CACEIS NEWS SIBOS 2013

2 caceis news - SIBOS supplement - september 2013

Banque Libano-Française has launched an asset management activity Walid Raphaël, General Manager, Banque Libano-Française

has seen strong growth in both its balance sheet and its earnings. Net income was $18 million in 2005; it is close to $100 million now. Over this period we have deployed a strategy of growth on a number of fronts. In addition to our core business of corporate and commercial banking, we have developed our investment banking, retail banking and private banking activities and, more recently, our asset management business. At the same time we have continuously adapted our product offering to meet the needs of our clients. We are currently concentrating on consolidating this growth and on operational excellence. A recent Ipsos survey indicated a customer satisfaction rate of 94%, but we want to improve this still further. To this end we are investing in new IT systems to ensure continued improvements in the quality of the services we provide to our clients. Does Banque Libano-Française have new local and international growth plans, over and above its presence in France, Switzerland, Cyprus and Syria? Banque Libano-Française already has several foreign subsidiaries: a bank in France with a branch in Cyprus, a financial company offering private banking services in Geneva (LF Finance Suisse), a bank in Syria, a representative office in Abu Dhabi to cover the Gulf region and another recently opened in Lagos, Nigeria, to cover Africa. In December 2012 we opened a branch in Baghdad, Iraq, which will soon be followed by branches in Erbil and Basra. These three new locations – Abu Dhabi, Iraq and Nigeria – will enable us to grow our business in regions where

there is a sizeable Lebanese diaspora. At the same time we have expanded our local network by 20% in the past two years, and plan to open a further ten branches over the next three years. How has CACEIS supported Banque Libano- Française in its growth? We have a strong partnership with CACEIS, which supplies us with traditional global custody services and also, more recently, fund administration and depositary bank services. We have developed a new fund management business, and as part of this in September 2012, we launched the LF Total Return Bond Fund, registered in Luxembourg, which offers private and institutional investors a vehicle through which to invest in international bond markets. Since launch the fund has performed remarkably well, far outstripping its benchmark. Encouraged by this performance we are attracting new investors and expanding our fund management business. We plan to create two new funds, which we will place with CACEIS, given our satisfaction with its services ■

The IMF is forecasting 2% GDP growth for Lebanon in 2013. Against this background, what are the factors driving growth at Banque Libano- Française? The IMF’s 2% growth forecast for 2013 is becoming highly uncertain given the particularly volatile situation in the region due to the events in Syria. Despite these difficult conditions, Lebanon has a solid banking sector, which has been strengthened since the financial crisis of 2008 by the high inflow of liquidity. This has favoured economic activity. Over the last five years, Banque Libano-Française

The development of local financial markets Middle East: strong potential for growth in asset management CACEIS brings its expertise to fund managers in the Middle East and assists in their local and international expansion.

managed by local fund managers are limited compared to those managed by international competitors. However, a growing number of local compa- nies are offering their expertise both locally and internationally, either by tying up agree- ments with non-GCC fund managers, or by directly marketing their expertise abroad. Thus in recent years, more and more promot- ers from GCC countries have elected, in coop- eration with managers of offshore structures, to launch funds for distribution in Europe, Asia and the USA. In 2012 and 2013 in Lux- embourg and Ireland, new promoters from the GCC zone created UCITS as well as Real Estate-Private Equity structures. These funds are distributed in Europe and in the countries and regions where investors look for this type of vehicle, such as Switzerland, Asia and Latin America. Although the proportion of promot- ers from the GCC countries seeking to boost growth internationally remains modest, there is no doubt that this development strategy will gather pace over the coming years. CACEIS is staying ahead of these trends by continuously adjusting its full range of services to changes in the profile of traditional and al- ternative fund management as well as meeting the growing demand for services that address the needs of Islamic finance ■ 1 Bahrain, Kuwait, Oman, Qatar, Saudi Arabia, UAE. 2 Source: Capital Standards Industry Research, May 2012.

The stakes are high for banks, fund managers and financial advisors given the substantial potential reserve of accumulated wealth in the region. The assets of sovereign and private in- vestors have grown steadily in recent years, ac- cording to different sources the sums involved are well above $1 trillion. Private banks and local and international fund management companies are working closely with the region’s governments to liberalise regulation and modernise the financial in- frastructure of local markets. Such reforms are necessary to meet the needs of investors in terms of active management, transparency and risk control. There is also a call for a steady move towards harmonisation, as was the case in Europe with European directives on UCITS and alternative funds. At present, Saudi Arabia, Kuwait, Bahrain, Dubai, Abu Dhabi and Qatar are all jostling for position as the region’s lead- ing financial centre. Each has its advantages but also its own regulatory complexities which can discourage some potential investors. At present, the asset management offering for private investors takes the form of wealth man- agement rather than collective investment. In 2012, Saudi Arabia, Kuwait and Bahrain were the three biggest domestic markets in the GCC, with 381 local collective investment funds with a total of some $31 billion under management 2 , a very modest amount in view of the region’s potential. As a result, the sums Local fund management is being exported

T he member states of the Gulf Coopera- tion Council 1 (GCC) and the countries of the Middle East more generally are attracting growing interest from both local and international fund managers. With its substan- tial cash reserves built up from exports of oil and gas, the region continues to attract both in- stitutional and private investors. Recent down- pascale tilloles, Business Development Manager, MENA and Asia clients, CACEIS

vincent marc, Head of Regional Coverage, MENA and Asia clients, CACEIS

grades of US and European sovereign debt, and the economic and financial crisis, have estab- lished the region as an attractive source of di- versification for fund managers and investors. The Middle East is also opening its doors to other markets, such as Turkey and the conti- nent of Africa, where Arab nations have high hopes of seeing economic expansion.

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