Varouj Nerguizian, CEO, Bank of Sharjah, tells Bloomberg Businessweek Middle East Editor Roger Field about plans for expansion, regulation and why supporting customers in tough times makes good business sense.
Tell me about the size and scale of the bank?
Bank of Sharjah has grown from a small bank in 1973 with $4 million capital into a much bigger player today with capital of $0.6 billion and equity of around $1.2 billion. We are considered to be the first commercial bank in Sharjah and we were the fifth bank to be established in the UAE. The size of our total assets today is around $8 billion with $5.5 billion of deposits and $4.2 billion of loans. We have a very healthy structure and we have always been liquid. Liquidity has been primary for us even if it comes at a cost in terms of P&L. That was partly due to a ratio that was imposed on us from day one to maintain 20 to 30% of our deposit in cash and securities. We have never encountered a situation where we were short of liquidity, even during the most difficult times of the Gulf Wars or the financial crisis of 2008.
This has been our philosophy: to maintain high liquidity and to back our customers. We support our customers in good times and bad times and we have been successful in proving that this philosophy is beneficial. Of course, the borrower’s integrity remains essential.
It sounds like a softer approach than many banks would adopt. Does it make good business sense too?
It is and it does and it has paid off with time. This year we will be celebrating our 45th anniversary. For the last 44 years we have been able to pay dividends, cash or bonus issue and sometimes both, and we have always made sure that our stakeholders benefit from our activities.
How has business been over the past year?
We are going through difficult times in terms of geopolitical risk and this is something we were not accustomed to over the recent past.
Over the last couple of years we have been encountering more and more challenges in the region, so growth was not quite as it used to be.
We have been more cautious in terms of loans book growth and we have been more active in deposit collection because we wanted to maintain our liquidity. Within an ever challenging environment we have been taking a more risk-averse approach.
Where do you have a presence in the region and which markets have the best potential at the moment?
We are more a UAE-based bank especially with our head office in Sharjah, two branches in Dubai, two in Abu Dhabi and one branch in Al Ain. We are also to a lesser degree active in Beirut thanks to our acquisition of the operations of BNPI Beirut which was an affiliate of BNP Paribas, about 10 years ago. In June of this year we celebrated 10 years of our presence in Lebanon.
Do you plan to expand into any new territories?
We don’t have any plans to make acquisitions outside of the UAE for the moment. However, I believe that there will be opportunities in the UAE and we will be ready to take advantage of such opportunities when they present themselves. We are witnessing significant consolidation in the industry and region.
Where do you see growth opportunities in terms of sectors or verticals?
We have always been extremely active in trade and industries. The emirate of Sharjah captures around 46% of the industrial base of the UAE and this has always been our area of expertise. On top of that we have lately entered the services market as well as real-estate financing.
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