking? Africa can be one of the best opportunities for Islamic financing. Most of GCC countries and SE Asia have strong trade ties and connections with many African countries. Therefore, Islamic finance can play a big role in creating significant opportunities for the big Islamic finance centres to make full use of these opportunities in the African continent. Islamic finance is still in the infancy on the global level. There are over 600 Islamic finance institutions worldwide. Africa is a continent which has great potential for Islamic financing. 50% of the continent is Muslim and studies show that over 65% of the total population is unbanked. The Islamic religion and culture is very rich in most of these African countries. Therefore, any penetration will be less complicated and will be encouraged by many of the central banks

in those countries. The need for finance of large scale Infrastructure and manufacturing projects, as well as the large unbanked population provides tremendous opportunities for Islamic financing in Africa. Studies show that greater regulatory clarity in Bahrain and Malaysia has been a catalyst for good performance. Can this be an impediment for organisations like BisB and for Islamic finance and banking to enter Western/European market? Bahrain Central bank was established in 1973, and it is worth mentioning that the modern conventional banking started in Bahrain back in August 1918 with the opening of Standard Bank of British South Africa, which is known today as Standard Chartered Bank. Bahrain enjoys great regulatory clarity and an excellent reputation as the banking hub in the Middle East. Islamic financing services were introduced by Bahrain Islamic Bank in 1979; BisB was the first Islamic bank in Bahrain and the fourth worldwide. For sure, expanding the bank’s services outside the boundary of the country will require the Central banks’ green light. However, the authorities in the kingdom always welcome the expan-

sion of its local financial institutions abroad based on sound feasibility studies. Al Baraka Islamic bank, one of the leading Islamic banks based in Bahrain, has a presence in a number of countries outside the region. Europe is a regularised financial centre with growing Muslim population and for banks to have a presence there depends on an individual bank’s future plans. Are there any plans by BisB to offer its services in UK? One of BisB’s strategic plans is to expand outside the boundary of the kingdom of Bahrain. The bank has been offering Islamic banking services for more than 35 years, and it has the expertise and the knowhow to comfortably operate outside the kingdom. All I can say is that we are ready but the time and place haven’t been decided.

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Turkish

is looking Partner Pelin Baysal and Ilgaz Önder of the Istanbul-based law firm Gün + Partners examine the current trends in Islamic finance

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Pelin Baysal

International Finance Magazine Oct - Dec 2014

Ilgaz Önder


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market up

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slamic finance has a history of more than 30 years in Turkey. At present, out of the 50 banks in Turkey, there are four Islamic banks normally referred to as ‘participation banks’. Ziraat Bank, one of the public banks in Turkey, is also contemplating entering the Islamic finance market in 2015. Conventional banks hold 90.4% of the banking market while the participation banks currently hold 5.5%, although this is expected to reach 15% by 2023. Sukuk, or lease certificates, are on the ascendant throughout the world, and are expected to grow rapidly in Turkey along with the flexibility and diversity introduced by the Communiqué on Lease Certificates in June 2013. Drafted in consideration of the international practice and with contributions of Capital Market Board (CMB), Treasury, Participation Banks Association of Turkey (PBAT) and other market stakeholders, the new Communiqué introduced new forms of

lease certificates, which can be based on the Ownership, Management, Trading, Partnership or Engineering, Procurement and Construction contracts. Additionally, Special Purpose Vehicles (SPVs), which are established to conduct the transaction between the investors and fund users, are allowed for multiple transactions. At the same time, bureaucratic process is eased and issuance costs are decreased. As another significant development in the Islamic finance market, the Turkey Export Credit Bank (Turk Eximbank) received approval from Banking Regulation and Supervision Agency (BRSA) to provide murabahah credit for exporters’ international transactions. Export credits, which were granted via only conventional banks, are also available for the participation banks to be granted for their customers as of May 2014. Hayrettin Kaplan, CEO of Turk Eximbank, clarified that Turk Eximbank acts

International Finance Magazine Oct - Dec 2014

as an agency between the banks of Gulf countries and Islamic Development Bank together with the participation banks whereby it provides the capital required by the participation banks on interest-free basis. Analysis of obstacles One of the long standing problems faced by the Islamic finance market in Turkey is liquidity. Participation banks, before the introduction of lease certificates, had to keep high volume of liquidity reserves in their accounts for risk management purposes, which led to a decrease in profits, thus creating a handicap while competing with conventional banks. Lease certificates, introduced in 2010, provided a tool for the participation banks to remedy the lack of fund raising methods. In order to increase market liquidity by means of lease certificates, the new Communiqué additionally allows rights as well as assets to be regarded as the source of the lease certificates. In ad-

dition, pension investment funds, real-estate investment funds and venture capital investment funds, which are revised in order to incorporate lease certificates and tax incentives for both individual and corporate incomes generated by interest-free transactions, constitute leverage for the expansion of Islamic finance structure. Participation banks mostly use lease certificates based on ownership (ijara), in particular on real estate ownership, to increase the liquidity. Participation banks need ownership of real estate among their assets to transfer it to SPVs and lease back within the framework of issuance if they want to continue to issue ijara sukuk. As stated by the Workshop on the Participation Banks and Islamic Finance (Workshop) organised by PBAT and BRSA and released in July of 2014, however, the participation banks’ inventory of real estate is about to be diminished. Therefore, participation banks need


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to diversify the methods to increase liquidity in the market and offer new instruments for investors. Recent ventures in the market Participation banks have begun to look at foreign investors to raise liquidity. Despite the concern among market stakeholders that the potential of Turkey in terms of Islamic finance is not clearly expressed abroad, recent transactions conducted by participation banks as well as private companies are promising for the future. Statistics also indicate that issuances to foreign investors have already reached up to 49% of overall issuances concluded to date. Turkiye Finans, which has previously concluded two international issuances in 2013 and 2014, concluded another in July of 800 million Malaysian Ringgit (app. US$250 million). This transaction, announced to be the first part of an issuance programme totalling 3 billion Ringgit, took place with the supervision of HSBC and Standard Chartered. Following this, it is on the news that Kuveyt Turk,

another participation bank, also plans to issue sukuk in Malaysia. In September, Kuveyt Turk announced that it applied for the approval of lease certificate issuance to raise as much as 2 billion Ringgit (app. $625.3 million). Apart from the participation banks, companies are also willing to provide funds by means of international issuance. Last month, conglomerate Dogus Group received regulatory approval to raise $370 million via sukuk in what would be the first dollar-denominated corporate transaction of the kind in the country. Similarly, Agaoglu, one of the significant players in construction sector, is planning to raise up to $300 million from foreign investors. Instruments offered to investors Despite the Communiqué introducing five types of lease certificates, most of the transactions conducted between the participation banks and investors are based on trading (murabahah – mark-up sale) where an asset or right is purchased through an SPV with funds contributed by the in-

vestors and sold to the fund user at a price that is calculated using an agreed profit margin. Approximately 75% of Islamic financial instruments contain murabahah, which concerns short term financing. Mukim Oztekin, president of Banking Regulation and Supervision Agency (BDDK), at the Participating Banks Workshop stated that they should be seeking for the application of other instruments such as lease certificates based on partnerships (mudaraba and musaraka) in order to maintain long-term funds for participation banks as well as the macro-economic projections for the next decade. At this point, an issuance led by Agaoglu in 2013, together with Aktifbank, an investment bank, drew the attention as the first issuance realised for the financing of the construction of Istanbul International Finance Center. The issuance amounted to TRY 100 million (US$44 million). It is based on mudaraba, an instrument also described as profit/loss sharing, where the SPV obtains a share in the joint venture by allocating the fund contributed by

the investors. Hasan Rahvaiİ, CEO of Agaoglu, commented on the introduction of this practice and stated that the development of new financial institutions, especially asset based instruments such as lease certificates (sukuk), creates the motivation required to draw the capital accumulated in the Gulf region. In addition, considering investors’ satisfaction in mind, lease certificates based on partnership are expected to be considered as a viable alternative to raise funds for the construction sector. According to Mr. Oztekin, the reasons why the participation banks mostly tend to use murabahah are the customer’s behaviour, i.e. tendency for short-term investments and competition among banks. On the other hand, Derya Gürerk, new president of PBAT, emphasises another aspect of the issue and points out that regulations concerning partnershipbased sukuk need revision. Confirming this latter opinion, the Workshop, taking into account the high level of risk in partnershipbased sukuk and hardship in tracing the activities of the fund user corporations, concluded that new regulations shall be brought in to reduce the risk and new incentives will be introduced. Suggested solutions are tax exemptions for investors and formation of a guarantee fund in order to distribute the risk of the investments, which is borne solely by banks.

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David Drake

Capital markets

losing their charm Shifting investment priorities of High Net Worth Individuals

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he lacklustre performance of major markets and the depressing outlook in the Eurozone and North America have made high net worth individuals (HNWIs) and their families rethink their investment strategies and priorities. To counter the dip in traditional investment performance, those managing assets for HNWIs have looked to diversify their assets. As a result, there is renewed investment interest and activity in the Eurozone and Asia Pacific. New investment opportunities are also opening up in several countries in South America. At the same time, the Eurozone is showing signs of recovery. The monetary and fiscal reforms instituted by several sovereign states, plus the infusion of funds from European Central Bank, have started to pay off. Recently, there has been an increased infusion of funds into real estate in the UK and other EU countries. UK investment platform Cofunds reported that net inflows into the Investment Management Association have increased by more than 400 percent in the past year. A Forbes report by Panos Mourdoukoutas noted, “Eurozone Initial Public Offerings (IPOs) and credit markets are coming back to life. Last week, two Spanish REITs attracted strong investment interest, as they made their debut as publicly traded funds.” The Asia-Pacific region has also drawn the attention of the world’s wealthiest.

An Asia Asset Management report states: “Asia-Pacific’s wealthiest investors are moving much more of their money into direct investment opportunities and away from capital markets, as they see greater opportunities in other businesses and real estate rather than equity and bond markets. In this respect, family offices in the region are following trends in Europe, where concern over some financial products has led many of them to embrace direct investing in a more concerted manner in the last few years.” There are many opportunities for direct investment in the Asia-Pacific Region outside of real estate. It is home to more than 70 percent of the world’s population. Except for Malaysia, Singapore and Thailand, the majority of countries in Asia are still underdeveloped, particularly in the infrastructure sector. To meet the demands of

their large populations, the energy sector will likely top these developing countries’ agenda over the next five to 10 years, including exploration of alternative and renewable energy resources like solar, driven by rising fuel costs. Another growth region is South America. Like their counterparts in Asia, most countries in South America are also developing. While many investors avoided South American markets because of problems with political stability, recent reforms have made the region an interesting new landscape for foreign investors, with Brazil leading the pack. Overseas Property Mall has listed Brazil, Chile, Nicaragua, Peru and Uruguay among South American countries with strong investment potential. Also of interest is the fact that Brazil will host the Summer Olympics in 2016, generating a range of investment opportunities that

are likely to cascade onto other neighbouring countries mentioned in Overseas Property Mall’s list. Many analysts on Wall Street are bearish on the future of traditional US market products. But global wealth managers can see growing opportunities in the UK and South America that can help balance the downturn in other sectors. David Drake is an earlystage equity expert and the founder and chairman of LDJ Capital, a New York City-based family office, and The Soho Loft Media Group, a global financial media company with divisions in Corporate Communications, Publications and Conferences. You can reach him directly at David@LDJCapital.com.

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INTERVIEW

‘Banks haven’t listened to customers for a very long time’ Mike Davies, Vice-President (EMEA North), GMC Software Technology, says banks are the last bastion of an outdated attitude towards customers, and are now struggling to catch up Megha Rai

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Mike Davies, Vice-President (EMEA North), GMC Software Technology

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With an increasing number of customers being tech-savvy, internet banking and mobile banking are emerging as a must have. IFM spoke to Mike Davies, Vice-President (EMEA North), GMC Software Technology, about what banks need to do to retain customers.

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The latest research by British Bankers Association (BBA) highlights that 65% of bank customers are not fully satisfied with the services offered to them. Why this dissatisfaction? This dissatisfaction with banking services stems from multiple sources. It’s worth remembering that a general dissatisfaction with banks as a result of the banking crises in 2008 still persists and is likely to be one factor which influences opinion. Although one large factor that banks can control is their failure to adapt to the pace of technological change in the same way that other high street retail brands have. A big part of this failure to adapt are the legacy systems that the banks have to operate with, which has slowed down and increased the cost of modernisation for the banking industry immensely. Banks haven’t taken the step to start to use technology not just as a conduit

to push messages, but as a channel through which they can begin to learn customer preferences, and begin to cultivate loyalty through personalisation. In short, banks haven’t listened to their customers for a very long time, and appear to be missing the opportunity for listening that modern technology brings. Couple this failure to adapt with tech-savvy retail brands beginning to offer their own financial services, and we find customers have genuine choice in how they manage their services for the first time in many years. In such a scenario, what key measures or technologies would improve satisfaction levels? Banks must become much more “available” than they are presently. The adaptation of banking services to digital channels (regardless of form factor of device) will be critical in achieving this. And, it has to be said that banks are cognizant of this issue and are investing

International Finance Magazine Oct - Dec 2014

in the technology needed to make this happen. What may go overlooked is the wider point on how more modern technology is utilised. Banks must fully realise the role personalised communications and offers play in developing loyalty with customers, or risk a steady flow of customers defecting to retail brands who have made significant investments in customer communications management tools and, consequentially, have become very adept at communicating with customers how they want, when they want. This will become especially important as newer generations are far less likely to simply default to the standard banks — preferring more digitally savvy and communicative options. From a bank’s perspective, what could be the key challenges associated with internet/mobile banking? The large variety of form factors and platforms (think

iOS, Android, Windows Phone etc.) presents a huge technological challenge, especially when coupled with aging banking IT architecture. There are some easy and quick fixes here though. Banking statements, for example, can be generated in a dynamic, interactive way without significant investment in (or changes to) a bank’s back end infrastructure. A pie chart that breaks down your spending each month would be useful to examine in detail — a list of transactions is far less engaging. Other services, however, will present a much more complex problem for the banks, especially as banks must (and are duly expected to) have the highest level of security possible. Who is driving mobile banking in the UK— banks or customers? I firmly believe that the customer is who ultimately drives change. Businesses that ignore customer desires will always eventually fail.


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I firmly believe that the customer is who ultimately drives change. Businesses that ignore customer desires will always eventually fail.

Banks are no exception to this rule. Banks are the last bastion of an outdated attitude towards customers, and are now struggling to catch up. UK is one of the most digitally advanced markets in the banking segment. Any insights on the other sectors that you have worked in? The insurance industry is usually seen as slow to embrace change. However, this industry in particular is now reviewing its interactions with its customers. Comparison and aggregation websites plus new regulations on claim referrals

have driven the industry to evaluate how insurers can differentiate themselves and increase customer loyalty. Ultimately, across the financial sector, customer communication and the management thereof is a hot topic. What lessons can newcomers in this segment learn from the mistakes of UK banks? Banks have been slow to build relationships with customers and to build out a true omni-channel offering (we’ll define omni-channel here as the ability to operate and communicate on any device/media at any time).

This kind of service is becoming expected, especially as internet native generations begin to take more prominence in the workforce. A targeted approach onto these younger generations with a truly digital offering will present a credible challenge to the current banking institutions. High street banks have struggled to differentiate themselves. Add in the fact that private banks are now seriously looking at entering the retail banking arena and you can be sure the next few years will be one of significant change in the banking industry. What is the future technology that could revolutionise this segment? Any technology that makes it easier and faster for customers to perform banking transactions will find itself quickly in demand. Contactless technology, in particular, seems the frontrunner for this. Do you see banks adopting a paper-less strategy in future or would you

recommend a multichannel approach? I would say this definitely depends on how far in the future we are gazing. For the foreseeable future, print remains a vital and important part of many peoples’ lives — think monthly statements in the post. Far into the future, say in the next 10 or 20 years, we may start to see that begin to change, but print still has its role and certain advantages over the touchscreen today, and so won’t be going away anytime soon.

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INTERVIEW

I’d like the global economy to work

Without Paper

Basware is the fastest growing company in the invoicing domain and recently exceeded 80 million network transactions across its Basware Commerce Network Karan Belani

International Finance Magazine Oct - Dec 2014


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Q&A with Stephen Carter, head of UK E-invoicing Centre of Excellence, Basware What is electronic invoicing? E-invoicing is simply the sending or receiving of invoices in any digital format. For example, email as an attachment, automated fax, web sites or ‘portals’, or even old style EDI. How does it help companies? The answer is for buyers and suppliers to offer a range of options to exchange invoices and orders. In this way, critical relationships in the supply chain are strengthened and costs are removed from both parties. E-Invoicing should be a winwin situation for everyone. What factors should companies take into account before considering e-invoicing? Suppliers need to consider how important their customers are and invoice them in the best format. This makes it easier for the customer to approve and quickly make payments. For example, emailing a PDF may actually take the customer more time to process than paper. Alternatively, they may prefer to receive a computer readable file (e.g. XML). Buyers looking to put in place a more automated payables process often offer only one e-invoice delivery option (e.g. a Portal). While this seems, on the surface, a simple solution, it can cause problems further down the line. For instance, such a limited range of options creates costs for suppliers and is likely to result in higher pricing.

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What category of companies would be interested? All companies, regardless of size, can now start to cut costs and, more importantly, strengthen customer/ supplier relationships through e-invoicing. Looking back on the previous 10 years, what were the key milestones? In Europe, possibly the most important milestone was 1st January, 2013. On that date, electronic and paper invoicing became legally identical and e-invoicing was acceptable across the EU. Other than this, the last decade has seen legislation in the Nordic countries forcing business-to-government adoption of e-invoicing. This is now happening in all EU countries and the result will be widespread savings across the public sector as well as further rapid growth and adoption. What are the new trends that stand out? The biggest trend to date

has been the ‘buyerdriven’ portal, in which buyers mandate e-invoicing for suppliers or make it compulsory as part of a trading relationship, as part of the accounts payable process. Looking to the future, we are going to see a push for more automated invoice transfer via machinereadable XML files and a new push by suppliers for electronic delivery. However, all this will be eclipsed by the move to automated supply chain financing. This is where buyer and suppliers will utilise approved invoices and perhaps also purchase orders to manage their cash more effectively, driving down prices and helping to finance their businesses. Does Basware have plans to develop and cater to the invoicing needs of end users?

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At Basware, we are constantly learning from our customers – understanding how they need to do business and creating solutions for their problems. By supporting both buyers and sellers, we are developing truly connected supply chains and not simply enforcing large company doctrine. Importantly, our open approach to working with other providers means that our customers are interconnected and can benefit from the global marketplace. How will the alliance with Mastercard help increase market share? The Mastercard alliance is a great example of a forward-looking company. We are developing products for our customers’ future needs around financing and selfservice payments. So, yes, the result will increase our market share and enhance our customers’ profitability. What are your objectives? My current role at

Basware is to develop and extend market adoption of e-invoicing in the UK. So, top of the pile is to see e-invoicing become simply ‘invoicing’ — with the added benefit of facilitating a connected supply chain. Next, is very much the evolution of supply chain financing from the preserve of big multinationals to a day-to-day cash flow management tool for small businesses. Finally, I’d like to help the social media generation make the global economy really work for every business — without paper!


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When the euphoria fades

International Finance Magazine Oct - Dec 2014


National pride, a salve for the 2014 World Cup’s exorbitant price Kamilia Lahrichi

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S$11.2 billion budget. Over 100 millions furious Brazilian protesters. One million foreign tourists. In a country where soccer is a religion and building stadiums com-

pares to erecting cathedrals, the 2014 World Cup has cast doubts on whether hosting mega sport events stimulates growth. Brazil’s economy is in recession since August for the first time in six years.

