Monday, 6 September 2010
JPMorgan to open commercial branch in Saudi
Thursday, 29 July 2010 at 14:51, Bloomberg
JPMorgan Chase & Co plans to become the first US bank to open a full-service commercial branch in Saudi Arabia this year, six years after Citigroup Inc exited a venture in the world’s biggest oil exporter.
The firm, building on an investment banking office, is adding services to attract more corporate and institutional customers, said Daniel Cotti, the New York-based bank’s executive for global trade services. It obtained a full commercial banking license from the Saudi government in 2005 and is now the only US financial firm to hold one. The expansion is part of a plan to accelerate growth in emerging markets also including Asia, South America and Eastern Europe.
“In North America and in Europe, the economic recovery is very slow,” Cotti, 51, said in an interview. “But if you look at the emerging markets, those economies are growing at 6 or more percent.”
Chief Executive Officer Jamie Dimon, 54, named longtime associate Heidi Miller in June to a newly created post of president of JPMorgan International to help win business outside the US Cotti is overseeing a plan to expand the trade-services unit, which provides institutional clients with guarantees, settlement services and credit lines.
“Trade finance is often seen in the emerging markets as an entry product,” he said. “Once you have the clients on board, then you cross-sell all the other bank products to the clients and create full-fledged relationships.”
In the 1970s, the Saudi government forced foreign banks such as Citigroup, HSBC Holdings Plc and ABN Amro Holdings NV to sell majority stakes in their local operations to Saudi nationals. A 2003 law opened the door for foreign banks to apply for licenses. The government has awarded full banking licenses to 11 foreign banks, including Deutsche Bank AG and BNP Paribas SA, according to the Saudi Arabian Monetary Agency’s website.
“JPMorgan has long, engaging and prosperous ties with the kingdom, far more than any other foreign bank, and it is the right time to be entering this market,” said John Sfakianakis, chief economist at Riyadh-based Banque Saudi Fransi. The commercial-banking push will strengthen the firm’s local ties while avoiding a “greatly competitive retail market,” he said.
The challenge may be finding the right people to build the business, Sfakianakis said.
Citigroup shareholder Prince Alwaleed Bin Talal said in April the bank is trying to return to Saudi Arabia. The New York-based bank sold its foothold in the country - a 20 per cent stake in Saudi American Bank, now known as Samba Financial Group - to a state investment group in 2004. Citigroup, then the largest financial services company in the world, said its strategy was to invest in countries where it could have majority control of the banks it ran.
JPMorgan’s trade services unit is part of the Treasury and Securities Services division, a wholesale banking arm that processes payments and provides other services to bank, government and corporate clients. The division produced 48 per cent of its revenue outside the US from 68 overseas offices last year, compared with 35 per cent from 51 international locations in 2004.
The trade services unit is appointing senior managers, and is about halfway done hiring almost 100 trade specialists, Cotti said. He aims to double its revenue in the next four years, Cotti said, declining to disclose figures.
New managers include Pravin Advani as global trade executive for Asia; Andrew Betts as head of global supply chain, David Conroy as global trade sales head and regional trade executive for North America; Andrea Leonel as regional trade sales and advisory head for Latin America; Kao Fang Ming as trade head for China; and Prashant Pillai as trade head for India and South Asia.
The firm, building on an investment banking office, is adding services to attract more corporate and institutional customers, said Daniel Cotti, the New York-based bank’s executive for global trade services. It obtained a full commercial banking license from the Saudi government in 2005 and is now the only US financial firm to hold one. The expansion is part of a plan to accelerate growth in emerging markets also including Asia, South America and Eastern Europe.
“In North America and in Europe, the economic recovery is very slow,” Cotti, 51, said in an interview. “But if you look at the emerging markets, those economies are growing at 6 or more percent.”
Chief Executive Officer Jamie Dimon, 54, named longtime associate Heidi Miller in June to a newly created post of president of JPMorgan International to help win business outside the US Cotti is overseeing a plan to expand the trade-services unit, which provides institutional clients with guarantees, settlement services and credit lines.
“Trade finance is often seen in the emerging markets as an entry product,” he said. “Once you have the clients on board, then you cross-sell all the other bank products to the clients and create full-fledged relationships.”
In the 1970s, the Saudi government forced foreign banks such as Citigroup, HSBC Holdings Plc and ABN Amro Holdings NV to sell majority stakes in their local operations to Saudi nationals. A 2003 law opened the door for foreign banks to apply for licenses. The government has awarded full banking licenses to 11 foreign banks, including Deutsche Bank AG and BNP Paribas SA, according to the Saudi Arabian Monetary Agency’s website.
“JPMorgan has long, engaging and prosperous ties with the kingdom, far more than any other foreign bank, and it is the right time to be entering this market,” said John Sfakianakis, chief economist at Riyadh-based Banque Saudi Fransi. The commercial-banking push will strengthen the firm’s local ties while avoiding a “greatly competitive retail market,” he said.
The challenge may be finding the right people to build the business, Sfakianakis said.
Citigroup shareholder Prince Alwaleed Bin Talal said in April the bank is trying to return to Saudi Arabia. The New York-based bank sold its foothold in the country - a 20 per cent stake in Saudi American Bank, now known as Samba Financial Group - to a state investment group in 2004. Citigroup, then the largest financial services company in the world, said its strategy was to invest in countries where it could have majority control of the banks it ran.
JPMorgan’s trade services unit is part of the Treasury and Securities Services division, a wholesale banking arm that processes payments and provides other services to bank, government and corporate clients. The division produced 48 per cent of its revenue outside the US from 68 overseas offices last year, compared with 35 per cent from 51 international locations in 2004.
The trade services unit is appointing senior managers, and is about halfway done hiring almost 100 trade specialists, Cotti said. He aims to double its revenue in the next four years, Cotti said, declining to disclose figures.
New managers include Pravin Advani as global trade executive for Asia; Andrew Betts as head of global supply chain, David Conroy as global trade sales head and regional trade executive for North America; Andrea Leonel as regional trade sales and advisory head for Latin America; Kao Fang Ming as trade head for China; and Prashant Pillai as trade head for India and South Asia.
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