National Bank of Fujairah (NBF) yesterday said that Steve Mullins has stepped down from the post of chief executive officer with immediate effect, while Tim Goddard and Chris Taylor will together act as joint interim CEO. NBF Deputy Chairman Easa Saleh Al Gurg said: « National Bank of Fujairah is an ambitious bank. Our potential is unmatched and we are uniquely positioned to develop from our strong position amongst the UAE banking community to be a bank of great substance and critical mass. « We will now conduct a thorough search to find an individual who shares this vision and ambition. I am delighted that Tim Goddard and Chris Taylor have agreed to act as joint interim CEO until we have a replacement. » business24-7.ae
Doha Bank, Qatar’s third- biggest bank by assets, said yesterday it would seek shareholder approval to raise its capital by up to 20 per cent and give that stake to the country’s sovereign wealth fund, the Qatar Investment Authority (QIA). Shareholders would meet on December 21 to discuss the plan, which would involve issuing up to 34.45 million new shares to the QIA at the bank’s closing share price on October 12, Doha Bank said in a statement on the bourse website. The increase would happen in two phases, it added. The move follows ones by other Qatari banks, including Commercial Bank of Qatar and Qatar International Islamic Bank, which have sold stakes to the sovereign wealth fund. In October, the QIA launched a $5.3 billion (Dh19.4bn) plan to buy shares of listed banks to shore up investor confidence in banks, amid the global financial crisis. Doha Bank opened a representative office in Seoul, South Korea, as part of its expansion into Asia. Besides Seoul, the bank operates representative offices in Istanbul, Tokyo, Singapore, Shanghai, Bucharest, and London, Doha Bank said yesterday in a statement to the Qatari bourse website. Agencies
Etisalat is in an upbeat mood and is scouting for a number of deals in the region, Emirates Business has learnt. Ahmad Abdulkarim Julfar, Chief Operating Officer, said the company is set to take advantage of the global financial crisis and is eyeing regional acquisitions. « This financial crisis creates a good environment for opportunities so we will be looking at acquisitions in India, Middle East and North Africa, » he said on the sidelines of the Leaders in Dubai Forum yesterday. « We have invested in 16 countries with $11 billion (Dh40.3bn) investments in these countries. All these countries – including Egypt, Saudi, the UAE and India – have high potential growth. And we will continue to focus on these countries. » Asked if this would happen in the next 12 months, Julfar said: « If the opportunity exists, why not? » He did not single out a country and declined to say how much they would be earmarking for the acquisitions, but he said the firm is « cash-rich », and has about over $3bn cash position making financing not an issue. He added that etisalat can also have access to cashflows from other sources thanks to its « excellent cash position » and « excellent ratings ». « The telecom sector – a very-cash intensive sector – is always the last and least impacted during crisis because it is a very innovative and creative sector, » he said. « During these challenging times, we will see more innovation and productivity because of the pressure. Julfar said they expect the company’s revenue to continue to grow as more and more windows of opportunities open up. « There will be more opportunities coming up and we will be watching these opportunities. Once something comes up we will not hesitate and jump in and take advantage of the situation, » he added. Etisalat, which had 7.05 million mobile phone subscribers at the end of the third quarter this year, claims that its internet and broadband penetration in the country exceeds 60 per cent. It also has roaming agreements with more than 400 operators and has investments in Egypt, Saudi Arabia, Afghanistan, Indonesia and Pakistan and 10 African markets, including Nigeria, Sudan and West Africa. It posted a 19 per cent rise in third-quarter profit, meeting forecasts, as it added more users in home market and expanded abroad. Karen Remo-Listana business24-7.ae