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Rocky road The South American country spent R$25.8 billion (US$11.2 billion) to build World Cup-related infrastructure – much higher than budgeted. “Brazil has considerably benefited from the 2014 World Cup in terms of infrastructure [because it] generated, first a sense of awareness regarding the lack of infrastructure in the country,” says Francisco Javier Urra, a Senior Specialist at the Inter-American Development Bank in Brasilia. Improving roads, railways and airports has been a pressing issue in Brazil for decades. This nation of 200 million people spent only 1.5% of its GDP on infrastructure in 2013, which is much less than the global average of 3.8%. “[W]e need [to invest] at

least 23% to 25% of [GDP] in infrastructure, mainly in airports, ports [and] highways,” says Michel Alaby, an International Trade and Development Consultant in Sao Paulo. Modernising Brazil’s infrastructure was even more crucial to accommodate the massive number of soccer fans. Upgrading overcrowded airports “is not only key in terms of capital investment (the “money” put into these airports), but also because through private firms, with procurement and contracting under private law, the rhythm of execution of these improvements has been much faster,” says Mr. Urra. He explains that three major airports were privatised, which enabled to raise US$14 billion. Despite some improvements, the government’s

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promises to overhaul major infrastructure fell through. “We need to begin to control people’s expectations. The idea that we were going to make up for 30 years without investment in infrastructure in just four years was probably never realistic,” acknowledged Aldo Rebelo, Brazil’s sport minister. Many renovated and newly built stadiums are now white elephants. The Arena da Amazônia, which can seat 44,000 fans, was erected in Manaus in the middle of the Amazonia, which is largely inaccessible by road. Only a few thousands soccer aficionados attended the games. The vast Brasilia National Stadium was built in a city that does not have a major football team. Similarly, amongst the six arenas South Africa used to

host the 2010 World Cup, only two – Soccer City and Port Elizabeth – are not white elephants. The majority of the stadiums were constructed from scratch. Although the African nation spent US$3 billion to build and renovate sport infrastructure, many stadiums required subsidies after the tournament. They have had difficulties attracting business. The 2014 World Cup did not either improve Brazil’s transportation system as the government vowed to. For instance, the 511-kilometer high-speed rail between Sao Paulo and Rio de Janeiro was not completed for the games. President Dilma Rousseff once described it as a priority. The refurbishment of the Rio de Janeiro and Belo Horizonte airports were not finalised before the


tournament. Fans landed in Fortaleza in a temporary terminal instead of the planned airport expansion. Booming tourism? “We lost the trophy, but Brazil won the World Cup,” proclaimed Aloisio Mercadante, President Rousseff’s Chief of staff, in reference to Brazil’s 7-1 semifinal defeat to Germany. Official figures set out that one million foreign tourists visited Brazil during the games – generating about US$7.5 billion in revenue. This number exceeded the Tourism Board’s projection of 600,000 visitors. In comparison, 310,000 foreigners visited South Africa for the 2010 World Cup. Two million went to Germany for the 2006 games. In Brazil, tourists from Saudi Arabia, Bahrain, Qatar, the United Arab Emirates, Kuwait and Oman spent over US$500,000 with their credit cards during the World Cup, according to a the Visa Everywhere Travel Report.

The survey found that these Middle Eastern tourists spent more than US$5.7 million during the event. Saudis and Emiratis made up more than 70% of the group’s spending. The hospitality industry also benefited from the nearly three million Brazilians who traveled around their country during the month-long tournament. Yet, whilst travelers indicated being satisfied with the event, the games’ tickets were quite unaffordable for many Brazilians. Brazil is one of the countries that have the highest level of income disparity. Mega sport event can be a “potentially successful yet hugely expensive strategy to develop tourism in developing countries,” concludes a research paper by the Journal of African Economies. It indicates that South Africa spent US$13,000 per tourist in 2010. In addition, it is difficult to assess if the World Cup enabled to create temporary jobs because Brazil’s unemployment rate stood at 4.9%

in April 2014 – a historic low – due to a contraction in the labour force. “[T]he World Cup represented a strong public investment, mostly in infrastructure, that may lead to some job creation, but in general, this was not very significant,” says Mr. Urra. A test for the government The 2014 World Cup enabled to assess the administration’s ability to manage public funds, develop an effective economic development policy and deliver large-scale projects it had nine years to prepare. “We had a strict plan in place to follow up with the construction works of stadiums. We controlled every delivery step of each ground,” declared Brazil’s sports minister. In reality, the government failed to deliver on its promises, especially in regard to infrastructure. “The delays in the works, the overprices, and the poor planning of public investments (choosing such a

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We lost the trophy, but Brazil won the World Cup Aloisio Mercadante, President Rousseff’s Chief of staff

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large number of host cities) proved the shortcomings of a public sector model in much need of reform and modernisation,” points out Mr. Urra. Brazil is the biggest spender in the World Cup history. Merrill Lynch estimates that resource-rich Qatar will spend more – over US$65 billion – to host the 2022 World Cup. Britain too did not manage properly its budget during the 2012 Summer Olympics in London. It spent over US$20 billion whilst it was supposed to disburse US$4 billion. More worrisome for Brazilians, the US$11.3 billion budget was mainly drawn from public funds that could have been poured into the health and education sectors, critics say. Otto Nogami, Econo-

mist and Deputy Associate Dean at Insper, a higher education institution in Sao Paulo, says that the total cost to build and reform stadiums was 42% higher than expected. It cost R$8.48 billion (US$3.7 billion) whilst it was supposed to cost R$5.97 billion (US$2.6 billion). Expenses and loans from the federal government, the states and the municipalities equal 9% of Brazil’s annual public expenditure in education, says Mr. Nogami. In other words, the World Cup budget amounts to one month’s spending on education, he explains. “There Will Be No Cup” Notwithstanding that Brazilians worship soccer, the 2014 World Cup has drawn millions onto the streets of more than 100 cit-

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ies in protest of the games’ exorbitant cost. Weeks before the referee blew the first whistle to start the Brazil-Croatia game on June 12, members of the anti-World Cup movement were still outspoken. They rallied under the banner “Não Vai Ter Copa” (There Will Be No Cup in Portuguese). Protestors demanded improved public services. Bus drivers, for instance, demonstrated under the banner “FIFA go home”, as they expressed concerns about transport infrastructure and safety as well as possible logistical breakdowns. The Brazil’s Homeless Workers’ Movement staged protests to request affordable housing. Civil unrest led to violent clashes with the police that

used tear gas, grenades and rubber bullets. A Pew Research Center survey released ahead of the 2014 World Cup reveals that 61% of respondents thought that hosting the event was not a good idea for Brazil. They deemed that it wasted money that could have been used for public services. It polled 1,003 Brazilians in April 2014. The survey also sets out that Brazilians had little trust in key governmental institutions as well as the police. Yet, Brazilians considered hosting the 2014 World Cup a prestige. “The success of the World Cup has an ‘intangible’ but real value, in terms of trust and self-confidence for the country, proving itself, and the world, that Brazil is able


to undertake ambitious initiatives,” says Mr. Urra. Economic legacy Besides economic factors such as 6.5% inflation, fiscal deficit and high interest rates, the World Cup contributed to Brazil’s recession. The national statistics agency IBGE announced on August 29 that the GDP of the world’s seventh largest economy fell by 0.6% in the second quarter and by 0.2% in the first one. In addition, tourism prices – which were higher than expected during the event –contributed to increasing the inflation rate. There were many municipal days off during the tournament so as to not disrupt traffic, which contributed to the loss of productivity and sluggish growth. In a July 2014 report, Brazil’s National Confederation of Industry found that industrial production dropped in June 2014 to the lowest level since the survey began in 2010. It found that the World

Cup played a role in the fall of employee numbers, capacity utilisation and build-up in inventories. “This reduction in the level of economic activity represented losses [worth] around R$20 billion [US$8.7 billion] per day, which impact[ed] negatively on the GDP performance,” says Mr. Nogami. The winner is… FIFA has reaped the financial benefits of the World Cup. It generates more revenue than any other sport event, including the Summer Olympics. The association’s profit for the 2014 World Cup is estimated at US$2 billion. World Cup revenue comes from the sale of television and marketing rights. For example, more than 3.2 billion people watched live coverage of the 2010 World Cup in South Africa for at least a minute, according to a FIFA report. In 2006, more than 26 billion people watched the World Cup in Germany, says FIFA.

When the euphoria fades away Whilst the World Cup and mega sport events in general can boost investment and national pride, Brazil’s 2014 tournament was so severely criticised that it has raised concern about its ability to host the 2016 Summer Olympics. “Hosting large-scale sports events is not a good investment,” says Andrew Zimbalist, Professor of Economics at Smith College in Northampton, Massachusetts, in the United States. He explains that the only two successful cases over the past 30 to 40 years are Barcelona and Los Angeles, which hosted the Summer Olympics in 1992 and 1984 respectively. It made sense for Spain to organise the tournament because the city plan predated the Olympics plan. This is generally the reverse for host countries, explains Professor Zimbalist. In the case of Los Angeles, the infrastructure required to host the international tournament was ready and

privately funded. “For the rest of the countries, and especially developing countries that lack transportation, communication, energy and sport infrastructure, the size of the investment required to host the World Cup or the Olympics is too great,” he says. Revenue from sport events generally totals between US$3 billion or US$5 billion, which is five to 50 times less than what countries spend to host large-scale sport events. For example, Russia disbursed between US$50 billion and US$70 billion to host the 2014 Sochi Olympics. China used up over US$40 billion for the 2008 Beijing Olympics. Hosting international sport tournaments is more costly for developing nations. “It is less likely that you will have [in developed nations] the kind of disruptive protests that you had in Brazil,” says Professor Zimbalist. The World Cup or the Olympics could be justified is if there is long-term return with increased investment and trade. Yet, return on investment is usually low. South Africa, for instance, only received 11% of the US$4.5 billion it invested in the 2010 World Cup. It is, therefore, crucial that countries have the necessary infrastructure and an effective planning strategy to manage funds, “which almost never happens,” he adds.

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Tom Groenfeldt

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TRADER Flash Boys by Michael Lewis reveals how some traders always manage to stay ahead of the competition

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erhaps the biggest surprise in Flash Boys, the best-selling book about high frequency trading (HFT) by Michael Lewis is how little professional money managers understood about how much the US stock markets had changed. You could start with their names. The New York Stock Exchange operates from a data centre in Mahwah, NJ while the Chicago Mercantile Exchange’s centre is in Aurora, IL. Then you could look at the speed — it takes a signal 12 milliseconds to make the round trip between the CME and NASDAQ in Carteret, NJ on the $300 million Spread Networks fiber. (Just how little firms understood about HFT and the value of speed was demonstrated by Citigroup, which insisted the fibre be extended from Carteret to their office in lower Manhattan “the twists and turns of which added several milliseconds and defeated the line’s entire purpose.”)

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Lewis is a wonderful, informal story teller who ambles his way through some extreme complexity using examples that don’t lose his readers. Brad Katsuyama, a trader the Royal Bank of Canada (RBC) sent to build the bank’s presence — hitherto unnoticed — on Wall Street, started looking into high frequency trading as he saw that listed trades moved away from him when he tried to buy and wanted to know why. Exchanges had proliferated and new players were taking big roles. Brad was talking “to a guy who worked on the retail end in Toronto selling stocks to individual customers.” He mentioned that a company called Getco now made up 10 percent of the US market. “It’s insane that someone running 10 percent of the US stock market and I’m running a Wall Street trading desk and I’ve never heard of the place.” You can see why this book has had such an impact — Lewis is a wonderful, informal story teller who ambles his way through some extreme complexity using examples that don’t lose his readers. But if you remember reading his account of big swinging dicks in Liar’s Poker, you already knew that. (A Google search

turns up plenty disagreement with him over both facts and conclusions, but there’s no arguing with his success in raising important issues about the market that have gone mostly unquestioned for years.) Three years after beginning his exploration, which required losing some large sums of RBC money with the bank’s permission, Brad (Michael’s informality is contagious) and his team concluded “Someone out there was using the fact that stock market orders arrived at different times at different exchanges to front-run orders from one market to another.” This raises a question — how does front-running differ from inside trading? After all, in early September a former portfolio manager for SAC Capital Advisors, was sentenced to nine years in prison for insider trading. Getting ahead of trades with HFT is netting companies billions of dollars, yet it continues. Flash Boys has been criticised or dismissed by people within the industry as sensationalistic, old news, or wildly exaggerating the impact of HFT on long-term

investors. Lewis makes a strong case that big things had changed in the US equities markets and even the top money managers weren’t sure what had happened or what they could do about it. RBC traders calculated the costs of HFT front-running at one tenth of one percent, adding up to $160 million a day across US stock markets. The business has also become more complicated with exchanges offering maker-taker fees for liquidity. When a pension fund sends an order to a broker, it has no idea if the broker looks for the best price for the buyer or the best fees from an exchange for the broker. (Responding to the book during an April conference, Jamil Nazarali, the head of Citadel Execution Services, said that small investors often get better prices for their trades than the biggest firms. That claim was criticised by Seth Merrin, a dark pool pioneer whose Liquidnet Holdings Inc. promotes its dark pools as safe venues for institutions to trade large blocks. “If you are going to buy in

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Congress will do nothing, as they always do in an election year. David Weiss, a Senior Analyst at Aité Group

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The Tabb Group, a market technology analyst firm, recently launched Clarity, a way for firms to see what happens to their orders. similar payments for order flow,” it concluded. Tabb regards the impact of HFT on long-term investors as minimal because they trade infrequently while HFT has reduced spreads. David Weiss, a senior analyst at Aité Group, thinks HFT is here to stay, but since it has already sucked the alpha out of the US equities markets, it will move into other asset classes such as FX or to other markets in Asia.

International Finance Magazine Oct - Dec 2014

He doesn’t expect much change domestically. “Congress will do nothing, as they always do in an election year.” His view on HFT is nuanced. He agrees it can be a tax on long-term investors, but it falls on informed investors — mutual funds, big insurers and pensions funds. “They are informed traders, they are not stupid. The little guy has abandoned the market.”

Larry Tabb, founder and CEO, The Tabb Group

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bulk, you should get a better price than someone buying retail.”) Confusion in the US equities market arises from the fact it has been scattered across multiple exchanges and dark pools. The Tabb Group, a market technology analyst firm, recently launched Clarity, a way for firms to see what happens to their orders. “In today’s fragmented US equities market with 54 trading venues, it is difficult for institutional investors to gain a clear understanding of how their orders are executed,” said Larry Tabb, founder and CEO. “Where and how orders are shopped has a significant impact on information leakage, opportunity cost and quality of execution. Traditional Transaction Cost Analysis (TCA) metrics are insufficient to determine the true costs of trading.” Tabb said Clarity will help institutional investors understand what brokers are doing with their orders. Pragma Securities, a firm specialising in trading, published a report saying that maker-taker creates significant conflicts of interest for brokers. “Regulators should eliminate or limit rebates and


Victim of its own success

Global Reinsurance Review

The sector is seeing record volumes of capital and low catastrophe claims Tim Evershed

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p erfect storm of factors has combined to cause serious soft market conditions for the global reinsurance markets. The sector has become a victim of its own success as recent profitable years, coming on the back of historically low catastrophe losses, have prompted a deluge of new capital looking to take advantage while investment returns in other asset classes continue to struggle. Reinsurers are currently faced with low premium rates that threaten to go lower still at the crucial January 1 renewals. In addition to the record volumes of capital and low catastrophe claims, the soft market has been caused by intense market competition and sluggish cedant demand and low investment returns. This trend is being exacerbated by the formation of a number of reinsurers by hedge funds as well as the exponential growth of insurance-linked securities. The traditional start to negotiations for the January

renewals is September’s Reinsurance Rendezvous in Monte Carlo. And reinsurers at this year’s event surprised many seasoned observers due to their resignation that little could be done to prevent market conditions softening further – at least in the short term. Tom Bolt, Director of Performance Management at Lloyd’s of London, says this is a remarkable period for a reinsurance industry that is beset by a number of challenges. He says: “First, this is the first soft cycle we’ve had with virtually no material investment income. Second, the concentration ratio of brokers in the market is higher than in the last soft cycle by some margin. “Also, excess capital is always a feature of the soft cycle, but what we have this year is close to an epic excess. At the same time, the regulatory burden on the industry is heavier than it’s ever been. And all this is happening while economic recovery is still fragile.” Bolt says that market

Cat Bond Issuance

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conditions are unlikely to improve for insurers in the near term because it is hard to envisage what will change the overall investment return picture and what will reduce the level of capital interested in entering the insurance business. Ratings agency Fitch Ratings has had a fundamental outlook for the reinsurance sector of ‘negative’ since the beginning of the year. In its ‘Global Reinsurance Guide 2015’, Fitch says the price adequacy is expected to decline next year although rates of return are expected to remain above reinsurers’ cost of capital. Earnings pressure is forecast to increase across the sector as softening pricing in property business migrates to other lines, such as casualty, as reinsurers look to redeploy capital in more profitable areas. At present individual reinsurers remain well capitalised. And Fitch says it would take a seismic shock to the industry in the shape of $70bn catastrophic loss event or an abrupt jump in

interest rates to threaten the industry’s robust balance sheets. Such an event would leave some reinsurers on the brink and may prompt other, newer entrants to the industry, to withdraw capital and look for safer returns elsewhere. Fitch says: “Such a scenario would leave balance sheets temporarily more exposed to adverse events and is particularly concerning if reinsurers do not have sufficient liquidity to pay claims and need to sell investments at a loss and/or raise new capital at a higher cost.” The agency notes that ironically it is the favourable underwriting results posted by the industry since the record catastrophe loss year in 2011 which has fostered the current challenging reinsurance environment. Fitch says: “Reinsurers’ profitable results are attracting more capital to the sector, which has created excess reinsurance underwriting capacity, leading to price competition and falling reinsurance rates. “However, recent perfor-


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57 mance reveals that pricing and competition need to deteriorate significantly more before profit erosion becomes untenable, as reinsurers in aggregate posted combined ratios below 90% and returns on equity (ROE) of around 12% in the last few years.” The persistence of low investment yields increases the risk of the reinsurance sector being exposed to adverse investor behaviour, driven by a search for higher yields. The influx of capital has been most notable as external investors, including pension and hedge funds, search for yield by investing in alternative reinsurance. These non-traditional forms include catastrophe bonds (cat bonds), collateralised quota-share reinsur-

ance vehicles (sidecars), industry loss warranties (ILWs), hedge fundsupported reinsurers and asset managers investing in insurance-linked securities (ILS). Fitch says: “Alternative forms of risk transfer are here to stay, having gained acceptance by both cedants and most traditional

reinsurance providers as a structural change to the reinsurance sector, principally in property catastrophe risk. “Fitch Ratings views the growth and acceptance of alternative reinsurance as a strain on the credit quality of reinsurers, particularly for smaller, standalone property catastrophe reinsurers.

“The benefit to traditional reinsurers from added fee income and risk management tools is more than offset by the increased competition from capital market capacity that, in conjunction with the strong overall capitalisation of the reinsurance industry, are resulting in a deteriorating profitability profile for the sector.”

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However, the travails of reinsurers could well prove a boon for primary insurers. Competition between the traditional reinsurance market and the considerably larger overall capital market has been a benefit to primary insurers that are taking advantage of having diversified sources of reinsurance. Fitch says: “The abundant reinsurance market capacity has resulted in lower reinsurance pricing (particularly on excess of loss business), and the broadening of policy terms and conditions. “Furthermore, the nontraditional reinsurance market has helped insurers manage their exposure, transfer risk and reduce capital volatility. In addition, primary insurers benefit from the reduced volatility of reinsurance rates after a catastrophe, as alternative reinsurance

coverage frequently remains available during a period of more scarce underwriting capacity and serves to dampen potential rate increases.” Reinsurance savings are also pressuring reductions in primary rates as cheaper reinsurance costs increases the competiveness of the primary market. For the man in the street this would mean that premiums on home or car insurance decrease as insurers battle for market share. It may also mean that insurance cover on personal lines is expanded with addons like legal protection being included in policies as a standard rather than optional extras. Then agency adds: “Fitch expects insurers to continue to find it economically efficient to transfer to the capital markets a portion of their more standardised

International Finance Magazine Oct - Dec 2014

property and property catastrophe tail risk business. This action moves higher risk business off-balance sheet, thus freeing up capital in rated entities that can be used to support less volatile business or for other capital management activities.” For reinsurers, the current rating environment means that a focus on the bottom line is more important than ever. Companies like Swiss Re, one of the world’s largest reinsurers, say it expects the decrease in natural catastrophe prices to slow down while other lines will exhibit mixed trends. In the meantime reinsurers will focus on strengthening customer relationships and developing cuttingedge in-house Research & Development in areas like catastrophe modelling. Michel Liès, Swiss Re

Group CEO, says: “In my 35 years of experience in the business, I’ve seen many turns of the reinsurance cycle and have learned that pricing is only one dimension of it. In order to succeed, you need to develop your business model based on a deep understanding of market fundamentals, participants’ behaviours and the evolution of your clients’ needs. “Rigorous cycle management, portfolio steering and underwriting discipline remain the obvious tools for profitable success. There are opportunities for our industry — especially in high growth markets. We remain firmly focused on the bottom line and are making sure that we support our clients to successfully capture the profitable opportunities they are pursuing.”


