Abu Dhabi Islamic Bank (Adib) is confident it will convince a sizeable portion of Barclays’ UAE customers to shift their banking to a Sharia-compliant institution, following the announcement that it will take over the British bank’s retail arm.
The bank also assured it is committed to hiring all Barclays’ employees that will be affected by the transfer. The bank announced on Sunday that it has signed a deal to acquire the retail banking business of Barclays in the UAE for Dh650 million. The transaction, subject to regulatory approval, is due for completion by the second half of the year and will see the transfer of 110,000 Barclays’ customers to Adib.
Sarvesh Sarup, global head of retail banking group at Adib, yesterday said the bank will be setting up an integration team to ensure the takeover will be seamless. “[The team is] specifically dedicated to ensuring the transition to Adib as their employer will be as smooth as possible with minimal disruption to the employees’ existing working patterns and terms,” Sarup told Gulf News.
Adib has been on an aggressive expansion drive and is seeking to attract the UAE’s growing number of expatriates, which account for 80 per cent of the 8 million population in the country. As of the end of 2013, it had reached almost 600,000 customers. The second-biggest Islamic lender in the UAE also saw its net profit grow by 20.7 per cent, from Dh1.20 billion in 2012 to Dh1.45 billion in 2013.
Islamic banking assets in the Gulf Cooperation Council (GCC) countries are poised to reach $628.6 billion in 2016, from $445 billion in 2012. Globally, the Islamic banking sector’s assets are expected to reach $1.6 trillion by the end of the year.
Tariq Qaqish, head of asset management at Al Mal Capital said the conversion of conventional customers, particularly high-end and institutional investors, to Islamic may present some challenges for the bank.
“These sophisticated customers want international trade; they want letter of guarantees, specific requirements that require an international or global bank,” Qaqish told Gulf News on Sunday.
“Among ordinary retail banking customers, however, I don’t see any issue there because their requirements are straightforward. Adib, like Barclays, has credit cards, deposits, loans. But for sophisticated clients, the ratio of conversion might be less,” he added.
Sarup said their “market-leading” products and services, as well as good customer service and incentives, will convince Barclays’ customers to keep their accounts with Adib. “[Our] customer base is already made up of Muslims and non-Muslims alike and the bank believes the most important thing customers look for when choosing a bank is the service it offers,” Sarup told Gulf News.
“We will aim to equal, if not better, the value they currently receive from their banking relationship,” he said.
One Barclays customer, who asked not to be named, said the transfer won’t discourage him from banking with Adib. “It doesn’t worry me because at the end of the day, all I care about is basically how much money I’m paying for my credit, what’s the interest rate, what’s the fee…,” he said.
Barclays is the latest bank to sell its portfolio in the Middle East. HSBC Bank Middle East sold this year its business in Jordan to Arab Jordan Investment Bank.
In 2010, Royal Bank of Scotland exited the retail banking business in the UAE and sold its assets to Abu Dhabi Commercial Bank (ADCB) for approximately $100 million.
Foreign banks are shifting their focus to corporate and investment banking as they continue to face tough local competition in the retail segment. Domestic banks, which enjoy larger liquidity, have been expanding aggressively in the region.