A new private aviation services centre at the Dubai International Airport will consolidate the importance of Dubai on the world travel map, said Sheikh Ahmed bin Saeed Al Maktoum, President of Dubai Civil Aviation Authority and Chairman of Emirates Group. He said the new centre will be a qualitative addition to the list of distinguished services provided by Dubai International Airport to this category of passengers and meet their aspirations according to standards that are difficult to be matched. The setting up of the centre according to the highest technical and operational standards meets ambitious strategies developed by Dubai Airports to provide anything that can consolidate the airport’s international reputation among passengers, especially businessmen, at local and international levels, he said. Sheikh Ahmed spoke at the unveiling of the new building and identity of the centre on the sidelines of the Middle East Business Aviation Show. The centre, built in the Dubai Airport Free Zone, extends on an area of 5,500 square metres. It consists of two floors equipped with all necessary services and facilities. It contains eight halls for VIPs. The centre, which works around the clock and is regarded the biggest of its kind in the Middle East, provides inspection points related to passports, customs, police and two e-Gate devices that the passengers can use if they want their travel via the airport to be quicker. The number of private planes in the region tops 300. This figure is projected to increase greatly over the next few years to meet growth rates in the travel of businessmen in the Middle East. Statistics issued by Dubai Airports reveal that Dubai International Airport posted a big growth in the movement of private aircraft. The number of trips jumped from 238 in 1988 to 1,888 in 2000 and to 9,432 in 2007, an increase of 29 per cent compared to 2006. Wam
Sharjah based Maritime Industrial Services (MIS) has completed the first ever offshore jack-up rig to be constructed in the Middle East. The move is expected to boost the profile of MIS in the region and also position the Middle East as an upcoming market for jack-up rig new builds. The SeaWolf Oritsetimeyin (Hull 104), which is scheduled for actual delivery to the client in the coming days, is currently undergoing intensive commissioning and testing procedures before final delivery. Along with its sister rig the SeaWolf Onome, this rig is one of two offshore jack-up drilling rigs being built by MIS for SeaWolf Oilfield Services, the Nigerian drilling company, in contracts worth $254 million (Dh932m). « This is our first ever jackup rig and the first to be constructed in this region. Due to this, the task has not been easy and completion has been delayed due to the many challenges and stumbling blocks, » said MIS Managing Director Jerry Smith. « For a yard with no previous record in building new rigs, we consider this an exceptional feat – especially with a new design that has never been built before anywhere in the world. » Both SeaWolf rigs are of a Friede and Goldman Super Mod 2 design with 30,000 foot rated drilling depth and an operating water depth capability of about 300 feet, or 92 metres. The SeaWolf Onome, SeaWolf’s second jack-up rig under MIS’ construction, is scheduled for delivery to SeaWolf in February 2009. Jack-up rig are mobile offshore drilling platforms used in oil and gas drilling and commonly used in oil and gas producing countries in the region and elsewhere. The Middle East is among the regions with the highest demand for jack-up rigs due to a large number of oil and gas drilling activities. While the region has previously looked at foreign yards for new builds and repair for rigs, drilling companies are beginning to pay attention to local manufacturers. MIS expanded its business line in 2006 to include the construction of offshore jack-up drilling rigs and currently has a backlog worth $1 billion, with seven rigs under construction and due for delivery in 2009 and 2010. The first quarter of 2008 saw a high demand for offshore drilling rigs, spurred by the increasing global demand for oil, leading to further shortage of yard space at the MIS yard in Sharjah. This year alone, MIS took four orders in excess of $500m, and with its current order book for oilrigs full until 2010, the company is in the process of opening its order book for 2011. « The overwhelming demand has prompted us to look for space elsewhere since the existing yard space is not enough if we are to expand our capacity, » Kevin Hudson, MIS Group CEO told Emirates Business. This year, Mosvold Middle East Jackup placed orders for Hulls 106 and 108 and while Bahrain’s MENAdrill ordered for Hulls 109 and 110. Smith said the future for the jack-up rig market would remain brighter due to increasing demand and the phasing out of ageing fleet that would have otherwise caused an oversupply. Ashaba Abdul K Basti business24-7.ae