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Egypt’s n The six-month-old government of Abdel Fattah el-Sisi hopes to dig its way out of the economic crisis by constructing a waterway alongside the Suez canal Alessandra Bajec

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n September, Egypt moved fast towards its goal of attracting domestic funding for the construction of the country’s new waterway alongside the existing Suez Canal. The real success factor won’t come from the canal project alone, aimed to expand trade along the shipping route, nor from the mega plan — per se — to develop the Suez area. It will come from the confidence that Egypt’s current government will inspire in the business community and people at large. That much needed confidence to invest in Egypt and build the country’s future. The government gathered a total of LE64 billion (approximately £5 billion) from sale of investment certificates issued early September, the central bank’s governor announced in September. The amount raised clearly exceeded the LE60 billion initially targeted to finance the national project. The certificates were mostly sold to individuals at an interest rate of 12% every three months over five years, the highest rate offered on any such instrument by Egyptian banks. In a TV interview preceding the sale of certificates, Dr. Ibrahim Ashmawy, investment advisor to the Minister of Tourism, predicted that total funds for the canal project would be raised in three weeks. “When President Abdel Fattah el-Sisi announced the project, it was very positively perceived by the Egyptians,” Ashmawy said unsurprised, “They were willing to support it right

away.” “In the first five days of funding, we saw a daily average of $1 billion (approximately £615 million) raised. Tell me about another project in the world that has attracted $1 billion a day,” he added confidently. The Egyptian president launched excavation operations for the new channel in August, calling it a national development project. The announced time for construction was initially set as three years, and then shortened to one year. The 72 km parallel lane, requiring 35 km of dry digging and a 37-km expansion and deepening portions of the current water way, would almost double passing ships from 49 to 97 a day via two-way traffic and cut waiting time. The government holds high hopes that the canal is the project that will get Egypt out of the current economic crisis. Estimated to cost between $4 billion and $8 billion, the project is part of a wider development plan to establish a trade and industrial hub on the banks of the existing canal. Mohammed Abu Basha, economic expert at Arab investment bank EFG Hermes, reminded that the project is not a new one. However, it was never implemented before. “The idea has been around for years,” Basha noted, “The government needed to shift people’s attention to something else other than austerity measures like fuel subsidy cuts.” The extension of the canal, which links the Medi-

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terranean Sea to the Indian Ocean via the Red Sea, is expected to boost annual revenues up to $13 billion by 2023. Dr. Ashmawy has no doubt about the project’s profitability. “The new canal will double the revenue, and generate investment returns of at least 20%,” he anticipated. “It will be very profitable.” Economist Basha is more cautious about the profit estimates forecast. He thinks

it will take more than just two years to have such returns. In his view, the canal should not be perceived as a commercial project only, but more of a strategic asset to evaluate over decades ahead. The economic analyst explained that the level of shipping traffic through the canal is essentially linked to the international trade volume, dependant on the health of the global economy and oil prices.

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“The project is more about maintaining the strategic nature of the canal in the global trade movement,” Basha argued, “Every few years, we need to invest in the canal and expand it.” Other economists criticised the government for inflating the profit figures. The Suez Canal is a key source of international trade and foreign currency, earning Egypt about $5 billion every year. Some engineering and

construction experts have claimed that the project doesn’t have a feasibility study, and that construction is poorly planned. Others say there are feasibility studies. However, they’re not published or accessible outside the cabinet. Problems like water flooding the construction site have appeared as a result of poor planning and expensive mistakes at the design stage, according to engineers.


Dr. Ashmawy, who’s also former Deputy Minister of Investment, assured that the project had been in the drawer for a long time, just ready to be pulled out. “It was completely studied, the feasibility was there along with the planning, the financing of the project was then taken care of,” he insisted, “It wasn’t a snap decision.” Professor Jehan Salah, Dean of the College of International Transport &

Logistics at Arab Academy for Science Technology and Maritime Transport (AASTMT), expressed some financial concern. “Driving public money towards one big project will make resources unavailable for other projects, which will in turn discourage other investors from putting money in Egypt,” the professor stated. Salah added that the money collected from the sale of investment cer-

tificates will have to be paid back to private individuals some day, and that will make a ‘shock effect’ on the budget as interest will be financed through portions of the canal revenue. For Basha, the project has no financial risk since it’s based on a sustainable funding scheme, and already counts on $5 billion worth of cash inflows per year. The other issue raised by Basha is related to the choice of investing in the

The government needed to shift people’s attention to something else other than austerity measures like fuel subsidy cuts. Mohammed Abu Basha, economic expert at Arab investment bank EFG Hermes

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new canal project, which some may not have prioritised at this particular time in Egypt. “Spending $8 billion on a single project like the new canal or spending the same amount in health or education or infrastructure?” he prompted. So, how does the new canal project fit into Egypt’s economy, which is struggling to recover after three years of unrest? In Ashmawy’s opinion, it came at the right time as, he believes, Egypt is stable now, it’s highly liquid from a financial point of view, so the project will draw cash already available and increase Egypt’s stability. Similarly, Basha maintained that there’s high liquidity sitting in Egyptian banks, with no investment value. Using that money to invest in a national project will have a multiplier effect. He also asserted that taking

out LE60 billion to finance the project is not unreasonable, considering the large volume of cash deposits in the banking system. The economist reiterated that the project is needed because the government had to give fiscal stimulus to the economy. “Egypt has passed through almost four years of very poor economic growth and very severe cuts in the state budget,” the analyst pointed out, “It makes it very hard to recover unless you put money in the market and reinvigorate the economy.” The new canal, attached to the larger development project, is expected to double revenue, create one million jobs, provide tourist resorts and bunkering stations. Dr. Ashmawy estimates that the giant plan will require at least $100 billion over 10 years to develop the

canal area through projects in logistics, industry, trade and supply. “The government needs to give concessions and incentives for investors to come and invest. Then the finances will come,” the investment advisor observed. Will the canal project benefit the Egyptian people then? Prof. Salah is confident about the potential of the canal. “It’s a unique place where Egypt can capitalize on the location and human resources,” she said, “Less than half of our population is under the age of 40. We can make a better use of this young human capital.” According to Salah, combining the two assets will enable to mobilise more Egyptians to work in the Suez area, revitalise employment, stimulate production and pour trade in. “The government needs to

attract more funds towards this and other infrastructural projects,” Salah said. “To do that, it needs to make investors confident about the business environment in Egypt.” Basha underlined that the project on its own will not bring a direct economic benefit to the population. Rather, the 10-year development plan will offer that opportunity as money is pumped in, private companies are attracted, and labour is brought in the area. Basha, nevertheless, believes the main focus of the current government is to restore confidence around the general public and the business community. Whether the local communities based along the canal will benefit from the long-term project will have to be seen.

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I J G RE I G NG

the numbers

Kenya attains middle income status after changing the base year for calculating the value of key sectors of its economy from 2001 to 2009 Amoxers Wachira

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enya has joined the league of Africa’s Top 10 economies after the country adjusted its statistics to reflect the true value of key sectors of its economy. Recent statistics released by Kenya National Bureau of Statistics (KNBS) show that major sectors like real estate, manufacturing and telecommunications had been grossly undervalued, thus the inaccurate valuation of the economy. For instance, the new figures, which have been jointly verified by the World Bank and the International Monetary Fund, indicate that the value of the telecom sector was 17 per cent higher than earlier estimated. The statistics also show that the economy expanded 5.7 per cent last year and not 4.7 per cent as reported

earlier. The new figures were arrived at after KNBS changed the base year for its calculations from 2001 to 2009. Technically, the revised figures have propelled the country to a mid-income status, though the report shows that the economy achieved the wealthy status in 2012. Subsequently, the East African nation now ranks as the ninth richest economy in Africa, overtaking Ethiopia, Ghana and Tunisia and cementing its place as the biggest economy in East Africa by a large margin. The exercise, which is called rebasing, paints an up to date picture of the country’s Gross Domestic Product (GDP) — total dollar value of all goods and services produced over a specific time period. The country’s GDP figure snow

International Finance Magazine Oct - Dec 2014

stand at $55.2 billion, up from $44.1 billion. What is curious is the general lack of concern and appreciation from Kenyans. Despite the encouraging numbers, majority of Kenyans remain disillusioned in the wake of high cost of living amidst other challenges. Some have dismissed the rebasing exercise as “cosmetic”. Is it just a game of numbers? “We are still languishing in poverty, insecurity, lack of access to clean water and proper healthcare. The numbers mean nothing,” points out Jacob Gibendi, a fruit vendor in the sprawling Kibera slums, one of the biggest informal settlements outside the capital Nairobi. For Susan Wokabi, an office administrator in Nairobi, the exercise was a “sham”.

It is a fake mid-income status. We are still a Third World country with over 40 per cent of the population living below the poverty line Rachael Kamau, teaches at a local university


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“How can a country that struggles to feed its people be a middle income economy?” she quips. Like her, the general feeling among most Kenyans is that of hopelessness. A spot check in the country’s cosmopolitan city of Nairobi reveals that a majority of Kenyans feel that the sudden surge in riches, at least on paper, does not alter their socio economic status. “It is a fake mid-income status. We are still a Third World country with over 40 per cent of the population living below the poverty line,” says a distraught Rachael Kamau who teaches at a local university. Another Kenyan, Josphat Mutero decries the cost

of living that has “gone through the roof”, yet an indifferent Talib Mwashigadi, a court clerk says he is not aware of the current developments. Like him, many Kenyans remain ignorant of the new statistical data and are always hesitant to take in news that tend to show the economy as faring well as they feel that the benefits do not trickle to the common man. Even as others remain cynical, Liz Wanjema exudes confidence that something good will come out of the whole exercise. “Maybe, they will give me a job now that the country is richer,” she says with a smile.

Do the numbers mean a thing in reality? According to Dr. Bitange Ndemo, a former government minister and a renowned economist, rebasing the economy has brought along many advantages.” First, there will be direct foreign investments.” He says several multinationals are already investing in the country and this means more jobs for the youths.” According to the country’s National Treasury permanent secretary Henry Rotich, the new outlook is expected to take the government back to the drawing board to develop new policies that will match the current status of the economy.

Currently, majority of the youth, who constitute 36 per cent of the more than 40 million people, remain jobless. The unemployment rate is around 60 per cent.

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70 For instance, the country had planned to achieve the current status by 2030 but will now have to revisit some of the objectives of the Kenya Vision 2030 blueprint. Kenya still grapples with problems of poor infrastructure, insecurity, poor health, biting poverty, food insecurity and corruption amongst other challenges, and while majority of its citizens would have hoped that the new status will address some of these problems, they might instead be slapped with wide ranging implications. Dr. Bitange Ndemo explains: “The country may not be able to access cheaper loans from the World Bank and other lenders as it is now rich.”

Is it all gloom? Experts opine that if the common man is to feel the positive impact of a bigger economy, the government should work on addressing the unemployment problem that has spiraled out of control. Currently, majority of the youth, who constitute 36 per cent of the more than 40 million people, remain jobless. The unemployment rate is around 60 per cent. The government also needs to support both the developed and upcoming sectors of the economy. “Much more needs to be done to improve the output of the economy for the man in the street to come to terms with this,” said IMF resident representative Morales Rogelio. Agriculture, for instance, has been termed as the mainstay of Kenya’s econo-

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my for many years and has contributed an average of 20 per cent of the GDP, but the government has shown minimal interest towards improving the sector. Additionally, sectors like telecom and manufacturing are yet to get substantial attention. In recent years, unethical business practices have seen the country struggle with an over flowing stream of cheap imports that have driven a number of manufacturers out of the country. The cost of doing business has not helped either. It has been on an upward trend against a backdrop of increased taxes and high cost of energy. However, there is a glimmer of hope. Major infrastructural projects are said to be kicking off in earnest despite several false starts

that have dogged their initiation. The multibillion Lamu Port and South Sudan Ethiopia Transport (LAPSSET) Corridor project, perhaps the biggest in the region, is among the projects that have been kick started by the government, while the Malili Techno City, Konza Techno polis and the standard gauge railway are about to kick off, giving Kenya fresh impetus to its quest to develop into a thriving nation. Ghana and Nigeria have both rebased their economies recently, an exercise that saw Nigeria overtake South Africa to become the largest economy in Africa. Additional reporting by Veronicah Riba


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Amanda Jennings

Restructuring Russian companies in England offers a solution to the impending Russian credit crunch

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ussia’s central bank has recently stated that Russian banks and corporates will have to repay $134bn in external debt between now and the end of 2015. With access to both the bond and bank markets restricted due to the recent EU and US sanctions against certain Russian individuals and corporates and sectoral sanctions affecting the finance and oil industries, it is unclear how this debt will be refinanced. According to Moody’s, most Russian companies may have sufficient liquidity to meet 2015 debt maturities and, therefore, the credit crunch is likely to hit hardest in 2016 with the metals and mining, real estate and construction sectors suffering most. This impending credit crunch may make the use of English insolvency laws more appealing and necessary to Russian companies. As a result of limited flexibility within existing

Russian insolvency laws and a requirement that any bankruptcy proceedings with respect to a Russian company must take place in the commercial court where the debtor is registered, a restructuring in the English courts may provide a solution if commenced pre-insolvency. There are two basic methods of restructuring a non-English company in England. First, by shifting the centre of main interests (“COMI”) of the company to England and enter into a pre-pack administration. Second, by implementing a scheme of arrangement. COMI EU Council Regulation No. 1346/2000 on insolvency proceedings (the “EU Regulation”) provides uniform rules for the resolution of cross-border insolvencies in the European Union. However, it can also apply to non-EU companies. Article 3(1) of the EU Regulation introduces the concept of a company’s

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COMI. A company can only have one COMI and its location determines the jurisdiction and applicable insolvency laws. The legal presumption is that the location of a company’s registered office is its COMI and it is for the company to prove otherwise. As a company’s COMI is decisive in determining the applicable insolvency laws, many companies move their COMI in order to benefit from more favourable insolvency regimes. A Russian company could also benefit from English insolvency laws if it moved its COMI to England. In Re Gallery Media Group (unreported), a Russian advertising company moved its COMI to England to facilitate its use of an English scheme of arrangement.

Pre-Packs Once a Russian company successfully shifts its COMI to England, it can then enter into a pre-packaged administration sale (“pre-pack”). The appeal of a pre-pack to a Russian company or any company is twofold. Firstly, the process is fast; the sale of all or part of the company can take place as early as the date of administration. Secondly, it is possible to transfer solvent parts of the business quickly and easily before the negative connotations that come with insolvency do irreparable harm to the business. In Re Hellas Telecommunications (Luxembourg) II SCA [2009] EWHC 3199 (Ch), the court concluded that the


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company had successfully moved its COMI to England because, among other things, the company’s head offices were now in London, it had registered at Companies House as a foreign company and all negotiations with creditors were held in London. However, a Russian company may not want to shift COMI as there might be tax and reputational benefits associated with having its COMI in Russia. Fortunately, the English courts’ continuously flexible approach to company restructurings through the use of schemes of arrangement has minimised the importance of COMI shifting. Schemes of Arrangement A scheme of arrangement is a statutory procedure, governed by Part 26 of the Companies Act 2006, which allows a company to enter into an arrangement or compromise with its creditors or shareholders (or any class of them). Schemes of arrangement fall outside the scope of the EU Regulation

and, consequently, companies with their COMI and establishment outside England can still use schemes of arrangement. Schemes of arrangement appeal to companies wishing to avoid the stigma of insolvency but are nevertheless in need of restructuring. Further, a scheme can be used even when insolvency is not in prospect. A proposed scheme is approved when more than 50% in number and 75% by value of each class approve it. The court then has discretion whether to approve a proposed scheme. Once a scheme is approved by the court, it binds all creditors and shareholders to which it applies. Essentially, the scheme allows a majority of the shareholders or creditors in each class to bind the minority in that class. English courts are willing to approve a scheme in respect of a foreign company as long as there is a “sufficiently close connection

with England and Wales which may, but does not necessarily have to, consist of assets within the jurisdiction” as per Knox J in Re Real Estate Development Co [1991]. The courts have taken a liberal view as to what constitutes a sufficient connection. The courts (in cases including Bluecrest Mercantile BV and another v Vietnam Shipbuilding Industry Group and others [2013]) have been able to establish jurisdiction on the basis that the loans that needed to be restructured under a proposed scheme were governed by English law. The difficulty for a Russian company trying to implement an English scheme of arrangement arises where it has Russian creditors who refuse to be bound by the proposed scheme and reject the English court’s jurisdiction. There is no treaty or reciprocity agreement between Russia and England requiring Russian courts to recognise and enforce English judgements. The Russian courts would have discretion to recognise the scheme or continue with the

insolvency proceedings. An English scheme of arrangement is, therefore, best used by a Russian company in agreement with all of its creditors or with creditors unlikely to reject the English court’s jurisdiction through the Russian courts. It can also be applied in circumstances where Russian corporates structures contain offshore holding companies located in jurisdictions which recognise English court judgments. Whether it is through shifting their COMI or establishing a sufficient connection to England for the purposes of a scheme of arrangement, it is evident that Russian companies could potentially benefit from the flexibility of English insolvency laws. If sanctions remain in effect for a sustained period and/or access to the debt markets remains constrained, Russian corporates may need to explore such options to restructure their debt portfolios. Amanda Jennings is a partner in the London Business & Finance Practice of global law firm Morgan Lewis

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A

n award is a celebration of hard work, innovation and success. Everyone seeks recognition, at least a pat on the back for their efforts. But recognition is not easy to come by. Hard work does not always convert to success. Good numbers do not always translate into awards. After all, most often, you are not the only one in the field. As if coming up with new products was not tough enough, there is the additional challenge of making them better than that being offered by competitors. Competition breeds more competition, which translates into better products for customers. When customers choose your products or services over that of the competition, it shows in your balance sheet. But the feeling to cherish is the look of awe in the eyes of the competition. No award can possibly make you feel any better. IFM is honoured when such companies are nominated for our awards, which seek to celebrate achievers and highlight their achievements in the larger business community. Achievements include innovative products or marketing strategies, new standards in corporate governance, path-breaking initiatives in social or charitable causes, and other activities that have an impact on the everyday lives of people worldwide.

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The aim of every business is to touch the lives of people in such a way that they turn into customers. The next benchmark is to make that customer come back for more. By then, you should have the customer talking to others about your product or services, which is the ultimate compliment for any company. With a population of over seven billion, there is no dearth of people. It is for companies to come up with products and services that can convert people into customers. Despite the huge population, competition is tough because there is no shortage of innovating thinkers or enterprising businesspersons. Which is what makes the job of our team of analysts that much tougher. No surprises then that winners like to celebrate their victory at the IFM awards. And, why not! An award means that you have set a benchmark for the industry. It also means that you have raised the bar for yourself. We respect and admire this desire to constantly improve yourselves, your products, your companies, your employees. Those who set themselves on this path are eventually going to be the companies by which others are judged. Let us raise a toast to the ones who set new benchmarks this year.


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Financial Awards Best Micro Finance Bank Lebanon

Best SME Bank Lebanon

Jammal Trust Bank SAL

Jammal Trust Bank SAL

HQ: Beirut, Lebanon

HQ: Beirut, Lebanon

The bank was established in 1963 under the name Investment Bank with an initial capital of L.L. 1million.Over five decades, it has built a reputation for supporting both Lebanon’s SME markets through commercial lending and Africa’s Lebanese Diaspora through large scale trade finance. JTB aims to bring banking services closer to the Lebanese that are un-banked. Today, it operates 24 branches and is planning to expand across Lebanon in the coming years. It is also planning to broaden its services in the African continent. It has two subsidiaries, Trust Insurance and Trust Life, which provide both traditional and innovative insurance products to the Lebanese market.

The bank was established in 1963 under the name Investment Bank with an initial capital of L.L. 1million.Over five decades, it has built a reputation for supporting both Lebanon’s SME markets through commercial lending and Africa’s Lebanese Diaspora through large scale trade finance. JTB aims to bring banking services closer to the Lebanese that are un-banked. Today, it operates 24 branches and is planning to expand across Lebanon in the coming years. It is also planning to broaden its services in the African continent. It has two subsidiaries, Trust Insurance and Trust Life, which provide both traditional and innovative insurance products to the Lebanese market.

