BNY Mellon sees Middle East outpacing growth of its global business over next five years

BNY Mellon, the US bank with more than $2.3 trillion of assets under management, expects its Middle East business to outpace its global growth level over the next five years, driven by a boost in markets in Saudi Arabia and the UAE.

The bank last year recorded “healthy, single-digit” year-on-year organic growth across markets including the Middle East and Africa, which was driven by new businesses.

However, it expects the region to outperform its global business growth over the next five years, Hani Kablawi, chairman of BNY Mellon’s international operations, told The National on Thursday in Riyadh.

“[The business] grows faster here in the region,” he said on the sidelines of the fifth Future Investment Initiative forum.

“There are outsize growth opportunities in the region.”

Vision 2030 in Saudi Arabia, the biggest Arab economy and Opec’s largest oil exporter, has “real, measurable plans underneath it”, which will lead to significant investments — both from within the region and globally, Mr Kablawi said.

“You have a vision in Abu Dhabi, which is being executed” and there is “action happening in Kuwait” and there is work happening in Oman that “we are close to and that we believe in,” he said.

“I think it is true for the region but … nowhere truer than in the UAE and Saudi [Arabia].”

Sovereigns in the six-member economic bloc of the GCC are transforming their economies to cut their dependence on oil revenue. The opening up of the financial sector and attracting foreign direct investment are among the central planks of regional economic overhaul agendas.

Foreign capital flows to the regional capital markets, some of the best-performing bourses in the world, and have risen amid continued reforms over the past few years. GCC government and corporate issuers have also tapped debt capital markets amid historically low global interest rates that have created more business opportunities for banks such as BNY Mellon.

Interest in investing in the region is on the rise, especially in Saudi Arabia, as the country’s Capital Markets Authority is “driving the right conversation with the private sector globally to make sure that the market here is attractive for foreign investment,” Mr Kablawi said.

It is “clearing away any obstacles” and “I believe there is more money coming to the region in the next five years, both into private and public markets”.

The broader Middle East is “a very important part” of the bank’s global operations, said Mr Kablawi, who has been associated with BNY Mellon’s Middle East business since 1997.

“It was significant in 1997 and it only got more significant since then and that is year after year of growth,” he said. “We haven’t had a single year of decline in our business.”

“It is a holistic statement” across everything that the bank does, including trade finance, payment flows, custody operations, investment and asset management services as well as helping regional issuers of debt and equity access global markets, he added.

The bank’s client base includes sovereign wealth funds, regional central banks, commercial lenders, insurance companies and regional pension funds as well as corporate issuers.

In terms of investment management business, BNY Mellon’s clientele, “without exception”, is interested in due diligence on environment, government and social standards and “understanding the dynamics of underlying investments in companies at the individual security level and in portfolios or funds at the aggregate level,” Mr Kablawi said.

In August, the bank, which has $45tn of assets under custody or administration globally, announced a deal with SNB Capital, a unit of Saudi National Bank, the biggest lender in the kingdom, to provide global securities services to institutional and large asset owners in Saudi Arabia.

The deal allows BNY Mellon’s clients a single point of contact and data source for their investment portfolios within and outside the kingdom, Mr Kablawi said.

The bank is also looking to forge similar alliances in other Middle East and African markets, he said, declining to give further details.

BNY Mellon, which set up its representative office in Abu Dhabi Global Market in 2019, has conducted business in the region for more than a 100 years. It opened its first regional representative office in Lebanon in 1963 and was also granted a branch licence in 2008 by the Dubai Financial Services Authority.

Over the next five years, the bank plans to invest in serving its institutional clientele through increased digital and data capabilities, which is a “very important pillar for us,” Mr Kablawi said.

“We are pleased but not satisfied and complacent with the progress that we have made and are always looking to grow our platform more in order to serve our clients better,” he added.