Dubai’s debt is manageable and is far lower if compared to the debt-GDP ratios of other developed countries such as the UK, Germany and the US, according to Sameer Al Ansari, Executive Chairman and Chief Executive Officer of Dubai International Capital. In his remarks to the Leaders in Dubai forum yesterday, he said the resources are guaranteed to pay the emirate’s debt obligations, which are variably estimated at $47billion (Dh172bn) to $70bn. « The next years will be better as all the resources are there for repayment. A lot of those debts are from companies with commercial operations that are extremely successful and very profitable and with strong cash flows, » he said. According to Al Ansari, compared to other countries, « Dubai’s debt to GDP is one is to one and the UAE’s debt to GDP is one-third of the GDP. In the UK, debt is five times compared to GDP, in Germany it is three times, in the US it is three and a half times. » Al Ansari’s remarks complement Emaar Chairman Mohamed Alabbar’s recent statement in the World Economic Forum that the Government of Dubai is fully covered to service its debt for the next seven quarters. Experts at the forum exuded optimism that the Gulf will continue to grow, albeit at a slower rate, indicating that GCC is not in a crisis. « Do you even know the real picture? We are receiving winds of contagion from the West but we do not have the crises that are swirling Wall Street. The important thing is to look at profitability and the balance sheets of the banks and they will appear. If you want to disregard the profits made by the banks and focus on the negative side, it is not fair. We will weather this. This is not being self congratulatory but there is no point in looking at a glass which is half empty, » said Dr Muhammad Al-Jasser, Vice-Governor, Saudi Arabian Monetary Agency. « Let us not forget Dubai is the financial, commercial, trading, logistics and tourism sector for the whole region. The region has strong fundamentals and Dubai will continue to be at the epicentre of the region’s prosperity, » Al Ansari said. « Dubai’s success is commercial, using leverage and foreign investment, » he added. « Some of you would remember that in the 1960s the Ruler borrowed heavily from Kuwait to dress the Creek and set Dubai to be the international logistics centre. « Dubai has always been bold and has always been taking uncertainty to its advantage, providing a safe haven in the region for the region. » Earlier, investment bank EFG-Hermes said as a ratio to the emirate’s fiscal revenues, it saw little to suggest the debt level was either unmanageable or unsustainable. Karen Remo-Listana business24-7.ae
The Gulf will continue to grow, albeit at a slower rate, indicating that GCC is not in a crisis, said experts. Dr Muhammad Al Jasser, Vice-Governor, Saudi Arabian Monetary Agency (Sama), said: « Do you even know the real picture? We are receiving winds of contagion from the West but we do not have the crises that are swirling Wall Street. The important thing is to look at profitability and the balance sheets of the banks and they will appear good. « If you want to disregard the profits made by the banks and focus on the negative side, it is not fair. We will weather this. This is not being self congratulatory but there is no point in looking at a glass that is half empty. » Dave Ulrich, professor of business at the University of Michigan believes that GCC will stay over the crises. « I do not have an exact answer as to when the region will come out of this but most people say it should take about one year. I think the region will just stay over the crises, » he told Emirates Business. Giving the example of the Saudi banking sector, Dr Al Jasser focused on the strong fundamentals in the region. « Our banking sector has shown good results and remains resilient amid global crisis. Saudi reserves have increased from SR157 billion (Dh156bn) in 2002 to SR1.3 trillion today. The banking sector has a leverage ratio of eight per cent and 120 per cent deposits are deployed domestically, » he said. Moreover, unlike the West, the GCC governments have followed a rather conservative policy, thus avoiding any kind of crash in the banking sector seen in the United States and Europe. « We have one of the most demanding and conservative supervisory regimes. We are very tough. Market economy is prone to excesses and if you do not have a regulator things will happen. « We have a very developed corporate governance structure. There are two external auditors for each bank with an internal audit department and have a compliance officer – all that has paid well for us, » he said. « Our domestic economy has absorbed all the liquidity. Our banks are also involved internationally but that is extremely small and does not exceed 11 per cent of the balance sheet, so the exposure is very small. On the macro economy level global financial crises is neutral, there is very little consumer debt, banks have healthy balance sheets without over leveraging and our government has paid off its debt and has built very large foreign reserve, » he said. Shuchita Kapur business24-7.ae