Most Innovative Islamic Bank Africa Africa

Best Islamic Retail Bank Africa Africa

75 Bank of Khartoum

Bank of Khartoum

BOK is Sudan’s leading Islamic bank offering its customers a full range of innovative financial products and services. It is also the oldest bank in the nation. It was established in 1913 by the Anglo-Egyptian regime. In 1925, it was renamed Barclay’s Overseas Bank. The name changed to Barclay’s Bank in 1954. In 1970, the bank was nationalized. From 1982-2002, it led the consolidation in the banking sector, acquiring several local and regional banks. In 2001, BOK was privatised, and institutionalised its shareholding structure.

BOK is Sudan’s leading Islamic bank offering its customers a full range of innovative financial products and services. It is also the oldest bank in the nation. It was established in 1913 by the Anglo-Egyptian regime. In 1925, it was renamed Barclay’s Overseas Bank. The name changed to Barclay’s Bank in 1954. In 1970, the bank was nationalized. From 1982-2002, it led the consolidation in the banking sector, acquiring several local and regional banks. In 2001, BOK was privatised, and institutionalised its shareholding structure.

HQ: Khartoum, Sudan

Best Re-Engineering and Re-Branding BanK Georgia

HQ: Khartoum, Sudan

Best SME Bank Bangladesh

JSC Capital bank

United Commercial Bank Limited

HQ: Tbilisi, Georgia

HQ: Dhaka, Bangladesh

Founded in 2003, JSC Capital Bank has been granted a licence by the National Bank of Georgia allowing it to provide the full range of banking services. It is a principle member of Visa International, MasterCard & China UnionPay. It is a member of Tbilisi Interbank Foreign Exchange, the Association of Banks of Georgia and the American Chamber of Commerce in Georgia. In 2014, the full process of rebranding was carried out. Technologies appropriate for modern standards of services were introduced and the bank now offers clients services based on individual approach.

United Commercial Bank Limited was incorporated in 1983. It provides various commercial banking services in Bangladesh. It offers deposit products, loans, Western Union money transfer, SMS banking, online, inward and outward remittances, travelers cheques, underwriting and bridge financing, locker, offshore banking, UCash mobile financial services, stock brokerage, portfolio management, investment banking and merchant banking services.. As of December 31, 2013, it had 139 branches, 25 authorised dealer branches, two agri branches and 101 ATM booths.

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Financial Awards Best Internet Bank Iceland

Best Commercial Bank Iceland

Landsbankinn hf

Landsbankinn hf

HQ: Reykjavík, Iceland

HQ: Reykjavík, Iceland

Landsbankinn hf. was founded in 1886. It provides a variety of financial products and services to individuals, SMEs, and institutional customers in Iceland. It primarily operates in personal banking, corporate banking and markets segments. The company also offers money market lending and advisory services, as well as a range of wealth and asset management products and services. It mainly operates in personal banking, corporate banking and markets segments.

Landsbankinn hf. was founded in 1886. It provides a variety of financial products and services to individuals, SMEs, and institutional customers in Iceland. It primarily operates in personal banking, corporate banking and markets segments. The company also offers money market lending and advisory services, as well as a range of wealth and asset management products and services. It mainly operates in personal banking, corporate banking and markets segments.

Fastest Growing Retail Bank Kingdom of Saudi Arabia

Best Commercial Bank Kingdom of Saudi Arabia

76 Saudi British Bank - SABB

Saudi British Bank - SABB

HQ: Riyadh, Saudi Arabia

HQ: Riyadh, Saudi Arabia

SABB, formerly known as the Saudi British Bank, provides a wide range of banking solutions for individuals and businesses. It is an associated company of the HSBC Group, one of the world’s largest banking and financial services organisations with over 10,000 offices in 83 countries and territories across Europe, the Asia-Pacific region, the Americas, the Middle East and Africa. This means that SABB customers have access to the HSBC Group’s global network, resources, skills, specialist knowledge and expertise.

SABB, formerly known as the Saudi British Bank, provides a wide range of banking solutions for individuals and businesses. It is an associated company of the HSBC Group, one of the world’s largest banking and financial services organisations with over 10,000 offices in 83 countries and territories across Europe, the Asia-Pacific region, the Americas, the Middle East and Africa. This means that SABB customers have access to the HSBC Group’s global network, resources, skills, specialist knowledge and expertise.

Best Foreign Exchange Bank Kingdom of Saudi Arabia

Most Innovative Bank Oman

Saudi British Bank - SABB

National Bank of Oman

HQ: Riyadh, Saudi Arabia

HQ: Oman

SABB, formerly known as the Saudi British Bank, provides a wide range of banking solutions for individuals and businesses. It is an associated company of the HSBC Group, one of the world’s largest banking and financial services organisations with over 10,000 offices in 83 countries and territories across Europe, the Asia-Pacific region, the Americas, the Middle East and Africa. This means that SABB customers have access to the HSBC Group’s global network, resources, skills, specialist knowledge and expertise.

National Bank of Oman is the first local bank of Oman and was founded in 1973. Today, it is one of the largest banks in the country. It serves its customers through 61 Branches and 173 ATMs and CCDMs. It has one branch in Egypt and two in UAE —one in Abu Dhabi and another in Dubai. NBO’s call centre enables customers to enjoy banking services 365 days of the year.

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Best Service Provider

Government & Corporate Banking - Oman

Best Customer Loyalty Programme Oman

National Bank of Oman

National Bank of Oman

HQ: Oman

HQ: Oman

National Bank of Oman is the first local bank of Oman and was founded in 1973. Today, it is one of the largest banks in the country. It serves its customers through 61 Branches and 173 ATMs and CCDMs. It has one branch in Egypt and two in UAE —one in Abu Dhabi and another in Dubai. NBO’s call centre enables customers to enjoy banking services 365 days of the year.

National Bank of Oman is the first local bank of Oman and was founded in 1973. Today, it is one of the largest banks in the country. It serves its customers through 61 Branches and 173 ATMs and CCDMs. It has one branch in Egypt and two in UAE —one in Abu Dhabi and another in Dubai. NBO’s call centre enables customers to enjoy banking services 365 days of the year.

Best Retail Bank Vietnam

Best Retail Bank Kuwait

77 Sacombank

Gulf Bank K.S.C

HQ: Ho Chi Minh City, Vietnam

HQ: Kuwait City, Kuwait

Sacombank was one of the first commercial joint stock banks to be incorporated in Ho Chi Minh City in December 1991 through the merger of Go Vap Bank for Economic Development and three credit cooperatives: Tan Binh, Thanh Cong and Lu Gia Cooperatives. Three years later, the bank opened its Hanoi Branch, creating significant opportunities for growth in the northern Vietnamese market. In 2001, Sacombank received investment capital from foreign shareholders, the first being Dragon Financial Holding (UK). The diversification of Sacombank’s financial services products started with the incorporation of Sacombank Asset Management Company in 2002. Sacombank also opened a banking model for women, which was the first exclusive banking model for women in Vietnam. The bank’s vision is to become the first modern multi-functional retail bank in Indochina.

Gulf Bank was established in 1960 and has since progressed to becoming an industry-leading financial services provider complemented by a large network of 56 branches strategically positioned in key locations in Kuwait. Gulf Bank’s Financial Institutions Division offers a wide range of superior Correspondent Banking services through its 900 bank correspondent networks around the world. Its Oil Sector Division specialises in providing banking services and facilities to foreign companies bidding for oil projects or contracting oil related business in Kuwait.

Best Commercial Bank Azerbaijan

Best Managed Bank Angola

Bank Technique OJSC

Standard Bank

HQ: Baku, Azerbaijan

HQ: Johannesburg, South Africa

Bank Technique Open Joint Stock Company was established in 1994 as Reshadbank. In 1998, it was renamed ‘Technika Bank’. After re-branding in 2012, it operates as “Bank Technique”. The concept of development of the bank is based on three components: modernity, feasibility and innovations. It has 32 branches and 13 departments.

Standard Bank has a 151-year history in South Africa and started building a franchise in the rest of Africa in the early 1990s. The bank currently operates in 20 countries on the African continent, including South Africa, as well as in other selected emerging markets. It has 1,283 branches and 9,300 ATMs on the African continent. The bank wants to connect selected emerging markets to Africa and to each other, applying sector expertise.

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Financial Awards Most Socially Responsible Bank Oman

Fastest Growing Bank Oman

Bank Sohar S.AO.G

Bank Sohar S.AO.G

HQ: Muscat, Oman

HQ: Muscat, Oman

Founded in 2007, Bank Sohar SAOG provides commercial, investment, and Islamic banking products and services to individual and corporate customers in the Sultanate of Oman. The company operates a network of 26 commercial banking branches and four Islamic banking branches within the Sultanate of Oman.

Founded in 2007, Bank Sohar SAOG provides commercial, investment, and Islamic banking products and services to individual and corporate customers in the Sultanate of Oman. The company operates a network of 26 commercial banking branches and four Islamic banking branches within the Sultanate of Oman.

Best Managed Bank Malaysia

Best Customer Loyalty Program

(Aseel Loyalty Program) - Kingdom of Saudi Arabia

78 Bank Rakyat

The Saudi Investment Bank

HQ: Kuala Lumpur, Malaysia

HQ: Riyadh, Saudi Arabia

Bank Rakyat was established in September 1954 under the Cooperative Ordinance 1948, following an expansion of the cooperative movement in peninsular Malaysia. To facilitate the expansion of the cooperative movement, the co-operatives set up their respective union banks to provide financial needs to their members. Today, Bank Rakyat is the biggest Islamic cooperative bank in Malaysia with 142 branches offering Islamic banking facilities. As an entity under the control of the Ministry of Domestic Trade, Cooperatives and Consumerism, the bank is committed to support the mission of the Ministry to consolidate the cooperative sector as the mainstay of economic growth of Malaysia.

The Saudi Investment Bank (SIB) is a joint stock company that has been successfully operating in the Kingdom of Saudi Arabia for more than 35 years, with over 48 branches and 11 ladies branches located throughout the Kingdom, including 41 working under ALASALAH Brand. SIB began operations in March 1977. The company’s vision is to become the financial partner of choice for aspiring businesses and individuals. The shareholders of the publicly-listed SAIB include J. P. Morgan Chase, Mizuho Corporate Bank, Saudi public and private institutions as well as Saudi individuals. To be in tune with the competitive market, SIB has positioned itself as a quality alternative to the larger institutions, with products and services specifically tailored for sophisticated corporate and individual customers.

Best Foreign Retail Bank Vietnam

Best Foreign Bank Vietnam

ANZ Bank (Vietnam) Limited

ANZ Bank (Vietnam) Limited

HQ: Melbourne, Australia

HQ: Melbourne, Australia

ANZ was one of the first foreign banks to open in Vietnam. It stated operations in the country in 1993. It now has eight branches and transaction offices, one saving kiosk in two major cities Hanoi and HCMC, and two representative offices servicing retail & wealth, consumer finance, institutional and commercial customers. It employs more than 750 staff. In 2008, ANZ became one of the first three 100% foreign owned banks to be granted a banking license by the State Bank of Vietnam to locally incorporate in Vietnam.

ANZ was one of the first foreign banks to open in Vietnam. It stated operations in the country in 1993. It now has eight branches and transaction offices, one saving kiosk in two major cities Hanoi and HCMC, and two representative offices servicing retail & wealth, consumer finance, institutional and commercial customers. It employs more than 750 staff. In 2008, ANZ became one of the first three 100% foreign owned banks to be granted a banking license by the State Bank of Vietnam to locally incorporate in Vietnam.

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Best Commercial Bank Qatar

Best Customer Service Bank Turkey

Doha Bank

Odea Bank sa

HQ: Doha, Qatar

HQ: Istanbul, Turkey

Doha Bank is the largest private commercial bank in the State of Qatar. It was incorporated in 1978. It one of Qatar’s leading financial services company. Through innovative technologies and the ingenuity of its people, it provides individuals and commercial, corporate and institutional clients across Qatar and even internationally, new and better ways to manage their financial lives. The company enables customers to do their banking and investing whenever, wherever and however they choose through an extensive network, and multiple access channels.

Odea Bank sa provides commercial and retail banking products and services. The company was founded in 2012 and is based in Istanbul, Turkey. It operates as a subsidiary of Bank Audi sal Audi Saradar Group.

Best Internet Bank

Best Corporate Bank Angola

79 Banco Único

Banco de Fomento Angola

HQ: Maputo, Mozambique

HQ: Luanda, Angola

It was incorporated by deed on October 12, 2010. Banco Unico is a private law entity and is authorised to operate pursuant to the guidelines that govern banking activities in Mozambique, its corporate object being to obtain third party funds, through deposits or otherwise, which is applied together with its own funds in loans denominated in domestic and foreign currency. It currently has a network of 11 branches.

The bank was founded in 1990 as Banco de Fomento Exterior (BFE) in Luanda. In August 1996, it was taken over by Banco Português de Investimento and renamed Banco de Fomento Angola (BFA). The new headquarters opened in July 2003 in Luanda. The bank has over 750,000 customers and over 190 stores across the country.

Best Commercial Bank Taiwan

Best Retail Bank India

The Shanghai Commercial & Savings Bank

HDFC BANK

HQ: Taipei, Taiwan

HQ: Mumbai, India

Established in Shanghai, China in 1915, Shanghai Commercial & Savings Bank (SCSB) is today one of the largest privately held banks in Taiwan, where it is headquartered. It is a premier choice for small and medium sized enterprises and recognised for its efficient trade finance and foreign exchange services. In Taiwan, the bank operates 59 branches and employs over 1,900 staff. It is reputed to offer the fastest possible remittance between Taiwan and China.

The Housing Development Finance Corporation Limited (HDFC) was amongst the first to receive an ‘in principle’ approval from the Reserve Bank of India to set up a bank in the private sector, as part of RBI’s liberalisation of the Indian banking industry in 1994. The bank was incorporated in August 1994 in the name of ‘HDFC Bank Limited’, with its registered office in Mumbai. It commenced operations as a scheduled commercial bank in January 1995.

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Financial Awards Best Internet Bank USA

Best SME Bank Mexico

Citigroup Inc

Banco Interacciones

HQ: New York, USA

HQ: Mexico City, Mexico

The company was founded in 1812 and is based in New York, USA. It is a diversified financial services holding company that provides various financial products and services to consumers, corporations, governments and institutions. The company’s global consumer banking segment provides traditional banking services to retail customers through retail banking, commercial banking, Citi-branded cards and Citi retail services.

Banco Interacciones is a financial group dedicated to providing loans to government and infrastructure finance, risk management and financial advisory services to the national public sector. Started in 1992, its customer base includes the federal government, states and municipalities, as well as government suppliers. As a group, it is shaped by Banco Interacciones, Interacciones Casa de Bolsa, Interacciones Sociedad Operadora de Sociedades de Inversión y Aseguradora Interacciones and is present throughout the Mexican Republic through its regional offices.

Best Government & Infrastructure Financing Bank Mexico

Best Investment Bank Azerbaijan

80 Banco Interacciones

PASHA Bank OJSC

HQ: Mexico City, Mexico

HQ: Baku, Azerbaijan

Banco Interacciones is a financial group dedicated to providing loans to government and infrastructure finance, risk management and financial advisory services to the national public sector. Started in 1992, its customer base includes the federal government, states and municipalities, as well as government suppliers. As a group, it is shaped by Banco Interacciones, Interacciones Casa de Bolsa, Interacciones Sociedad Operadora de Sociedades de Inversión y Aseguradora Interacciones and is present throughout the Mexican Republic through its regional offices.

PASHA Bank is one of Azerbaijan’s leading corporate banks. Established in 2007, they offer all major financial services, including investment banking, trade financing and asset management, to a range of clients, from large corporates to small and medium enterprises. The bank works particularly closely with companies operating in the non-oil sectors of the economy, including agriculture, transportation, construction and retail, which are vital for helping Azerbaijan to diversify its economy.

Best SME Bank Azerbaijan

Best Investment Bank Turkey

PASHA Bank OJSC

Garanti Yatırım Menkul Kıymetler A.Ş

HQ: Baku, Azerbaijan

HQ: Istanbul, Turkey

PASHA Bank is one of Azerbaijan’s leading corporate banks. Established in 2007, they offer all major financial services, including investment banking, trade financing and asset management, to a range of clients, from large corporates to small and medium enterprises. The bank works particularly closely with companies operating in the non-oil sectors of the economy, including agriculture, transportation, construction and retail, which are vital for helping Azerbaijan to diversify its economy.

Garanti Securities, a 99.99% subsidiary of Garanti Bank, serves domestic and foreign customers in corporate finance, research, capital markets brokerage activities and private equity investments since 1991. It is one of Turkey’s leading brokerage houses in mergers and acquisitions, privatisation administration, and also in domestic and foreign capital markets brokerage activities and clearing and settlement services.

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Best Online Bill Payment Portal UAE

Best Internet Bank UAE

Mashreq Bank PSC

Mashreq Bank PSC

HQ: Dubai, UAE

HQ: Dubai, UAE

Founded in 1967, Mashreqbank PSC provides banking and financial services in the United Arab Emirates and other countries. It is one of UAE’s leading financial institutions with a growing retail presence in the region, including Egypt, Qatar, Kuwait and Bahrain. It focuses on providing its customers access to a wide range of products and services. Its domestic corporate segment offers corporate and commercial banking.

Founded in 1967, Mashreqbank PSC provides banking and financial services in the United Arab Emirates and other countries. It is one of UAE’s leading financial institutions with a growing retail presence in the region, including Egypt, Qatar, Kuwait and Bahrain. It focuses on providing its customers access to a wide range of products and services. Its domestic corporate segment offers corporate and commercial banking.

Banking Awards Dr. R Seetharaman - CEO Doha Bank, Outstanding Contribution to Banking Qatar

81 Doha Bank HQ: Doha, Qatar Doha Bank is the largest private commercial bank in the State of Qatar. It was incorporated in 1978. It one of Qatar’s leading financial services company. Through innovative technologies and the ingenuity of its people, it provides individuals and commercial, corporate and institutional clients across Qatar and even internationally, new and better ways to manage their financial lives. The company enables customers to do their banking and investing whenever, wherever and however they choose through an extensive network, and multiple access channels.

Financial Awards Dr. Ali M. Al-Khouri - Director General of Emirates Identity Authority - Most Influential Federal Personality GCC

Dr. Mohamed Abdulaziz Kalmoor - CEO, Bank Sohar Outstanding Contribution to Banking Oman

Emirates Identity Authority

Bank Sohar S.AO.G

HQ: Abu Dhabi, UAE

HQ: Muscat, Oman

Emirates Identity Authority (EIDA) is an independent federal authority established on September 29, 2004. Its project includes the establishment of a modern population register in order to facilitate the obtainment of government services as well as to provide required information for supporting decision making, strategic planning and allocation of sources in all vital sectors in the UAE. By adopting cutting edge technology, EIDA is keen to play a distinctive role in the sustainable development of the country through a nationwide population register that will help elevate the UAE to its well-deserved position amongst advanced countries.

Founded in 2007, Bank Sohar SAOG provides commercial, investment, and Islamic banking products and services to individual and corporate customers in the Sultanate of Oman. The company operates a network of 26 commercial banking branches and four Islamic banking branches within the Sultanate of Oman.

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Financial Awards Best Insurance Company Russia

Best Non – Life insurance company Bangladesh

JSC ZHASO

Green Delta Insurance Company Limited

HQ: Moscow, Russia

HQ: Dhaka, Bangladesh

Zhaso insurance company provides transport, cargo transportation and accident insurance. The company was founded by ministry of railways in 1991 and is based in Moscow, Russian Federation. Zhaso Insurance Company operates as a subsidiary of Open Joint Stock Company United Credit Systems.

Under the charismatic leadership of Mr. Nasir A Choudhury, Founder Managing Director and Advisor, Green Delta Insurance Company Ltd. has been leading the winds of change in the insurance industry of Bangladesh in terms of service standard, innovative products and legislative restructuring. Over 28 years, it has become a big family of 14 board members, 600+ committed staff, numerous valued clients and thousands of esteemed shareholders. It is almost a one-stop solution provider in the non-life insurance sector in the country.

Best Takaful Company Kingdom of Saudi Arabia

Best CSR Initiative

Kingdom of Saudi Arabia

82 SABB Takaful

BUPA Arabia

HQ: Riyadh, Saudi Arabia

HQ: Jeddah, Saudi Arabia

SABB Takaful provides a range of takaful plans to personal and business customers in the Kingdom of Saudi Arabia. It operates through three segments: Individual Family Takaful, Group Family Takaful and General Takaful. The company offers various protection plans products, including care, travel, Schengen travel, personal accident and home takaful plans; investment plans and saving plans, such as education, retirement, savings and simple savings takaful plans.

