Dubai hub: oil, gas and beyond

Umer Sultan, head of global banking and transactions for the Middle East, Africa and Turkey, tells Giulia Rhodes how a deal with Egypt’s leading oil company is the sign of a healthy market in the area covered by the Dubai hub.

Giulia Rhodes

26/07/2016

“Buoyant and active” is how Umer Sultan, Intesa Sanpaolo’s head of global banking and transactions for the Middle East, Africa and Turkey, describes business at the bank’s Dubai hub.

While the area has experienced a slowdown in economic activity, the bank’s recent $1.3 billion (£0.89 billion) pre-export finance deal with the Egyptian General Petroleum Company (EGPC) is evidence of significant opportunities for those with the skills and capacity.

Owned by the Egyptian government, EGPC is responsible for the exploration and development of the country’s valuable petroleum resources. “It is a prestigious, strong and important client for the group, in collaboration with our Egyptian bank, AlexBank,” says Sultan. “Egypt is strategically very important in the area, with a population of 90 million people and a GDP of around $370 billion. So this is a relationship of which we are very proud.”

Focusing on the key products of trade finance and structured export finance, the bank has seen healthy local growth.

“We have been able to identify opportunities in line with the risk and credit appetites of the bank,” says Sultan. “It is a win-win situation.”

Intesa Sanpaolo’s long-standing physical presence and deep understanding of the region – with the hub dating back to 2008 and involvement much earlier – leaves it well placed to meet the demands of doing business there. It is a presence, Sultan adds, unique among Italian banks.

A new onshore Abu Dhabi branch, able to lend in the local currency, and one about to open in Qatar will further cement the bank’s coverage of the region.

“Our commitment is clear. We are growing. We have continued to do a lot of business throughout the harder times. We lend, we participate in transactions to support our Italian clients. We did not stop and that is now coming back to us in a very positive way.”

This is not to suggest, Sultan hastens to add, that caution should be thrown to the wind. The key, he says, is nuanced long-term knowledge of the region, its politics and its industries and a carefully-tailored product offer. Sultan himself has 18 years of local experience. “You should be able to connect all the dots, look at things in context,” he says.

“This is more important than ever, he adds, in a time of unprecedented geo-political and economic changes – in particular the current low oil price. Sultan describes regime change in Saudi Arabia, which has seen reduction in government subsidies & the young Crown Prince work on a reform agenda, as “unthinkable even five years ago”.

 

Diversification of the economy is one of the key objectives of change, he says. So while oil and gas remain crucial to the Middle East – 90 per cent of Saudi Arabia’s GDP comes from oil exports – other industries including tourism, infrastructure, manufacturing and retail are steadily growing.

Clearly, this period of transition presents challenges, but Sultan is focused on new possibilities. “Record numbers of Italian clients – strong in these areas – are going into Saudi to look at business there. They need financing. They need support and advice,” he says.

In Egypt, meanwhile – again, a country where Italian contractors are building an ever-growing presence – products such as iron ore, limestone and manganese, as well as surging demand for power to service this diversification, will offer opportunities to develop business beyond the traditional oil and gas market.

Cross-selling – building on the bank’s important local client relationships – and a widening of the range of products on offer are key medium-term objectives for Intesa Sanpaolo. Project finance, debt capital markets and advisory services are among the opportunities Sultan is keen to explore.

The opening this month of a Dubai office by the Italian export credit agency SACE offers further proof, he points out, of how strategically important the region will be to the Italian economy.

“The Italian government and large corporates are looking very closely at it. Hence, I do firmly believe the Dubai hub can be integral to the Italian economy.”

It is a challenge that Sultan is raring to meet. “We have navigated well against the headwinds of the past few years and the future looks promising. As the markets improve I see real opportunities. We are excited to continue building our business here.”



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