His Highness Sheikh Mohammed bin Rashid Al Maktoum, Vice-President and Prime Minister of the UAE and Ruler of Dubai, has approved the design of the seventh crossing over Dubai Creek to be known as the « Dubai Smile ». The project, with an estimated cost of Dh810 million, will run between Dubai Creek Park, Wonderland Park and Dubai Courts in Bur Dubai, and Deira City Centre and Dubai Golf Club in Deira. Chairman of the Board and Executive Director of the Roads and Transport Authority Mattar Al Tayer said the bridge is one of the landmark projects to be undertaken by RTA, and is aimed at easing traffic congestion around the Creek. The bridge will consist of 12 lanes, six in each direction, and will have a width of about 61.6 metres. The bridge will also feature an arch rising to over 100 metres and will be able to accommodate up to 24,000 vehicles per hour. business24-7.ae
Rental yields expanded in October on the back of lower asset prices and a tight supply market, as gross yields increased to 6.3 per cent from 4.7 per cent in September, said a new report. « Rental demand is likely to remain robust as we sense potential buyers are deferring their plans until there is better visibility in the credit markets, » HSBC Holdings said in a monthly real estate report. Yield expansion reflects the market tightness. The shortage of stock has been further exacerbated by a clear shift from holding to selling, as investors try to exit the market, Majed Azzam, co-author of the report, said. « This trend in part reflects risk aversion in the current period of uncertainty, especially since rental regulation in Dubai favours tenants (rental caps, anti-eviction laws, etc), making tenanted units less attractive. » Additionally, new government regulations prohibiting the sharing of villas by more than one family are likely to add to pent-up demand, particularly for smaller units. On the other hand, the change in visa requirements for relatives, whereby proof of either ownership or tenancy of a two-bedroom residence is required, should increase demand for larger units, Azzam said. Meanwhile, secondary prices showed weakness for the first time in October as property prices in Dubai and Abu Dhabi fell. Prices in Dubai fell four per cent from September, while prices in Abu Dhabi were down five per cent. Villas in Dubai were hit, with the average price falling 19 per cent between September and October on the back of tightening lending conditions. The decline in villa prices had more to do with « affordability than anything else, especially in light of lower mortgage loan to values (LTV) », HSBC said. The average villa price of $2.6 million (Dh9.5m) in September would now require a minimum down payment of $650,000. Average apartment asking prices in Dubai were flat month-on-month, despite the majority of development prices being down. « This is due to a rise in the weighting of high-end projects, » Azzam said. Although prices in Abu Dhabi fell due to the emirate’s « heavy off-plan rating », the capital offers the « best shelter for investors and provides good appreciation potential », the report said. Apartments were down six per cent month-on-month, villas were up four per cent due to their scarcity. The report expects the market in Abu Dhabi to remain tight near term, as pent-up demand alone is more than enough to meet supply coming on to the market in the next two years. Raha Gardens, the only development that is ready, was down two per cent month-on-month. « We believe, similar to Dubai, this is because of the lower LTVs and thus affordability. However, it could also be related to the development’s liquidity as it is only open to local investors, » HSBC said. HSBC said in its September report that property prices had surged in the UAE, with Dubai and Abu Dhabi registering an increase of 17 per cent and 11 per cent month-on-month. « Price growth is picking up again after a brief moderation during the summer. However, while prices remain on an upward spiral, rental rates in Dubai seem to be stabilising, thereby compressing rental yields. This shows we have reached a level where affordability is getting breached, » the bank had said. Loan-to-values ratio falls As mortgage rates have risen on average by 100 basis points, loan-to-values for apartments have fallen from an average of 85 per cent to 60 per cent and for villas from 85 per cent to 75 per cent. The average down payment increased from $98,000 to $220,000, but the average monthly mortgage payment is down from $7,100 to $5,750, a decline of 20 per cent month-on-month. The average monthly rental payment is up from $3,600 to $4,500, 25 per cent increase, which means it now covers 80 per cent of the mortgage payment once the initial down payment is done. Parag Deulgaonkar business24-7.ae