BUPA Arabia For Cooperative Insurance Company offers medical insurance in the Kingdom of Saudi Arabia. The company was founded in 1997 and is headquartered in Jeddah, the Kingdom of Saudi Arabia. It issues short-term insurance contracts for providing health care services. It serves large companies, small and medium enterprises, Saudi families, Saudi expatriate residents and domestic staff.

Most Innovative Healthcare Partnership Kingdom of Saudi Arabia

Best Life Insurance Company Mauritius

BUPA Arabia

BAI Co (Mtius) Ltd

HQ: Jeddah, Saudi Arabia

HQ: Curepipe, Republic of Mauritius

BUPA Arabia For Cooperative Insurance Company offers medical insurance in the Kingdom of Saudi Arabia. The company was founded in 1997 and is headquartered in Jeddah, the Kingdom of Saudi Arabia. It issues short-term insurance contracts for providing health care services. It serves large companies, small and medium enterprises, Saudi families, Saudi expatriate residents and domestic staff.

BAI Co (Mtius) Ltd is the leading and largest life insurance provider in Mauritius with a market share of over 45%. The company started its operations in 1969, as a small branch of British American Insurance Kenya. In the following years, it expanded its activities geographically in Mauritius while introducing a broad set of innovative products and services for the welfare of Mauritians. Today, it has over 22 branches and sales offices across the country and in Rodrigues Island.

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Best Insurance Company Taiwan

Best Free Trade Zone

Fubon Insurance Co

Ras Al Khaimah Industrial Authority (RAKIA)

HQ: Taipei, Taiwan

HQ: Ras Al Khaimah, UAE

Fubon Insurance Co., Ltd. was founded on March 17, 1961. It is the first privately owned property insurance company in Taiwan. It mainly provides property insurance and casualty insurance products primarily in Taiwan and employs over 2,000 persons. The company was formerly known as Cathay Insurance Co. Ltd. and changed its name in 1992. It operates as a subsidiary of Fubon Financial Holding Co. Ltd.

RAKIA develops and manages the industrial parks in Ras Al Khaimah. The advantages of the region are low cost of living, 100% repatriation of profits and capital, complete ownership in free zones, no tax on import of raw material and machinery, no hiring restrictions, low rent options for long-term leasing, dedicated power plant for the industrial parks, as well as land, air and sea connectivity from Ras Al Khaimah to major markets in the UAE and surrounding regions.

Best Investment Bank Portugal

Best Investment Bank Nigeria

83 Caixa Banco de Investimento SA CaixaBI

Dunn Loren Merrifield

HQ: Lisboa, Portugal

HQ: Lagos, Nigeria

Caixa - Banco de Investimento, S.A. (CaixaBI) is the investment banking arm of Caixa Geral de Depósitos, S.A. (CGD Group). CGD is the biggest Portuguese banking group, with a strong tradition in the financial system. Its mission is to create a dynamic investment banking business platform between Spain, Brazil, Portuguese-speaking African countries and Portugal, in CaixaBI’s different business areas. The objective behind the development of a rigorous, transparent architecture is to ensure effective control within CaixaBI, guaranteed by a compliance system and an adequate corporate governance structure.

Dunn Loren Merrifield is a full-service investment house. It is an independent institution that combines the attributes of origination, distribution and trading of securities. They also provide asset management services in addition to cutting edge research to clients worldwide. They also work with international emerging market fund managers and international banks with an appetite for sub-Saharan Africa investments.

Best Customer Service Bank Angola

Best Asia Fixed Income House Singapore

Banco Privado Atlântico, S.A.

UOB Asset Management Ltd.

HQ: Lisbon, Portugal

HQ: Singapore

Atlantico began conducting business in Angola at the end of 2006 with an innovative project to create and develop an institution based on two business areas: Relationship Banking and Investment Banking. In 2009, they implemented internationalisation strategy and Atlantico Europa was founded in Portugal. Spanning a vast geographical area, the company wants to accompany its clients in the various markets of which they are part, starting along the Atlantic perimeter and extending to Asia and the Americas.

A subsidiary of United Overseas Bank, UOB Asset Management is a leading company with more than 27 years of experience investing in equities and fixed income instruments of regional and global markets. Established in 1986, the bank offers global investment management expertise to individuals, institutions and corporations through retail unit trusts, exchange-traded funds and customised portfolio management services. UOBAM has a team of close to 60 investment professionals, and has regional business and investment offices in Malaysia, Thailand, Brunei, Taiwan and Japan. The bank also has two joint ventures – Ping An UOB Fund Management Company based in China and UOB-SM Asset Management, based in Singapore.

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Financial Awards Best Asset Management Company Singapore

Best Investment Bank Sri Lanka

UOB Asset Management Ltd.

NDB Investment Bank

HQ: Singapore

HQ: Colombo, Sri Lanka

A subsidiary of United Overseas Bank, UOB Asset Management is a leading company with more than 27 years of experience investing in equities and fixed income instruments of regional and global markets. Established in 1986, the bank offers global investment management expertise to individuals, institutions and corporations through retail unit trusts, exchange-traded funds and customised portfolio management services. UOBAM has a team of close to 60 investment professionals, and has regional business and investment offices in Malaysia, Thailand, Brunei, Taiwan and Japan. The bank also has two joint ventures – Ping An UOB Fund Management Company based in China and UOB-SM Asset Management, based in Singapore.

NDB Investment Bank Limited (NDBIB) is a dominant force in the Sri Lankan financial markets offering a diverse portfolio of financial products and services, with particular focus on debt and equity structuring and placement. NDBIB is a part of NDB Bank’s Investment Banking Cluster, which is a key strength as NDBIB is ideally placed to draw on the sound financial knowledge and expertise of the overseas partners of the parent company, thereby affording clients a comprehensive, dynamic solution

Best Service provider to Government & Non-Government sector - UAE

Best Islamic Bank Bahrain

84 Aafaq Islamic Finance

Bahrain Islamic Bank

HQ: Dubai, UAE

HQ: Manama, Bahrain

Aafaq Islamic Finance is a private joint stock company with paid-up capital of AED 150 million. It is licenced and regulated by the Central Bank of UAE.

Bahrain Islamic Bank (BisB) was established in 1979 as the first Islamic commercial bank in the Kingdom of Bahrain. Since its inception, BisB has recorded a steady growth. In 2007, the bank launched its new identity with the core objective of radiating its new and fresh mandate of exceeding expectations, both from an inspirational and a functional perspective. The bank, with seven local branches and four new financial malls, has established the largest network among Islamic banks in the Kingdom.

Best Islamic Bank Nigeria

Best Islamic Finance Technology Provider

Jaiz Bank

Path Solutions

HQ: Abuja, Nigeria

HQ: Kuwait City, Kuwait

Jaiz Bank was created out of the former Jaiz International Plc, which was set up in 2003-04 as a special purpose vehicle to establish Nigeria’s first full-fledged Non-Interest Bank. It is an unquoted public company owned by over 3,000 shareholders spread over the six geographical zones of Nigeria. Jaiz Bank Plc. obtained a regional operating licence to operate as a Non-Interest Bank from the Central Bank of Nigeria in November 2011 and begun full operations as the first Non-Interest Bank in Nigeria in January 2012 with three branches located in Abuja FCT, Kaduna and Kano.

Path Solutions aims to be the market leader for the financial industry, and in specific the Islamic banking industry, in providing the best innovative, high quality, feature rich and integrated solutions complemented by the most comprehensive set of consulting, implementation and support services. It has R&D centres in Beirut, Cairo and Kerala, and support offices in Dubai, Jakarta, Karachi, Khartoum, Kuala Lumpur, London, Manama and Riyadh, while maintaining a presence through partner companies in other locations around the globe.

International Finance Magazine Oct - Dec 2014


COLUMN

Best New Islamic Asset Manager United Kingdom

Best Asset Management Company Ireland

Arabesque Asset Management Ltd

Mediolanum Asset Management Ltd

HQ: London, UK

HQ: Dublin, Ireland

Arabesque Asset Management was established in June 2013 through a management buyout from Barclays Bank PLC. The firm offers a quantitative approach to sustainable investing. It combines state-of-the-art systematic portfolio management technology with the values of United Nations Global Compact, the United Nations Principles for Responsible Investments, and balance sheets and business activity screening.

Mediolanum Asset Management Limited is the Irish asset management company of the Mediolanum Banking Group. The company has an innovative approach to investment management based on the application of a proprietary investment process, which allows the development of portfolio management solutions tailored to meet clients’ needs; investment advice and related investment management services.

Most Innovative Investment Management Company Ireland

Best Fund Management Company Estonia

85 Mediolanum Asset Management Ltd

AS LHV Varahaldus (LHV Asset Management)

HQ: Dublin, Ireland

HQ: Tallinn, Estonia

Mediolanum Asset Management Limited is the Irish asset management company of the Mediolanum Banking Group. The company has an innovative approach to investment management based on the application of a proprietary investment process, which allows the development of portfolio management solutions tailored to meet clients’ needs; investment advice and related investment management services.

LHV Asset Management (AS LHV Varahaldus) is a fund management company supervised by the Financial Supervision Authority of Estonia. It is owned by AS LHV Group, which is a holding company for LHV Asset Management as well as LHV Bank. LHV was founded in 1999 and offers its services in Estonia, Latvia, Lithuania and Finland. LHV Persian Gulf Fund is also publicly offered in Sweden, Finland and Norway. In addition to two UCITS funds LHV Asset Management also manages mandatory and supplementary pension funds in Estonia.

Best Mortgage Fund Australasia

Best Investment Management Company Australia

La Trobe Financial Asset Management Limited

La Trobe Financial Asset Management Limited

HQ: Melbourne, Australia

HQ: Melbourne, Australia

Formed in 1952, La Trobe Financial is Australia’s leading credit specialist fund manager with 60 years’ experience managing over $10 billion of investment mandates on behalf of retail and institutional investors. Apart from Melbourne, where it is headquartered, it has a presence in Sydney, Traralgon and Shanghai in China.

Formed in 1952, La Trobe Financial is Australia’s leading credit specialist fund manager with 60 years’ experience managing over $10 billion of investment mandates on behalf of retail and institutional investors. Apart from Melbourne, where it is headquartered, it has a presence in Sydney, Traralgon and Shanghai in China.

Oct - Dec 2014 International Finance Magazine


COLUMN

Financial Awards Best Pension Fund Italy

Best Strategic Federal Project Implementation - GCC

Poste Vita S.p.A. Fund Postaprevidenza Valore

Emirates Identity Authority

HQ: Rome, Italy

HQ: Abu Dhabi, UAE

Poste Vita SpA ., the life insurance company of the Italian Post Office Group, was founded in 1999. In 2010, it became the top insurance company in Italy in terms of premium income (€ 13.1 billion in 2013 alone) .

Emirates Identity Authority (EIDA) is an independent federal authority established on September 29, 2004. Its project includes the establishment of a modern population register in order to facilitate the obtainment of government services as well as to provide required information for supporting decision making, strategic planning and allocation of sources in all vital sectors in the UAE. By adopting cutting edge technology, EIDA is keen to play a distinctive role in the sustainable development of the country through a nationwide population register that will help elevate the UAE to its well-deserved position amongst advanced countries.

Most Socially Responsible Company Kenya

86 Kwale International Sugar Company Ltd HQ: Nairobi, Kenya Kwale International Sugar Company is a $200-million sugar processing facility being built from the ground up incorporating 5,500 hectares of cultivated cane, a 3,000 tonnes-crushed-per-day sugar mill, an 18 megawatt bagasse-fired power plant and a sophisticated irrigation and water management system, resulting in affordable, locally grown sugar. The project, being one of the largest green field projects in Africa, is expected to be fully operational in late 2014. With state-of-the art technology, including a sub-surface drip-fed irrigation system, KISCOL is saving on 40 percent of the water requirements for crop growth. It plans to harvest 60 tonnes of rain-fed cane per hectare and 140 tonnes of irrigated cane per hectare.

Brokerage Awards Best Introducing Broker Program

Most Innovative Social Trading Platform

GCI Financial LLC

Saxo Bank

HQ: Copenhagen, Denmark

HQ: Copenhagen, Denmark

GCI is a forex and CFD broker with a focus on superior trading conditions and customer service. The many benefits of trading with GCI include spreads as low as 1 pip, interest paid on account balance, direct interbank (ECN) trading access, and reliable MetaTrader and ActTrader software. GCI’s advanced software allows one to easily trade from PC, Mac, web browser, iPhone, or other mobile device, whether using MetaTrader or ActTrader. GCI is recognised globally as one of the premier foreign exchange market makers and providers of industry research and analysis. GCI’s Introducing Broker (“IB”) program allows individuals and companies to get paid for directing new clients or trading volume to GCI.

Established in 1992 as Midas Fondsmæglerselskab, a brokerage firm, the name was changed to Saxo when the company obtained a banking license in 2001. Roughly two-thirds of its activities are derived from partnerships with institutional trading partners. The company functions as an online broker with a bank license, without offering traditional banking products. Since the beginning, it has been a facilitator in the global capital markets aggregating liquidity and offering access to exchanges around the world.

International Finance Magazine Oct - Dec 2014


COLUMN

Brokerage Awards Best ECN Broker Asia

Best Electronic Trading Platform Latin America

InstaForex Group

ATG – Americas Trading Group

HQ: Kaliningrad, Russia

HQ: Rio de Janeiro, Brazil

InstaForex was founded in 2007 as a retail forex broker. It also provides online trading services using an electronic communication network to execute trades. Additionally, it gives access to trading in currencies as well as contracts for differences based on shares and commodity futures. It has a worldwide network of about 265 representative offices and a presence in 31 countries, mostly in Asia and Europe.

Established in 2010, the Americas Trading Group (ATG) offers electronic trading products and services to institutional investors. ATG is headquartered in Rio de Janeiro and has local offices in Miami, Mexico City, SĂŁo Paulo and Santiago. The company consistently seeks opportunities to strengthen and advance electronic trading in Latin America. With a cutting edge electronic trading platform, which incorporates technology so far unavailable in the region, ATG has set a new benchmark for the Latin American electronic trading markets.

Brokerage Awards Best Finance Comparison Portal UAE

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Compareit4me.com HQ: Dubai, UAE Compareit4me was setup to serve the banking industry in the UK, the site had some success but with a crowded UK comparison market, the founders looked to exit the UK and take the idea to emerging markets. In 2011, it was launched in the UAE and spent the first 12 months of its existence acting purely as an information site. In December 2013, the founders decided to step away from the business leaving the CEO and COO to continue to push the site forward

Oct - Dec 2014 International Finance Magazine


DUBAI 2013

AWARDS CEREMONY


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The oompH in

HYBRIDS

The trend towards environment-friendly vehicles won’t kill off the opulent luxury car — if anything, it’ll only get better Stephen Errity

International Finance Magazine Oct - Dec 2014


Porsche Panamera H 1

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he luxury automotive sector is undergoing rapid change as the 21st century unfolds. In today’s globalised and environmentally conscious world, even the finest and most exclusive cars on sale have had to adapt to a mixture of government legislation and customer demand requesting they be friendlier to nature. Traditional brand values, such as making use of the highest-quality materials and eye-catching yet digni-

fied styling remain, but today they go hand-in-hand with a commitment to minimising the environmental impact of these vehicles by using the very latest technology. However, buying one of these luxury hybrid motors isn’t just about projecting an environment-conscious image to the world — although that’s certainly part of the appeal. The same hybrid technology that improves fuel consumption and reduces harmful emissions can also enhance some

of the more familiar benefits of luxury car ownership, such as the ability to travel in near-silence, as well as enjoy thrilling performance when desired. British manufacturer Rolls-Royce is often seen as the pinnacle of luxury motoring, and where it leads, the industry as a whole will follow. Rolls’ links with BMW gives it access to the significant technical resources needed to develop hybrid drivetrain technology, and the company is forging ahead with plans to incorporate hybrid technology in some of its iconic models. Speaking to the press at this year’s Geneva Motor

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It’s never a question of not having enough to afford a Rolls-Royce, but our customers are shrewd businesspeople, and they want to know what they’re getting for their money, Torsten Muller-Otvos CEO, Rolls-Royce

Bentley Hybrid Concept

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Show, Rolls-Royce CEO Torsten Muller-Otvos said that hybrid tech would be ‘essential’ to comply with emission regulations within the next two to three years. The company demonstrated a prototype electric model, the 100EX, some time ago, but according to Otvos, the compromises in terms of range and battery recharge time were not acceptable to the typical Rolls-Royce customer. So, the flexibility of current hybrid technology offers a better solution in the short to medium term. The ability to whisk passengers silently and swiftly through urban environments, before switching to conventional engine power for the long-distance element of a trip, is certainly an attractive proposition. And while cost has been seen as a barrier to growing sales of hybrid models elsewhere in the motor industry, this isn’t a factor in the high-end luxury market, where it’s the quality and capability of the product that’s important. “It’s never a question of not having enough to afford a Rolls-Royce, but our customers are shrewd businesspeople, and they want to know what they’re getting for their money,” says Otvos. Rolls-Royce’s British rival Bentley (also owned by a German company, in this case VW) too is set to embrace hybrid technology. At April’s Beijing Motor Show, the brand took the wraps off its Hybrid Concept, which is based on the flagship Mulsanne limousine. Demonstrating the range of benefits of hybrid technology, the Bentley Concept sees power increased by 25 percent and emissions reduced by 70 percent compared to the standard Mulsanne. It also has a driving range of at least 50km on electric power alone. Bentley will introduce a hybrid SUV in 2017 and, by the end of the decade, at least 90 percent of its range will be available as a plug-in hybrid. At the Hybrid Concept’s launch, the then CEO of Bentley Wolfgang Schreiber commented: “There is no doubt that plug-in hybrid technology is true to Bentley’s values of outstanding luxury and effortless performance. Combining our renowned engines with electric power reinforces and enhances both prin-

International Finance Magazine Oct - Dec 2014

ciples, and so we will gradually introduce this powertrain across our model range... We are proud to be pioneering these developments in the luxury sector.” Schreiber has since been succeeded at Bentley by Wolfgang Durheimer, but the latter is no less enthusiastic about the possibilities presented by hybrids. Rolls Royce’s owner, BMW; the VW Group’s sports car brand, Porsche; and the other German automotive giant, Mercedes all have their own hybrid offerings in the highend luxury saloon class. Yet, it will still carry the driver and up to three passengers in comfort. Unsurprisingly, the Porsche is the most driver-focused: the Panamera S E-Hybrid produces a total of 416bhp from its electric motor and six-cylinder petrol engine combination, and will accelerate from 0-60mph in a supercar-rivalling 5.5 seconds, before going on top speed of 167mph.


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Porsche Panamera H

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The BMW 7 Series ActiveHybrid and Mercedes S500 Plug-In Hybrid feel more like traditional large luxury saloons. Although the BMW is only slightly slower from 0-60mph than the Porsche, with a time of 5.7 seconds, it’s also a less agile car, with the focus more on passenger comfort than driver involvement. It’s less powerful, too, putting out 349bhp. The Mercedes is the newest of the bunch, and it shows. The economy and emissions figures for this car are almost more impressive

than the performance numbers with a claimed 100mpg and 65g/km of CO2. It has a larger battery than most plug-in hybrids, enabling it to drive using just the 114bhp electric motor for up to 20 miles, but when the open road beckons, the driver (or chauffeur) can summon up 328bhp from a 3.0-litre, twin-turbocharged V6 petrol engine. The 0-60mph time is the same as the Porsche’s, and top speed is electronically limited to 155mph. The Mercedes also

‘coaches’ its driver on how to be more efficient: if slowmoving traffic is detected up ahead, the accelerator pedal will vibrate to encourage the driver to ease off and come to a gradual stop, rather than staying on the gas until the last minute and braking suddenly. Data from the GPS sat-nav system is used to make sure the batteries are fully charged in time for your arrival in an urban environment, to allow zeroemissions electric driving for as long as possible. Finally, no discussion of

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BMW Active Hybrid 7

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environmentally friendly luxury cars would be complete without mentioning Tesla Motors. Elon Musk’s start-up has dared to do what the big manufacturers have so far been too cautious to: put a fully electric luxury saloon on sale, in the form of the stunning Model S. This car has almost single-handedly turned electric motoring from a niche interest into a status symbol among America’s wealthy elite, and the advent of the Tesla Supercharger network of highspeed charging stations promises to eliminate the one thing that holds most buyers back from electric cars: range anxiety. So, whether the future of luxury motoring is plug-in hybrids or full electric vehicles, there’s no shortage of technologically advanced and desirable models out there, from manufacturers both old and new. The environmentfriendly trend won’t kill off the opulent luxury car — if anything, it’ll make it even better.

