Large-scale fiscal and structural reforms are being implemented by governments across the Middle East and North Africa (MENA), especially in the GCC would open up new financial services opportunities.
The COVID-19 pandemic, combined with a sustained drop in oil prices, has highlighted the importance of fiscal reforms to balance budgets, structural reforms to diversify economies away from hydrocarbon dependency, and reforms in the public sector, government-related entities (GREs), and large corporations to increase productivity and scale.
Efficiency is the target
Many regional sovereigns, GREs, and large corporations have been forced to reconsider their efficiency as a result of the pandemic.
Ms. Elissar Farah Antonios, Head of the MENA Cluster and Citi Country Officer for the UAE stated that “there has been a lot of focus on simplification of the public sector, creating efficiencies, monetization and creating synergies. We have been witnessing large mergers & acquisitions (M&A) deals over the past 12 to 18 months. The two markets that are leading such transactions are the UAE and Saudi Arabia.”
The regional sovereign wealth funds (SWFs) and large companies are interested in acquisitions and consolidations within the region and outside. These are opening up new capital markets opportunities for our institutional businesses, especially in debt market fundraising and investment banking services such as mergers and acquisitions (M&A).
The effect of COVID-19 on the GCC
The pandemic has had a significant effect on many primary industries in the GCC, including airlines, hospitality, real estate, and retail, in addition to the direct and indirect impact on government revenues due to low oil prices. A few industries have also benefited. This crisis has provided gains to logistics, digitization, and creativity.
Regional economies, especially those in the GCC, have been quick to respond to the pandemic, both in terms of healthcare and financial assistance. The effect of these responses can be seen in the rapid recovery that is occurring as these economies open up and return to normalcy.
Banking systems that are resilient
Despite a dramatic drop in profitability in 2020, GCC banks have held up well in the face of the pandemic and the subsequent economic slowdown.
Ms. Antonios remarked that “Compared to the global financial crisis, the banks have remained largely resilient and are a part of the solution rather than a part of the problem. This has been a great relief to the economies.”
UAE and Saudi Arabia will be important growth markets
Within the emerging markets cluster, the Mena field is one of the most exciting clusters for Citi.
Because of the bank’s historical position in the growth of regional economies and its partnerships with governments in the construction of infrastructure, the region is very important to Citi Group.
Citi covers 3,800 institutional clients in the region. Nearly 2000 clients are part of the GSG (global subsidiary group). Global corporations such as Proctor & Gamble, Cisco, Nestle, Facebook, and Oracle are among them. These are the consumers who maintain their banking relationships with Citi in any market they reach.
The UAE and Saudi Arabia will be Citi’s main growth markets in the Mena region. Citi has operations in three jurisdictions in the UAE; onshore operations supervised by the Central Bank of the UAE, the Dubai International Financial Centre (DIFC), and Abu Dhabi Global Markets (ADGM).
Citi sees a great future for its Global Wealth
Citi claims its global wealth management sector, which has ties to consumer banking across the affluent segment, has a bright future. Citi has launched Citi Global Wealth, a new vertical that brings together private banking and wealth management under one leadership.
Private banking is primarily for ultra-high-net-worth individuals with minimum deposits of $10 million. The affluent are covered by the wealth division, which is part of the consumer banking market. The newly formed vertical includes the entire wealth management industry.