A ‘pro-competition’ regulator, high population growth and attractive demographics would be the key drivers of the Saudi telecoms sector, resulting in a compound annual growth rate (CAGR) of 7.1 per cent, a Dubai-based investment bank has said in its new report. Al Mal capital in its recent report on the Saudi telecoms sector said that the revenue from mobile, internet and fixed telephone segments in Saudi Arabia will grow 44.4 per cent over six years – from SR45.3 billion (Dh44.3bn) in the year ending 2007 to SR65.4bn in 2013. Competition between multiple players and ‘digital natives’, meaning people who primarily use services such as mobile phones and the internet will serve as the stimulators of growth of telephony in the country, the report said. The report projects Saudi Arabia’s telecom scene over the next six years. Saudi telecommunications market, the largest in the GCC, is characteriesed by a appreciably high per capita GDP ($15,731, or Dh57,733, for 2007), high mobile penetration (116 per cent in 2007) and growing internet penetration (26 per cent in 2007) and a steady but surprisingly low fixed-line penetration (16.8 per cent for 2007). Saudi Arabia joined the WTO in November 2009 and so became bound by the WTO agreement on basic telecommunications committing it to provide full market access for its telecommunications services, allowing an increasing level of foreign participation from 2005 to 2008. While 60 per cent of the country’s landline services are open to competition, 70 per cent of the other services (mobile and internet) are open to other companies. Regulatory policies with regards to interconnection and traffic regulation has helped the Saudi telecoms sector prosper and will continue to do so in future, the report said. « Given the strength of the former incumbent STC, and in order to ensure it did not abuse its dominant market position, a Reference Interconnection Offer (RIO) was drafted by the Saudi Telecom Company (STC). The STC RIO is reviewed and amended annually, in light of market developments, with the aim of moving the interconnections fees to a long-run incremental cost basis by 2010, » it said. « Overall key regulatory policies are in place, and, with Zain KSA launching services, there is very strong competition in the mobile segment. With the issue of three new fixed-line licenses, there will be competition in that segment as well, which should drive fixed line penetration, » it added. Competition between the players fuelled the growth of Saudi mobile market, Al Mal said. « The Saudi mobile market has benefited greatly from the introduction of competition, with mobile penetration increasing from 40 per cent in 2004 (when there was no competition) to 116 per cent by the year end 2007, » the report said. The Average Revenue Per User fell 47.3 per cent as competition grew – from SR189 in 2004 to SR100 by the end of 2007, the report said. Rising population and demographics of Saudi Arabia, the report said, have also played a role in invigorating the country’s telecommunications markets. « While the increasing population is a growth driver, it is the demographics of the population that should have the greatest impact on the telecom sector, with more than 50 per cent of the population under the age of 25. These are the ‘digital natives’ who have grown up with digital technology such as computers, the internet, mobile phones, cameras and MP3 players. As the ‘digital natives’ pursue further education, the workforce will become economically self sufficient, they will increasingly use telecoms devices and services. Additionally, more than 28 per cent of the population is estimated to be under the age of 10 and currently use telecom services, thus providing a strong potential demand for the future, » Al Mal said. The STC which is owned 70 per cent by the government is now « feeling the heat » from competitors and its share in mobile, landline and ISP market segments will decline over the years, the report showed. While etisalat of the UAE (through Etihad Etisalat) and Zain of Kuwait (through Zain KSA) are the two other mobile players in Saudi Arabia, three fixed-line licenses have been awarded to firm from the United States, Hong Kong and Bahrain. The report said STC’s mobile market share will deplete to 46 per cent from the current 67 per cent, its fixed-line market share will decrease to 70 per cent from the current 100 per cent. Shashank Shekhar business24-7.ae