Tesla S

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Oct - Dec 2014 International Finance Magazine


INTERVIEW

Packing more into a

holiday package Joyeeta Basu

International Finance Magazine Oct - Dec 2014


INTERVIEW

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»

(L-R) Rob Tominey, Piers Linney of Dragon’s Den and Aden Levin

Oct - Dec 2014 International Finance Magazine


INTERVIEW INTERVIEW

Why Rob Tominey and Aden Levin are the talk of the town

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Describe your company. We specialise in young people’s clubbing holidays and festival events. How did the idea for your business come about? When we were at university, we would sell tickets for small events that happened in and around our university. That triggered the idea of taking it forward as a business. We worked on it from there. Why the name Mainstage Travel and who thought of it? We thought it was short, simple and that everyone would be able to remember it. The whole team had been trying to work out the perfect name to fit our image when we both came up with it. Tell us a bit about yourselves. We went to Manchester University where we studied business and felt keen on running a business together. Then we came up with this idea and started working on it as soon as we finished university. At the time, we were around the same age as our potential customers. So, we knew what people of that age group would like. We knew what would attract them and what to offer them. Having a business mind and a sound knowledge in business helped us

understand what it would take to make it work. What developments has your company made since being picked and backed by BBC show Dragons’ Den star Piers Linney with a £100,000 investment? Since working with Piers, we have taken considerable steps towards making our company more professional and fit for higher growth. We have also been developing our innovative technology platform as a system that can be used by hotels and companies. This has enabled us to become both a travel as well as a technology company. We will have some incredible technical products coming out very soon. What is the market size of your product today and what is the growth rate you expect? The market size is huge. Clubbing holidays and festivals have always been popular with young people but in recent years, there has been a bigger increase in the number of people taking part in them. Since young adults make up about a third of the population, the market we work in is huge, which is perfect for our product. This market is also constantly increasing and will continue to grow each year with young adults turning

International Finance Magazine Oct - Dec 2014

18 or finishing college and about to start university. There are also the more mature young adults (20+) who may have been working all year and want a break, who also form a part of our customer base. Our product will constantly be popular, as clubbing holidays and festivals has been around for years and they don’t look like they are going to die out any time soon. This gives us plenty of time to grow our business and further it within the clubbing holiday and festival markets. Who are your biggest customers (age group wise)? Our biggest age group are mature young adults, as they tend to be more interested in festivals than clubbing holidays. This is probably because they have already been on such holidays and clubbing destinations, and now want to try something different. We have our own Snowboxx winter festival, along with packages for about six other summer festivals. So, we have a wide range of festivals on offer with some fantastic prices. What are your competitive advantages and why can’t your model be copied? Our competitive edge is that a lot of the existing travel agents are out-dated and don’t seem to understand what young adults want from their packages. We offer complete packages, which are exactly what our young customers look for. For example, our clubbing holiday packages not only include flights and

We have our own Snowboxx winter festival, along with packages for about six other summer festivals.


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accommodation, like other travel agents do, but much more, like transfers and event tickets too. These are all included in the price of the holiday. Besides saving 20-30% on the overall price, we also save our customers money once they get on their holidays, as their expenses for transfers and event tickets are paid for before they arrive at the destination. There aren’t many travel agents who offer these great priced packages.

We also save them a lot of time as customers would otherwise need to buy tickets and then arrange for their travel and accommodation separately. How do you plan to develop your brand? Any other areas of travel that you are looking to get in to? We are constantly developing our brand and within the destinations and events, we are constantly making sure that we not only offer the same packages but also

a better one each year. Previously, we were able to add a new destination each year to our clubbing holidays. So, though there is no way to say where or when yet, we are continuing to grow and becoming more successful each year. So, who knows where we will be offering great packages for in the years to come. The biggest challenges and triumphs so far? Our biggest triumph was gaining a name within the travel industry. We were

able to achieve that after a lot of hard work and determination. Tell us more about your plans to launch a new ski festival brand? They are really exciting new plans, watch out! What motivates you? Our main motivation has always been to be able to create a successful and a constantly growing business.

Oct - Dec 2014 International Finance Magazine


MARK YOUR

Calendar

CALENDAR INTERVIEW

102

4-7 November 2014 Mecminas Expo (Mechanical)

Belo Horizonte, Brazil

4-8 November 2014 China Aerospace and Aviation Technology Show 2014 (Aerospace) Shanghai, China

Lagos, Nigeria

World MoneyShow (Financial) London, UK

Cape Town, South Africa

Luxury Travel Fair (Travel) London, UK

London, UK

Lagos International Trade Fair (Economic & Business) Lagos, Nigeria

12-13 November 2014 Industrial Products industry (Manufacturing) New Delhi, India

18-19 November 2014 Entrepreneur Expo (Business)

Cape Town, South Africa

18-21 November 2014

4-5 November 2014 Windtech (Energy)

Sao Paulo, Brazil

International Finance Magazine Oct - Dec 2014

29 November - 7 December 2014 Essen Motor Show (Auto) Essen, Germany

2-4 December 2014 Aerospace (Aviation)

Toulouse, France

4-6 December 2014 Asia Golf Show/ PGA Merchandise Show-Asia 2014 (Golf) Shenzhen, China

8-10 December 2014

7-16 November 2014

4-5 November 2014 The Luxury Property Show (Real Estate)

Yiwu, China

6-9 November 2014

3-7 November 2014 AFRICA OIL WEEK 2014 (Oil & Gas)

China Yiwu International Manufacturing Equipment Expo 2014 (Manufacturing)

6-8 November 2014

1 November 2014 Showfx World in Lagos (Financial)

19-22 November 2014

Metal Expo (Metals)

Paris, France

Meba (Aviation)

Dubai, UAE

19-20 January 2015 AFF 2015 - The 8th Asian Financial Forum (Financial) Hong Kong, China

22-25 January 2015 kreuzfahrt-schiffsreisen (Shipping) Stuttgart, Germany

28-31 January 2015 CHEMTECH WORLD EXPO 2015 (Oil & Gas/ Chemicals) Mumbai, India


INTERVIEW

INTERVIEW

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‘The industry should grow, and then we will also

grow’

Farzana Chowdhury, MD & CEO, Green Delta Insurance Company, talks to IFM about her professional journey and her vision for Bangladesh in the context of the insurance sector

Oct - Dec 2014 International Finance Magazine


INTERVIEW INTERVIEW

“The country remains behind its neighbours in the sub-continent, especially India and Pakistan, both in terms of premium income and penetration. Only 1.5 percent of our population has life insurance coverage, as compared to 4.5 percent in Pakistan and 7.5 percent in India”

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You had recently said that the insurance market in Bangladesh is untapped. What opportunities do you see for the industry in the coming years? The insurance sector in Bangladesh is indeed a virgin territory. The opportunities are countless. As this sector had been neglected for years, many developments are yet to take place. Green Delta acts as a pioneer and many of our products have been introduced for the first time in Bangladesh, namely Nibedita, Micro Health Insurance, People’s personal accident policy, Worker Insurance etc. Our motto is Insurance for Everyone. We want to bring insurance to everyone’s doorstep, which is a very retail focused approach. But that’s just a piece in the pie. There are many areas of general insurance that are still untouched. We have projects in the pipeline to cover those areas. We want other insurance companies,

especially in the private sector, to come forward and be a part of this growth. We want the whole industry to grow so that we all can grow together. As this industry lacks glamour, the portion of the youth that are considering insurance as their career path, is very low. If the whole industry strives for the betterment of this sector, we can popularise insurance among all, especially among the youth, which will automatically generate more opportunities. How big is the insurance market in Bangladesh and how mature is it? What is the rate at which it is growing? The insurance industry in Bangladesh has recently seen rapid growth driven by accelerating economic growth, notes a 2008 ADB report describing a technical assistance loan to improve the country’s capital markets and insurance sector. There are 77 insurance companies in the country, including two state-owned enterprises, the Jiban Bima

International Finance Magazine Oct - Dec 2014

Corporation (JBC) for life insurance and the Sadharan Bima Corporation (SBC) for general insurance. Nevertheless, the country remains behind its neighbours in the sub-continent, especially India and Pakistan, both in terms of premium income and penetration. Only 1.5 percent of the population has life insurance coverage in Bangladesh, as compared to 4.5 percent in Pakistan and 7.5 percent in India. Further, per capita insurance premium in 2003 was found to be only 2.1 percent (Pakistan 2.9 percent and India 16.4 percent). On the upside, the ADB finds that growth in premiums was remarkable. The life insurance sector clocked a growth in premiums of 22 percent per year between 2001 and 2003, whereas general insurance showed an 11 percent per year growth in the same period. You have been associated with GDIC since 2009. Tell us about the growth of the company? Although I joined Green

Delta officially on 2009 as an additional managing director, I was a part of the team for a very long time. I was a board member from 2002-2008 and vicechairperson of the board from 2008-2009. There’s also something many people are not aware of —after my graduation in 1993, I joined Green Delta as a Trainee Executive and worked in the company for a few years. I’ve seen many ups and downs. Being a part of the leading general insurer of


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the country, I was lucky to see the growth very closely. Mr. Nasir A. Choudhury, who’s the current advisor and the founder managing director, is a legendary figure in the insurance industry, not just in Bangladesh but also in the world. Under his charismatic leadership, Green Delta achieved recognition in the country and abroad. His contribution is the reason for Green Delta’s success. When I joined, I tried to be a part of this journey of growth and

success. With the help of my team members, I pioneered many insurance products in the market. This way, I also contributed to the legacy of Green Delta. You have pioneered the launch of Nibedita, the only product catering exclusively to the welfare of women. What were the reasons behind starting this project? Why this special focus on women when there is anyway a huge untapped market?

More than 52% of the population of our country consists of women. Our society is still male dominated. Nibedita has some exclusive features for women, which are not present in other accidental policies. It has extended coverage for victims of rape and acid attack, and in case of death during child birth. It deals with principles like gender equality, fairness, human rights, non-discrimination, health and safety. So you can say that this product

was a demand of the times and our effort to address a national issue. Tell us about Nibedita. What does it aim to achieve? Nibedita is a comprehensive insurance scheme, with a wide range of coverage of accidental death, bodily injury due to accident, death during child birth etc. It also has extended coverage for legal expenses incurred during divorce proceedings, trauma allowance for rape, robbery, acid victims

Oct - Dec 2014 International Finance Magazine


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etc. It is a product that can be availed by women from all walks of life because of its low price. One can get the policy for a year with a premium as low as BDT 580 only. This will give coverage worth BDT 100,000, which is very much affordable. One can get coverage up to BDT 1,000,000, with a corresponding increase in the premium. A female sales force is actively involved in promoting Nibedita and the popularity of the policy is soaring in the market. This product aims to make woman self-sufficient. It promotes women’s empowerment and leadership to a great extent. As the women in our country are exposed to various risks, Nibedita dares to be their partner in bad times and safeguards their future. How do you intend to promote the growth of the insurance sector in Bangladesh? What role can GDIC play? Our brand communication activities mostly aim at promoting the insurance industry rather than just our company. We believe if the industry grows, we grow. And like I said before, we want other companies to grow with us as well. Our motto, which is a retail focused approach, is to bring insurance to everyone’s threshold. We are building insurance awareness first. Being the leader in the industry, we have responsibilities to fulfill. We have recently launched a training institute through which we are training professionals on various financial courses. Insurance is a major subject. We joined hands with

CII, UK for the insurance courses. This way, we wish to make more insurance experts in the industry who can contribute greatly to the sector in the future. What are the other products offered by GDIC? Green Delta provided a people’s personal accident policy for students of renowned private universities, covering accidents and accidental deaths and permanent damage to any body organ. It covered numerous students and had the largest coverage of about BDT 100,000 per student and with a premium as low as BDT 74 per year. In addition, employees of many corporate houses have been provided with a personal accident policy. This policy is significantly useful for medical promotion officers and field level employees who sell medicines in hospitals, travelling to the farthest corners through sheer dedication and for the factory workers who are exposed to dangerous chemicals. Niramoy is a micro health insurance product developed for the rural population. It enabled a neglected portion of the population avail insurance service at a very low cost. Our other significant products are crop insurance, Shudin — micro insurance for garments workers, worker insurance, personal content insurance, health insurance with global emergency evacuation services, property insurance and overseas medical insurance.

International Finance Magazine Oct - Dec 2014

More than 52% of the population of our country consists of women. Our society is still male dominated.


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has been driven by positive factors, inclusive of huge investments in the industry by domestic and foreign players, growing demand, protective government policies, favourable macroeconomic factors and strong economic growth — despite the global economic slowdown, domestic insecurity and political unpredictability. Nigeria can now earn export income from cement, as local capacity, estimated at c.28.95 metric tonnes as at first quarter of 2014, dominates the c.20.95 metric tonnes annualised domestic demand. In 2012, Nigeria overtook South Africa to become Sub-Saharan Africa’s largest cement producer, second largest cement producer in Africa — behind Egypt — and fourth largest cement producer in the broader

Middle East and Africa — behind Egypt, Saudi Arabia and Iran in that order. Given current capacity and demand levels, Nigeria is now self-sufficient in cement production even as demand for cement has over the years been on a healthy increase, in line with growth in production. We see the rapid progress being made in the cement industry as a major factor that will spur industrialisation in Nigeria. To consolidate and improve on current leading position, as well as position for anticipated increases in cement demand across Africa, some key players in Nigeria’s cement industry have highlighted plans to further invest in capacity expansion in the years ahead. We estimate that Nigeria’s cement industry will rank in the comity of the world’s top 15 cement

producers no later than 2025 even as we expect the industry to overtake Egypt’s cement industry to become Africa’s largest. This is given the slow rate of capacity addition in Egypt’s cement industry. Egypt is currently the biggest cement producer on the continent and faces a certain level of oversupply, which is a disincentive for further capacity addition. In terms of value creation, Nigeria’s cement industry has, on average, been a consistent value creator. Cumulatively, the industry has also created wealth for shareholders. We estimate that between 2010 and 2013, the industry created a cumulative average value of 23.01 percent or N39.92billion (c.US$250mn) in absolute Naira terms. The industry has also increased wealth levels of equity portfolio

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At present, the industry is favourably characterised by thin cost and high margins, as major raw materials for production are cheaply available domestically, though power challenges remain a problem. Looking ahead, it is our expectation that the industry will graduate into a significantly volume-driven sector, as excess capacity and production come on stream and the government’s various reforms crystalise

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investors, creating a cumulative average wealth of 58.13 percent between 2010 and 2013, in our estimation. This implies equity investors who allocated equal capital to shares in the industry at the start of 2010, and held on to these shares without periodic revisions, would have earned an average return of 58.13 percent on the total invested capital. Meanwhile, further analyses of the dynamics of Nigeria’s cement industry, in our assessment, suggests that revenues in the industry are yet to be fully and solely volume-driven. To a considerable extent, revenues are driven by a combination of relatively high cement prices and volumes, not high volumes alone. Our sensitivity analysis of the industry concludes that the robust growth in revenues of the industry in recent times would decrease by a factor of c.13 percent if prices were to equate global average price estimated at c.$100, even if the quantity of cement sold went up by 30 percent. This buttresses the influence of current domestic cement prices on industry revenues. Looking ahead, it is

our expectation that the industry will graduate into a significantly volume-driven cement industry, as excess capacity and production come on stream and government’s various reforms on the industry crystalise. A significantly volumedriven cement industry is already the case in China, for instance, where overcapacity and production have forced down cement prices well below global average wherein survival of the country’s cement producers hinges, to a considerable extent, on their ability to drive volumes, both domestically and via exports. The oversupply of cement in China explains why many cement import-dependent countries, with weak cement industries, are awash with cement produced in China. It is clear to us that there is value in Nigeria’s cement industry. We believe in the prospects, value and wealth creation potential of the industry. At present, the industry is favourably characterised by thin cost and high margins, as major raw materials for cement production are cheaply available domestically, though power challenges

International Finance Magazine Oct - Dec 2014

remain a problem. We side with efforts of players within the industry, as they look to not only boost local capacity to address demand but also put measures in place to produce more cheaply via diversifying fuel sources and reverting to low cost fuels. If these efforts remain consistent, they could lead to a marked decline in production costs, given the chief role power/fuel costs play in aggregate production costs. We have rated the industry outperform; our outlook on the industry remains positive. Source: Dunn Loren Merrifield Asset Management & Research Co. The Dunn Loren Merrifield Group is a full-service investment house with headquarters in Lagos, Nigeria. An independent institution that combines the attributes of origination, distribution and trading of securities, we also provide asset management services in addition to cutting edge investment research to our clients and investors. Through the companies, Dunn Loren Merrifield

tailors its activities with the primary objective of offering quality service that meets and exceed clients’ expectations. The Dunn Loren Merrifield Group comprises the following companies: Dunn Loren Merrifield Asset Management & Research Co. which is focused on delivering competitive and superior investment returns in line with the clients’ objectives. The firm has a team of dedicated and experienced investment managers & analysts who devote themselves to providing in-depth analyses of the financial markets, Nigeria in particular. Dunn Loren Merrifield Advisory Partners, the firm provide clients with corporate finance deal structuring, corporate finance advisory and execution that is bestin-class. Dunn Loren Merrifield Securities, which is appointed by the Nigerian Stock Exchange, operates as a fixed income and equities market marker following a rigorous selection process and lastly, Dunn Loren Merrifield Nominees.


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JTB to expand in African markets Jammal Trust Bank (JTB) is a rapidly growing commercial bank in Lebanon with clear competitive advantages in the local market and in that of West Africa. With a proven track record spanning 50 years, it provides tailor-made, innovative financial products and services. Its client base includes major private-sector corporations, financial institutions, multinational companies active in the region and the West African states. JTB has gained experience for project and trade finance and is a major player in the local syndicated loan market. JTB’s financial strength is based on conservative asset and liability management policies, its high-quality asset profile and deposit base.

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growing flow of recurrent earnings.

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The journey since 1963 JTB was established in 1963 as a small familyowned bank with focus on the channeling of investment funds between Lebanon and a number of the West African states. The capabilities, commitment and hard work of its founder helped the bank grow domestically to 24 branches strategically located throughout the geography of Lebanon. Its outreach in Africa today practically covers the entire continent, in addition to a representative office in the United Kingdom. The bank was initially called Jammal Investment Bank S.A.L. In the same year, the chairman, Ali Abdullah Jammal, accompanied by some of his senior officers, made an extended tour of Africa aiming to establish relations with the thriving and important Lebanese business communities. As a prominent veteran expatriate, Jammal’s long and distinguished record as an industrious and successful businessman in Africa ensured a very warm welcome. The very positive response to the bank’s full range of services, both in

Africa and in the Lebanon to the expatriate communities, exceeded all expectations. It became necessary to increase the capital, which was done in 1977. There was no change in the constitution of the company, its ownership or its management; however, its name was changed to Jammal Trust Bank S.A.L.

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The current scenario With significant improvements continuing across all major business activities, the bank set on a growth path in 2009, which continues to fuel restructuring and expansion strategies. This exceptionally strong yearon-year advance reflects increases in both interest and non-interest earnings and a reduction in provisions for credit losses, demonstrating the success of JTB’s ongoing strategic initiatives, coupled with an effective and proactive management of risk. The result clearly illustrates the soundness of the bank’s new retail banking strategy introduced a few years ago, focusing primarily on Lebanon and the Western African states, which has increasingly contributed to diversification of a steadily

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Optimism about future Despite the turmoil in the region, signs of economic improvement remain acceptable. Coupled with a stable domestic performance, it has stimulated substantial vigour in JTB’s business since the introduction of its new retail strategy a few years back. As a result, there have been strong contributions across all major operating activities, enabling the bank to achieve record levels in financial performance. Prospects for the years ahead continue to look encouraging. In addition, demand for overall banking services is expected to increase, as important structural reforms in the country’s financial infrastructure gather pace. A major thrust in retail banking activities in 2007 improved the sector’s contribution to the overall income of the bank over the last three years, through the implementation of a carefully formulated business development strategy that focuses on increased market penetration and product diversification. According to Mohammad Fheili, Assistant General Manager, the more important points to make in this regard is that the figures for those years showed a very healthy growth in terms of (a) earnings, (b) quality of assets, (c) strength of the bank’s liquidity ratios and (D) the adequacy of the capital. What the figures don’t show, but is significant for

JTB, is the attention the bank has been giving to human capital, governance, compliance, risk management, and systems & procedures.

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The road ahead JTB believes that there is ample room to further leverage the distinctive advantage it has of enjoying a privileged access to niche markets both on-shore and off-shore. Such efforts will rest, as defined in the detailed strategy and business plan, on adopting an all-inclusive approach to service large clients and to attract prospects. More specifically, JTB will systematically offer commercial and private banking services as well as family office support, particularly for non-residents and their families. In sum, client relationships will be viewed as a whole, with possibly an introduction to doing business with the bank via documentary credit or other commercial banking facilities and graduating to a web of more complex intertwined services quickly. Suffice to say at this juncture that the funds will be dedicated to develop all existing business lines and also to expand the number of branches, especially in regions where the bank enjoys a high name recognition and reputation, reinforce off-shore activities, finalise external growth plans by acquiring a participation in a prominent and reputable African banking establishment and explore possible acquisitions on the domestic market.


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Bringing in dollars for Ras Al Khaimah Industrial Park RAKIA is pulling in both regional as well as international businesses

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RAKIA’s parks are home to over 500 manufacturers in various sectors, including metal, chemicals, food, plastics and automotive. Major clients include Guardian Glass (USA), Arc International & Saverglass (France), Zamil Steel (Saudi Arabia), Falcon Technologies International (UAE), Posco (South Korea), Ashok Leyland, JBF, Dabur & Mahindra Motors (India), Duscholux (Germany), Vesuvius (UK) and Ahmed Tea (UK)

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nected to destinations in the Gulf countries, CIS, Europe and Asia providing access to emerging and well-established markets in the region. With easy access to the strategic markets, 3 billion consumers in a five-hour flying radius, proximity to two express highways, three sea ports and airports, a 45-minute drive from Dubai

International Airport, and other factors makes RAKIA the preferred choice for setting up operations. The number of licenses issued by RAKIA shows a steady flow of investment into the emirate. There has been a significant amount of growth in new industrial entities registered with RAKIA this year. The low cost

of RAKIA’s quality services and swift setups is likely to account for the increase. Earlier this year, RAKIA signed a strategic partnership agreement with RAK courts to smoothen and expedite processes by establishing a dedicated branch at RAKIA’s headquarters. The agreement also allowed RAKIA’s employees to have access to the electronic system of RAK courts and legal advisory services concerning RAKIA’s legal affairs. Characterised by exceptional value and convenience, RAKIA’s approach has earned the company a respectable reputation in the free zone world and a growing portfolio of investors across sectors. RAKIA’s parks are home to over 500

manufacturers in various sectors, including metal, chemicals, food, plastics and automotive. Major clients include Guardian Glass (USA), Arc International & Saverglass (France), Zamil Steel (Saudi Arabia), Falcon Technologies International (UAE), Posco (South Korea), Ashok Leyland, JBF, Dabur & Mahindra Motors (India), Duscholux (Germany), Vesuvius (UK) and Ahmed Tea (UK). The clients range from a variety of sectors but have equally impacted the economic development in Ras Al Khaimah and the UAE, being major suppliers of different materials. Cement production is one of the major sectors in the country, with five major ce-

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ince its inception in 2005, the Ras Al Khaimah Industrial Authority (RAKIA) has moved far beyond the scope of developing and managing free zones and industrial zones. Tasked solely with boosting industrial and business opportunities in the Emirate of Ras Al Khaimah, RAKIA began pulling in regional and international businesses to Ras Al Khaimah (RAK) within a short period of time, attracting a range of small, medium and large companies to its two industrial parks. This resulted in a steady increase in brand awareness and sparked off interest among investors in what was then a low-key emirate.

Thanks to its flexible and tailored offerings, such as free zone and non-free zone facilities, RAKIA brought in billions of dollars of fixed investment to Ras Al Khaimah. RAKIA’s scope of services is evidence of the company’s evolution and success. Here investors can get everything from business licenses to leasing options on land and office spaces to visas. RAKIA’s facilities and solutions cover a broad swath of client needs with warehouses, commercial and residential units. Its administrative units offer assistance with visas and all coordination efforts with government departments. RAKIA’s industrial parks, spread over 25 million m2, are well located and con-

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ment factories that produce over nine million tonnes per year. One of RAKIA’s first clients, Pioneer Cement Industries, has a remarkable capacity to produce one million tonnes per year. Another impactful division is the glass sector. Guardian, a US-based multinational industrial manufacturer of glass, produces 700 tonnes of glass per day, which is used in automotive, commercial, residential and furniture applications. Saverglass, the French glass manufacturer built its first plant in the Middle East in one of RAKIA’s industrial parks, Al Hamra Free Zone. World renowned specialists in manufacturing and decorating luxury glass bottles, with their first factory abroad,

their unit has a capacity of 350 tonnes of glass bottles a day and approximately 90,000 tonnes a year. Due to its strategic location, the company’s products are exported from RAK’s branch to more than 80 countries, catering to demand in the southern hemisphere and serving markets such as South Africa, Australia and New Zealand. UK-based Vesuvius, a global leader in metal flow engineering serving the steel and foundry industries set up their Advanced Refractory Division of Vesuvius Group, in RAKIA’s park in 2012. Vesuvius Group provides products, services and technologies dedicated to high temperature industrial processes. The Advanced Refractory Division represents the single largest investment for the European Advanced Refractory business in 2012, a total investment of $10.5 million. One of India’s largest commercial vehicle manufacturers, Ashok Leyland, set up an integrated vehicle assembly plant in 2006 in RAKIA’s Al Ghail Industrial Park with a capacity to build 1,000 buses per year. K M Mandanna, Ashok Leyland’s vice president (manufacturing), stated, “RAK Industrial Authority proved the ideal partner in realising our plans to expand to the Middle East. Thanks to RAKIA, we managed to set up our unit and commence operations remarkably quickly.” With a list of big name clients, RAKIA developed an initiative to maintain good relations among its growing portfolio of investors.

In May, RAKIA launched a platform to drive business sustainability and engender a sense of community on its premises. Known as the Tenants’ Committee, the initiative invites business leaders from tenant companies operating within RAKIA’s Al Hamra and Al Ghail industrial parks to express any issues or concerns directly to RAKIA’s management and engage in meaningful exchanges and networking among fellow CEOs, corporate heads and senior managers. As part of the expansion plan, RAKIA is currently working on increasing their warehouse units in their industrial parks. The development of more warehouses has been put in motion to meet the rising demand from investors after all units were quickly rented out. The warehouse facilities have been a successful approach to meet the needs of investors, allowing for easy and effective storage and light industrial activities. Infrastructure projects have also been put in motion to provide better services for existing and prospective clients. To accommodate the increase of clients at the industrial parks, RAKIA has implemented an improved road network to ease operations and to enhance road connectivity. Also, RAKIA is considering several expansion options for Ras Al Khaimah’s port facilities, such as Saqr Port, one of the region’s largest bulk handling ports. Constructed in 1977, Saqr Port is located in the northern part of the emirate and is the first

major port. It handles over 90% of imports and exports entering and exiting RAK by sea. RAK has enormous aggregate reserves, which can help to streamline the production process for manufacturers. The emirate’s ports provide a further advantage of operating out of RAK. The emirate benefits from a great location that brings unique geographical advantages, being at the crossroads of trade between East and West. RAKIA, a fundamental contributor to Ras Al Khaimah’s economy, has played a prominent role in the cycle of growth in the emirate. In essence, while endorsing the organisation itself, RAKIA promotes the emirate through their marketing and business campaigns. By attracting investors, Ras Al Khaimah’s economy continues to boom, which essentially allows for more investments and developments directed towards the emirate. The economic stability and infrastructure enhancements remain a main attraction for investors. Heading into its tenth year, RAKIA is a complete business park offering endto-end business formation services and solutions, with the goal of being the undisputed choice among industrial zones in the region. With a prosperous future ahead, RAKIA plans to increase their industrial land assets to ensure sustainability while supporting the economic development of Ras Al Khaimah.

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Does a suit make a man, or is it the other way round? It doesn’t really matter as long the suit is made to perfection. Suresh and Mahesh Ramakrishnan, the boys behind Whitcomb & Shaftesbury, tell the men how to get that impeccable suit Priyadarshini Nandy

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While on

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They’ve dressed the Who’s Who of the world; Michael Jackson, Richard Gere, and Sachin Tendulkar, are just a few of those names. Twins Suresh and Mahesh Ramakrishnan are definitely shaking things up at London’s Savile Row. And talking about the perfect suit is one of the best The 5 Ps of conversations one can Dressing 1 have with them. Presence: It’s not about wearing something flashy, but making sure you are noticed as soon as you are in the room. Ninety five percent of a person’s first opinion of a stranger is formed in the first seven seconds of them meeting, and what people are most likely to notice are your clothes.

Professionalism: In the boardroom, it is critical to create an atmosphere of trust and professionalism. Unless your colleagues and others can see you as someone who will take the business seriously, you will always be on the back foot trying to convince people. Power: People need to look at you as a figure of authority and respect. If your clothes do not reflect this power, people will consider you a bit player in the proceedings. You never see Presidents conducting meetings in casual clothes for a reason. Personality: Your clothes should reflect your personality. Are you a serious person, or are you someone who has a bit of frivolity? The better your clothes reflect you, the easier it will be for people to relate to you and understand you. The choice of colour and fabrics will go a long way here. Panache: A little style never hurt anyone. People will always remember the best-dressed person in the room, in the same way that they tend to overlook the sloppy looking chap in the back row. International Finance Magazine Oct - Dec 2014


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Fix the mistakes

It is worth remembering the words of the great Mark Twain “Clothes maketh the person, naked men have never had an influence on society”.

It is better to wear a wellfitted cheap suit than an expensive one that does not fit. The most beautifully tailored cashmere worsted suit costing upwards of £6,000 will not impress if the shoulders look like they are still being held up by a hanger and the collar is gaping at the back of the neck.

A small man buying a pinstripe suit whose stripes are way too wide for him resulting in about 5-6 stripes running across the width of the suit making him look even smaller; conversely, a large, portly man buying a hairline stripe suit making him look like a sea of stripes.

Dress for your body type If you’re short: • Jackets should be as short as possible but covering the seat • 1/4” - 1/2” of shirt cuff visible • One-button jackets are ideal (the less elements on the horizontal the better) • Pockets with no flaps create a cleaner look • Trousers with little or no break (puddling trousers make them look shorter) • Flat fronts or no pleats • Side buckles preferred to belts (minimising the horizontal) • Stripes are elongating If you’re heavy set: • Straighter cut coat • Two-button or one-button coats • Side vents • Slim sleeves to create a streamlined look • Dark solid colours, with medium stripes or herringbone patterns are most elongating • Trousers with single pleat facing inward to reduce width of hips and cut to sit as high on the waist as possible creating an elongating slimming line • Cuffs to create a transition If you’re tall: • Three-button jackets are ideal to create a break in the long profile. • Double Breasted jackets also work with this body type • Flap pockets with a ticket pocket • Larger Scale Patterns like checks and heavier fabrics work well • Trousers with a cuff, and belt loops to create breaks in the length

Buying ‘trendy’ clothes in an effort to look young or fashionable. While this in itself is not a crime, fashion changes frequently and a 45-year-old Vice President of a company like a bank or consultancy will be better positioned to represent himself and his company in classic clothing than in trendy clothing.

Choosing colours that do not work. Think about ‘contrast between your hair, face and the suit, ideally the suit and hair should frame the face in a way that it is presented in the best possible way. For example, if you have a light or medium skin tone, with dark hair, choose a dark suit.

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Shopping advice When you’re out buying suits, especially if you’re not an expert at it, start with the basics. Make sure you have a beautifully fitted dark navy suit first. It works for the morning and evening, and can be worn with every colour of shoe and shirt/ tie. It is the easiest garment to wear. Next, think of your entire ensemble, it must all come together. Are you making sure that the suits you are buying will work with the shirts that you have and ties (if you wear them); for example, if you don’t have brown shoes, then you shouldn’t be buying a tan suit just yet even though it looks great on you.

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Trousers are better if they are half an inch looser on the waist than half an inch too tight - your stomach will thank you after that heavy lunch or dinner. Make sure you keep enough money aside for accessories (shirts/ties/shoes/pocket hankies). You are only as good as your weakest link. Think about how often you will wear your clothes. If you are buying suits for year round wear, a more durable, crease resistant fabric will serve you better. If you wear suits occasionally, or if it is a special occasion, you can splurge on a higher quality fabric. Some fabrics will work better in humid climates while some work better in cooler climes. Keep your environment in mind when choosing fabrics.

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Must have. Must have. Must have • • • • • • • • • • • • • • •

Navy suit in medium weight Charcoal suit in medium weight Pinstripe suit in medium weight Prince of Wales or Birdseye suit in medium weight Tropical weight suit in medium/light grey or tan (for humid/ hot climates) Winter weight flannel suit in medium grey or navy - plain or chalk striped (for cooler climates) Navy Blazer Sports jacket in cashmere or wool/silk mix for casual wear (in a sporty check pattern or tweed) Trousers in Dark Navy, Medium Grey, Tan/Fawn Overcoat/Top coat in cashmere or wool/cashmere mix (for cooler climates) Dinner suit (tuxedo) in Peak or Shawl collar with satin or grosgrain lapels Velvet Smoking jacket (for an alternate to black tie/ tuxedo) Shirts in white/pale blue and fine stripes Good quality shoes in black, Medium brown Good quality (preferably knee length) socks

Always in fashion Elegance is timeless. The best example of this would be James Bond. It is hard to remember a single outfit of his, but the image that comes to mind is classic and well dressed. His clothes have changed minimally over time (with a few exceptions). Styles that will rarely fade into the horizon are: • • • • • • • • • •

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Single Breasted jackets with two or one buttons (The Savile Row Classic) Buttons made of horn Medium sized lapels (typically about 31/2” - 3 3/4” depending upon the size of the suit) Four buttons on the cuff (ideally two should be working buttons) Buttonaire on the lapel Pockets with a flap either straight or slanting (for sports jackets) Slanted or straight side pockets for trousers French ‘bearer’ fly, to keep front clean Classic fabrics such as Plain weaves, Twills, Herringbones, Birdseye’s, medium with pinstripes, Prince of Wales checks Dinner suits (tuxedos)

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LUXURY TRAVEL

When your travel is

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first class If you’re willing to spend about £6,000 and upwards, you could buy yourself a ticket to royalty, and that too mid-air. A look at how luxury gets redefined at 35,000ft above sea level

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Complete with lavish accessories, private butlers, gourmet meals by award winning chefs, and occasionally even a private cabin, airlines leave no stone unturned in rolling out the red carpet for their business and first class travellers. Shilpa Bansal

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Air France Air France’s La Première guests, departing from Charles De Gaulle, have their exclusive meeting point, and a porter handling their baggage as they check-in. Once you get on board, you are introduced to the crew before being led to your cabin. Apart from a personalised coat service and a full range of accessories that include slippers and a dust bag for your shoes, you also get a travel kit complete with a selection of Biologique Recherche facial and body care products. Your 10.4-inch interactive video screen gives you access to a line-up of ondemand videos. Your seat offers direct access to the aisle no matter where you are seated. It transforms into a full bed that measures 2 m / 6.5 ft in length and includes a mattress, hypoallergenic feather pillow and a duvet, which ensure you sleep soundly.

chair with complete swivel seating, which folds down into a comfortable bed, and includes noise-cancelling headphones. Apart from ample baggage allowance, you also have access to a private, spacious suite, complete with fully flat bed and skincare products. While the entertainment section offers endless hours of the latest films, documentaries, television and music, meals are served when and how you would like and a range of champagnes are available throughout the flight. Some of the flights also offer passengers a complimentary facial or massage in the Elemis Travel Spa.

British Airways The First Class section on British Airways offers a

Cathay Pacific Airways Rated as the World’s Best Airline for 2014 at the World Airline Awards, Cathay Pacific does come out on top as far as their first class service is concerned. The Exclusive Suite in the Air cab gives you a personal suite where you have access to a suit that transforms into a fully flat bed with a thick mattress, a pair of PJs, Ermenegildo Zegna amenity kits for men and Trussardi amenity bags for women – and a range of skincare products from Aesop. An LCD remote control enables you to control the lights, among other things.

And with an entertainment selection offering audio and video on demand, you can sit back and relax as you relish an array of made-toorder Asian and international dishes. Emirates Emirates ups the game in their A380 first class. Privacy is truly the keyword here as each suite comes equipped with fully flat bed, a sliding door, a personal mini-bar, adjustable lighting, a private vanity table, mirror and wardrobe. You can either lounge around at the two lounges located on the upper deck, or cosy up in your cabin as you dig into gourmet food served in Royal Doulton fine bone china and exclusive Robert Welch cutlery, alongside the fine wines. You can also indulge in a complete shower spa experience, mid-air, at the upper deck, just to recharge your nerves. Etihad Airways Located on the top deck of the new A380 super jumbos, The Residence by Etihad redefines luxury, where a “little extra space” is taken more than seriously. What you get, for about £13,000 (one way, Heathrow to Abu Dhabi), is a VIP suite where you are king for the duration of the flight. It all begins with

You can also indulge in a complete shower spa experience, mid-air, at the upper deck, just to recharge your nerves

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screens to keep you entertained.

Each cabin features sliding doors and window blinds, the largest-ever armchair and the pleasure of sleeping on a distinctively designed, standalone bed; not one converted from a seat a chauffeur driven ride to the airport, luxury check-in and lounge facilities. Once you board, your suite comes with its own living room, a double bedroom and ensuite shower. Available for single and double occupancy, your suite has a 64-inch sliding door, a mini bar, a personal vanity unit, wardrobe and a 32-inch swivelling television. You also have access to gourmet meals, a personal butler and The Lobby, a serviced lounge. You have to wait until December to actually start booking tickets for this particular section, but then again when you want something more than ‘first class’, what’s a little waiting period? Lufthansa This Frankfurt-based airline boasts an intimate upper deck with eight large seats, personal service, individual mealtimes and flight attendants. What awaits you in the flight are: a special floor structure in the aisle area, Van Laack pyjamas and amenity kits with cosmetics from La Mer. Lavatory spaces are three times as large as average firstclass lavatories. Apart from

Qatar Airways Qatar, which has been progressively downsizing its first class operations, offers first class only on its Airbus A380. You can expect to indulge in signature dishes from celebrity chefs, Christian Dior amenity kits and designer sleeper suits. The spacious first class cabins come with ample stowage options and a comfortable flat bed. Unwind over a freshly brewed cup of coffee or tea served after each meal or sink into your chair as you choose from a variety of entertainment options, or just enjoy a drink at the in-flight lounge. Passengers leaving from the airline’s Doha base can avail of spa treatment, jacuzzis, saunas and fine-dining restaurants.

the usual services like flat bed and an extensive range of TV programmes and good reads, you can also enjoy an amazing meal along with outstanding wines. These wines have been selected especially for the first class passengers with the help of Sommelier World Champion and Master of Wine, Markus Del Monego. Qantas Qantas offers First Class travel on its A380 aircraft, which operates on its international network from Sydney and Melbourne to London, Dubai, Los Angeles and recently, to Dallas/Fort

Worth. Here, your journey begins from the moment you leave your doorstep, in a chauffeur driven car. The in-flight comfort includes a fully flat bed along with a sleeper suit, controls at the end of your armrest, and an ottoman so you can host a companion inside your suite during the flight. Also look forward to a signature menu created by leading Australian restaurateur, Neil Perry, complimentary treatments at luxurious Aurora Day Spa, private business suites equipped to help you continue working, a library, magazines, newspapers, internet access and plasma

Singapore Airlines While Singapore Airlines is overhauling its first-class service across some aircraft, the very new first-class suites are wooing passengers of A380, where you can enjoy luxury in your private space. Each cabin features sliding doors and window blinds, the largest-ever armchair and the pleasure of sleeping on a distinctively designed, standalone bed; not one converted from a seat. Watch movies and television on the largest inflight flat screen and savour special menus, exclusively created by a celebrated international culinary panel or select from the list of premium Book the Cook dishes or even request for your own Book the Cook meal.

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LET US MAKE YOUR

STAY

COMFORTABLE A hotel is a refuge for businesspersons on the move, but have you ever thought what goes into designing your room away from home 126 Kate Mallord

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Le Meridien Bali - Bamboo Chic (Restaurant)

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Banyan Tree Yangshuo, Phuket

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f you’re a frequent business traveller, location, service and view are probably the only things that will ever cause you to remark about your hotel. And that’s how an interior designer wants it to be, despite the fact that your room and your needs were all they thought about for 18 long months. From the moment you unlock your hotel room, every inch of your experience has been fastidiously researched and meticulously designed to ensure you never need to think about

the room itself. “The rooms are the first area of the hotel that the designer conceptualises and from there, the other areas will be developed,” says Mary Jane Barredo of Architrave Design the company responsible for Banyan Tree’s new Cassia collection with serviced apartments in Thailand, Indonesia, Australia and China. IHG and Starwoods combined will open more than 600 hotels in over 100 countries in the next five years, which will account for more than 900 years of de-

International Finance Magazine Oct - Dec 2014

sign attention. So why does a hotel room take so long to design? The necessities Let’s start with the things every business traveller needs; a bed, a desk and a TV. “You have your sleeping zone, your working zone and your relaxation zone,” says Warren FosterBrown, managing director of FBEYE, a Singaporebased boutique interior design firm. The easiest to design is the television, which will be chosen by the brand or hotel chain. “At its

most basic, the TV needs to be positioned so that it can be watched from the bedroom and the desk, and there should only be one remote control,” says Mr Foster-Brown, who designs primarily for five-star chains like St Regis, Four Seasons and Western across Asia and Europe. Next comes the bed. “This again is chosen by the operator but many of them have spent months researching and designing the beds they use in all their hotels,” says Mr Foster-Brown. This means if you’re staying


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Banyan Tree Cassia, Phuket

A lot of people won’t consider it when they’re using a hotel desk, but the desk has usually been custom made Warren Foster-Brown, Managing Director of FBEYE, a Singapore-based boutique interior design firm

with a large chain like the Sheraton or the Intercontinental, you’ll be sleeping on the same mattress and sheets no matter where in the world you’re staying. You can even purchase a St. Regis bed for your home (they start at US$2,495). So, in terms of design freedom for the necessities, it’s the desk that will be given the most attention by the design team. “A lot of people won’t consider it when they’re using a hotel desk, but the desk has usually been custom made. We spend time deciding the height and the finish – ‘is it timber, marble or granite top?’ – we consider its placement in the room and even the charger sockets

have to be scrupulously measured to ensure they are perfectly placed for ease of use,” enthuses Mr FosterBrown. “There’s a certain desk size that you’ll need for a laptop with a dedicated space for filling. More and more operators ask us to include connectivity panes so that you can plug your laptop into the TV too. It’s also important to consider where the air conditioning outlet is. There’s nothing worse than cold air blowing at your face while you’re trying to concentrate. This all means that it can take two to three weeks to design the working zone alone.” Let there be light How about the light-

ing? We’ve all climbed into a hotel bed only to be confounded with switches for different “settings”. In fact, one business traveller spent the whole night with the TV stuck on a children’s channel and the master light on because he couldn’t find the right switch. Mr FosterBrown responds, “The lighting is probably one of the most frequently complained about parts of the room, usually there’s not enough, or the switches are too complicated. We work with a specialist lighting designer and spend time working out the switching methodology. We set the ‘welcome scene’, the lights that will be automatically activated when you open your room door. And we always ensure there’s a master switch that will turn everything off, except the bedside lamps. The lighting itself and the logic behind the switches can take up to 200 pages of drawing and design.” Easy on the eye and the touch The “trimmings” in the room — the soft furnishing, lamps and artwork — are usually dictated by the operator’s design guide. The design guide helps a hotel chain to provide a sense of familiarity across the globe, but more recently briefs have requested that designers include a nod to the local culture. “The uninitiated would ask us to design a room with a wow factor; a defining centrepiece or some trend in the market,” says Jack Liew, senior associate at HBA, a global interior design company. “We rather design a timeless

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Movenpick Hotel

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Ocean Suites

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product with a story line that will reflect the overall hotel’s approach in a way that will inform guests of the culture and locality with an interesting twist.” Banyan Tree Yangshuo, opening later this year, has design elements that are selected to give a unique sense of Guilin in China, a place famous for its mountains and river. “Hotel guests will be able to feel the culture, history, art, architecture and beauty of the destination,” says Ms Barredo. But even these elements of the room might go through two or three prototypes before the texture, colour and quality are right. “The walls, the drapes, sofa and if it’s a Western, the beautiful lounge chair with foot stool,” says Mr FosterBrown, “are all created and placed in a real-size mockup of the room before the hotel is even finished.” Mike Lim, the director of Singapore’s DP Design says he’s wary of following a design guide too closely as “you don’t want to become a ‘cookie-cutter’ contractor.

That’s why we might do two or three life-size ‘model’ hotel rooms to help the client get really excited about the design. It can take a year to get a final approval on the quality and safety of the materials.” Time to get wet As a rule of thumb, a third of the room space in a business traveller’s room is dedicated to the bathroom. It’s an area of the room that has been given far more attention in recent years and many designers view it as the most challenging but exciting part of a project to work on. “A lot of time is spent laying out the bathroom fixtures in relationship to the positions of the shafts, supplies and heights,” says Mr Liew. “I personally like the process of proposing a bathroom ‘without walls’ — the idea of openness in the room is both exhilarating and ambiguous. It usually takes me a day or two to consider layout options.” So, what makes a great

International Finance Magazine Oct - Dec 2014

room? “I think the moment you walk in, you should feel relaxed. It should be intuitively functional and be better than your home. Guest should leave recharged and feeling better than they arrived,” says Mr Foster-Brown. In the future, this could mean an end to bulky minifridges, alarm clocks and switches. Touch sensitive images could appear on the walls, and all the electronics and room service will be activated by a guest command. But for now, when you turn the key in the lock, or swipe your hotel keycard, know that months of design heartache have gone into making every minute and inch of your stay as perfect as possible.


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Westin, Daily Treats

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Le Meridien Bali - Celebration Pavilion

Westin, Owner’s Office

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The promise of an enchanting conversation, followed by a languorous and delectable dinner, and an evening that deserves an encore – there are a few things that the world could learn from the Europeans. The practice of serving an aperitif could very well be one of those. Priyadarshini Nandy

International Finance Magazine Oct - Dec 2014


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sually served before a meal, to ‘open up’ one’s palate, or possibly even to lower our guard, an aperitif offers a sneak peek into what will follow. However, there is an art, or maybe even some science, to the kind of aperitif one could serve to guests. Champagne, dry white wine, rose wine, sherry are some of the most commonly used aperitifs across the world. However, to make a meal truly special, it’s best to serve one that is slightly different, or perhaps even unexpected. Let’s run through some of the most loved aperitifs Europe has to offer: Dubonnet: Formulated by chemist and wine maker Joseph Dubonnet is 1846, Dubonnet is a wine-based aperitif, is sweet, and is a blend of herbs, spices, and fortified wine. It also contains a bit of quinine. In fact, it was in an effort to force the French Foreign Legionnaires to drink quinine, while in North Africa, to avoid malaria that Dubonnet came into existence. Dubonnet is available in Rouge, Blanc, and Gold; Rouge is one of its most popular varietals. This aperitif can be made into a cocktail and served. Mixed with other spirits such as Cherry Brandy, Gin, Dry Vermouth, Black

Currant vodka, lemonade, Cointreau, Bourbon etc, Dubonnet can be made into absolutely delicious cocktails. Lillet: The Lillet, which dates back to 1872, is best served chilled. A blend of carefully chosen wines (85%), and other fruit liqueurs (15%), Lillet is available in Blanc, Rose, Rouge, Reserve Rouge, Reserve Magnum and Reserve Blanc. The Lillet Blanc is one of the most popular aperi-

tifs, has a beautiful golden hue with tasting notes of candied oranges, honey, pine resin and exotic fruits. The Rose on the other hand has a strong bouquet of fresh orange, ripe berries, vanilla and delicate spices with a robust structure. These two make for a delightful introduction to a sit-down dinner. Adding tonic, and a slice of orange, in Rouge, or a bit of gin and vodka to Lillet Blanc, can result in beautiful cocktails as well, to be served as aperitifs, of course. Vermouth: While Vermouth began as a medicinal drink, it turned into an aperitif in Italy around

the 18th century. And in little time, this fortified wine became a favourite choice of ingredient for many cocktails and continues to remain so. So what was originally limited to two versions – sweet and dry – vermouth soon had variations such as bianco, ambre rosso and rose. Such is the flexibility of the aperitif that an online search throws up dozens of aperitif cocktails with vermouth in it; for instance, the Rob Roy that dates back to 1902 uses a fascinating combination of scotch, vermouth and orange bitters. The Manhattan, one of the world’s most popular cocktails, has a mix of Absinthe with vermouth (among other ingredients), bourbon, bitters, and is considered to be one of the classiest cocktails to be served as an aperitif. Campari: Invented in 1860, Gaspari Campari of Novara, Italy, is responsible for the creation of Campari. Inci-

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dentally, the original drink was made red by using carmine dye, obtained from crushing cochineal insects; Gruppo Campari discontinued this practice in 2006. One doesn’t quite drink Campari as it is. Ideally, it’s served as two parts soda water with one part of Campari. At least, that’s what the original serving suggestion was. Citrus juices too pair well with this spirit. The Campari, which is normally 20.5% to 28% potent, is the key ingredient in making a Negroni that also requires sweet Vermouth, gin and orange slices. Prosecco: Champagne is good, but Prosecco is gradually becoming a popular sparkling wine to be served as an aperitif. This Italian spirit is light, is less effervescent, and extremely refreshing. Given its creamier and softer texture, we’d say it’s perfect for lunches. Choosing a good quality Prosecco is a must to making your meal a success. While it’s best to serve Prosecco as chilled as possible, this drink is also used to make cocktails, Bellini being one of the most popular ones – after all, the likes of Ernest Hemingway drank it. While a Bellini uses Prosecco and peach juice, The Negroni Sbagliato uses Prosecco instead of gin. Ouzo: This is as Greek as it can get. If you have the tolerance for exceedingly sweet liqueurs, a 60ml of chilled Ouzo can be quite a good aperitif. What began as a project by monks in the 14th century, the modern version of Ouzo dates back to the early 19th century,

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becoming popular as the Absinthe began to lose its position as a liqueur. To make the anise-based spirit slightly less potent, one can add ice, or even chilled water. Watch the clear drink turn milky and take small sips – really small ones. Pastis: Think of Provence, and Pastis comes to mind. Anise and liquorice root are two of its primary ingredients, and it is best had in winter, purely because it warms you up almost instantly. It dates back to 1930s (not as old as some of the other aperitifs on this list) but is as French as it can get. It’s best served with mineral water because drinking it straight, with its 45% alcohol, can be quite a sight! Kir Royale: The French wine cocktail Kir takes a deviation as champagne replaces the white wine to become the Kir Royale. So make it when you truly have something to celebrate – like announcing a promotion perhaps? Served in a wine flute, Kir Royale is made by adding crème de cassis to the bottom and then topping it up with champagne.


Stimulus

Musical @ Savoy The Savoy Theatre in London is presenting the Dirty Rotten Scoundrels in which Robert Lindsay gives a master class in theatrical style in this caper about two fraudsters, who are both equally determined to outwit each other, as well as the mug punters unlucky enough to cross their paths. At Savoy Theatre, Savoy Court, Strand, London, UK. On till November 29

Art @ London British painter Joseph Mallord William Turner (1775-1851) was known for his romantic landscape paintings, water colours and printmaking. His works are often considered as the preamble to the Impressionist movement. Some of his famous works include Rain, Steam and Speed – The Great Western Railway, Dutch Boats in a Gale, and The Blue Rigi, Sunrise. His works are currently on exhibition at The Tate Britain. Incidentally, this is the first large exhibition of his works from the period where he created his best pieces. At Tate Britain, London, UK. On till January 18, 2015

Film festival @ Singapore The Singapore Film Festival 2014 is slated to begin this December and promises to be a melting pot of international films and local films. Revived after two years, the 25th edition of the film festival will also be part of the new Singapore International Arts Festival that includes the Asian Television Awards, Asia Television Forum and Screen Singapore. Yuni Hadi, producer of the critically acclaimed film Ilo Ilo, helms the new executive team. SGIFF will be screening about 80 films across venues in Singapore from December 4 to 14. Log on to www.sgiff.com for more details.

Musical @ NYC Spending a week or so at New York City in the next couple of months? Catch a Broadway show for sure. The Last Ship, a new musical with an original score by Grammy award winner Sting, is set in the English seafaring town of Wallsend, a close-knit community where life has always revolved around the local shipyard and the hardworking men who construct magnificent vessels with tremendous pride. It is a portrait of a community so bound together by passion, faith and tradition that they’ll stop at nothing to preserve the only way of life they’ve ever known. At Neil Simon Theatre, New York, NY. All through November and December 2014, and January 2015

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Stimulus

Theatre @ London The National Theatre is staging the play 3 Winters from November to January. Written by Tena Stivicic and directed by Howard Davies, the play creates the portrait of an eclectic family, held together by the courage to survive. From the remnants of monarchy to communism, democracy, war and the EU: Croatia 1945-2011, the Kos family argue, fall in and out of love.

Architecture Biennale @ Giardini della Biennale

At National Theatre, Lyttelton. November 26, 2014 to January 11, 2015

If you have to be in Venice till the end of November, catch the 14th edition of the Architecture Biennale, which has, for this year, adopted Fundamentals as its theme. The show focuses on exploring the history of architecture, as well as its past. The show has international participants in 29 individual pavilions. The show will look at the achievements of 20th century literature and give a glimpse into what awaits us in the 21st century. At Giardini della Biennale, Sestiere Castello, Venice, Italy. On till November 23.

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Art @ Los Angeles January is a good month for art lovers. Los Angeles is playing host to the LA Art Fair that will feature top of the line national and international galleries. The four-day festival will also include lectures, tours and special exhibits. At 1201 South Figueroa Street, Los Angeles Convention Center, Hall J and K. January 15 to 18, 2015.

Jazz @ Washington DC

Art @ Singapore

Spending the last day of the year in Washington DC by any chance? Welcome the New Year over a jazz evening with Grammy Award-winning saxophone player Brandford Marsalis. He is also the 2011-NEA Jazz Master and a Tony Award nominee. Marsalis will perform with his quartet, one of the best-known jazz groups at present.

Catch the Singapore Art Fair (ME.NA.SA. Art), which is being held in the last few days of November in Singapore. In its first edition, this modern and contemporary art fair is dedicated to the art of the Middle East, North Africa, and South and Southeast Asia, hence the name Me.NA.SA. Art. This festival will have up to 80 participating international galleries, with about 20 solo shows.

At Terrace Theatre, John F Kennedy Center for the performing Arts, 2700 F St NW, Washington, DC. December 31.

At 1 Raffles Boulevard, Suntec City, Singapore. November 27-30. Log on to www.singapore-art-fair.com

International Finance Magazine Oct - Dec 2014


Page-turners

The Consolations of Economics: How We Will All Benefit from the New World Order By Gerard Lyons Gerard Lyons, the chief economic advisor to the Mayor of London, looks at the growth of global economics over the next two decades. According to his predictions, life expectancy, income and standards of education will only increase. The Consolations of Economics is a lucid and accessible expert’s attempt to look objectively at the changing global economy — what is happening and what it means.

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Page-turners

The Glass Closet: Why Coming out is Good Business By Lord John Browne Drawing on the author’s personal experiences and that of other gay and lesbian business leaders, and by investigating the research and the social contexts, The Glass Closet strives to give courage and inspire the LGBT community that despite the risks involved, self-disclosure is best for employees and for the businesses that support them.

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Hack Attack: How the Truth Caught Up with Rupert Murdoch By Nick Davies Award-winning journalist Nick Davies spent more than six years uncovering the truth about the crimes at the News of the World. Hack Attack is the definitive, inside story of the whole scandal. This book tells for the first time how Davies and a network of rebel lawyers, MPs and celebrities worked tirelessly to expose the facts: how they challenged Rupert Murdoch, one of the most powerful men in the world; what News International did to protect itself; how the police and the press regulator failed to uncover the truth, and challenged those who were trying to expose it.

International Finance Magazine Oct - Dec 2014


Page-turners

Thrive: The Third Metric to Redefining Success and Creating a Happier Life By Arianna Huffington Co-founder and editor-in-chief of the Huffington Post, Arianna Huffington looks at the importance of living a healthy, and productive, life. And that, she believes, leads to true success. In this deeply personal account, she talks rather openly about the challenges she faces — juggling between the requirements of her career and her two daughters. And in the process, tries to give us perspective when it comes to changing work cultures, thinking and our lives.

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Making it Happen: Fred Goodwin, RBS and the Men Who Blew Up the British Economy By Iain Martin From the birth of the Royal Bank in 18th century Scotland, to the manic expansion under Fred Goodwin in the middle of a mad boom and culminating in the epoch-defining collapse, Making It Happen is an account of the RBS disaster that continues to trouble the British economy.

Oct - Dec 2014 International Finance Magazine


OUT OF OFFICE COLUMN

‘Weekends also are

exhausting but fun’ Christopher Rezendes is global EVP & chief sales officer at CSS Corp. He is based out of Boston, Massachusetts, United States. He spoke to IFM on how he enjoys his time outside of office Suparna Goswami Bhattacharya

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What do you look forward to doing in your down time – weekends or even week days? I strongly believe in work life balance. Over the weekends, I like to do sailing, snowboarding and hiking. Do you buy the latest gadgets/books? I normally don’t buy the latest gadgets or books. What gadget is on your wish list? Why? Among the latest gadgets I would like to have is the iPhone6, especially for its screen size. I need something with which I can take some great photographs. Also, something I can grab quickly and throw in my pocket. I always liked the iPhone’s smaller size. The iPhone6 is my next best bet. Which was the last gadget you bought? Was it for work or to pursue your hobbies? Being a sales person, I am on the road most of the time. To be connected, the latest gadget that I purchased was the 4G hotspot, and mainly for work

purpose. It helps me stay connected always, instead of “Where is the nearest Starbucks?” or camping out in a burger joint’s parking lot to check e-mail or the nearest open network? What was your last holiday destination? Why did you choose that place? Would you visit again? My last vacation was in Mexico. I like Mexico because of the variety it can offer. Right from the rocky beaches of the Pacific coast to the warm waters of the Gulf of Mexico, plus all the quaint pueblos in between, Mexico is a large and diverse country that offers something of interest to nearly every visitor. I really like Mexico’s energy and beauty, and after my latest taste of the country, I am looking to go back again to rediscover more of what Mexico has to offer. Do you end up skipping events in your child’s school? How do you make it up to them? As a parent, away from home most of the time, I

International Finance Magazine Oct - Dec 2014

am guilty of missing a few events in school. I normally compensate for it by spending time with children, taking vacations or spending time with them when I am not travelling. I also ensure that I am up-to-date with the school calendar; as in case I miss an event or PTA meeting, I try and schedule a time with the teacher to monitor the progress of my children On your off day, what is typically your schedule? I always try and spend the weekend with my family. My weekends are an important time to unplug from the day-to-day activities and spend time with my family. I wake up early and have breakfast with the family. Weekends also are exhausting but fun with bike-riding, soccer-playing, zoo-going, book-reading and errand running. I use weekends as an opportunity to catch up on work-related reading. What is your favourite dish? I like sushi. It’s healthier than a lot of other options and you can feel full without

that heavy feeling in your stomach. It’s also got all the elements – great on visual appeal (small bite size with bursts of flavour and easy to eat), well-balanced, healthy and great on textures. Given a choice, do you prefer to sit at home or go out for a movie, meet friends? I prefer to spend most of the time with friends. With friends, I get more knowledge, gain more experience as each of us are different. My friends and I often organise a party on weekends. Sometimes we have a barbeque or go for a trip or a round of golf. Are you involved with social causes? Yes. I am involved with an agency. What are your hobbies? It’s important to develop a passion outside of your professional life. Having a hobby helps me switch off the part of the brain that’s in the office. My favorite hobbies include reading, golf, boating and cars.


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International Finance Magazine (Inaugural Issue) Oct - Dec 2014  

Your window to the business world presented in a simple and easy-to-undesrtand format that keeps you updated on global developments

International Finance Magazine (Inaugural Issue) Oct - Dec 2014  

Your window to the business world presented in a simple and easy-to-undesrtand format that keeps you updated on global developments