Trust is the key
Rohit Walia – Executive Vice Chairman and CEO, Bank Sarasin-Alpen and Alpen Capital, Dubai replies to a set of questions sent out by our guest editor, H E Anil Wadhwa

We read a lot about ‘green shoots’ emerging in the global economy. Would you agree with this assessment?
It is too soon to draw this conclusion. Definitely the green shoots are a positive sign and mirror Bank Sarasin’s optimistic view on the recovery of the local as well as the global economy. For the GCC region, the government stimulus has definitely helped the recovery process but the region is definitely tied to oil prices. While there are glimmers of hope, it is not the end of the financial crisis. There is still a lot to be done in terms of capturing investor confidence. India along with China are economies that definitely are on the road to recovery with valuations becoming attractive and increase in domestic demand. Bank Sarasin had recently published a report on the Indian Equity markets which highlighted the upside potential of these markets. So I would definitely say that there is a ray of hope for the GCC and Indian markets.

What has been the impact of the financial crisis in the GCC region?
In today’s connected world, no region is immune to the happenings in another region. Although the strong fundamentals of the GCC region did offer some immunity it did not prevent the financial crisis from hitting the region. This has however been felt with varied levels of impact in the different GCC countries. The major impact that we have seen is in the change in investor attitudes. We have had some minor corrections in the past. I have been in the region for a long time and we have seen some ups and downs but not such a steep downturn as we are seeing today. In the last few years, most investors in the region have only seen markets go up and started believing that this is the way the markets will always behave. It has been a learning process for everyone. The more I interact with people, the more I feel they are beginning to understand some of the things they shouldn’t have done like overleveraging. It will hurt, that’s for sure and it is with this hurt that the maturity will come in.

As far as private banking is concerned, as I always say, this crisis has brought us back to the basics. In the last few years we have seen that anybody could come, set up operations and make some money. Now the customer wants to understand very clearly why he should trust you with his money. In many ways it is back to basics for the private banking industry – safety and security are of prime importance. That is why banks came up in the first place and there is again a growing recognition of these basics and trust is once again the key word. Customers and potential customers will increasingly want to understand your story and your credibility before they will trust your advice and trust you with their money.

One of the things that will definitely happen is consolidation. People who had multiple accounts will definitely consolidate, especially if they have got less wealth. We must however not loose sight of the fact that there will be life after the crisis and decisions we take today will impact where we stand after the crisis is over. In every crisis there is an opportunity and there are now emerging some exceptionally attractive investment opportunities in some of the world’s best and strongest companies. We feel that both the financial institutions and the investors will come out wiser from their experiences of the current financial crisis. The current crisis will shape investor attitudes over period of time and we will see more responsible behaviour and an increased focus on “wealth preservation” as opposed to an aggressive focus only on “wealth creation.”

Do you foresee different countries in the GCC region coming out of the crisis in different stages?
The crisis has definitely had a different impact in each of the GCC countries. We look at the Qatar and Oman economies as being able to with stand the impact of the crisis and come out of it without requiring fresh stimulus. The UAE government has taken several measures to ensure that enough money is injected into the economy to ensure a smooth recovery. According to our economists, the Gulf States particularly Oman will emerge as powerful economies driven by the wealth it contributes not just in terms of natural resources but also human capital and business infrastructure.

Can companies expect the liquidity situation to improve in the near future or are banks still reticent to lend?
There has been a gap of liquidity in recent months as banks are trying to balance their books but this is not the case any longer. There is a big pool of liquidity selectively available in the region. The infusion of funds by the Central Banks and the announcement of the Central Bank of UAE and other Central Banks of guaranteeing local deposits is also contributing to improving the liquidity in the market. With the economic downturn, banks became wary of lending and brought about a temporary credit squeeze. However, with the improvement in liquidity and pressure of the Central Banks, availability of liquidity to the corporate world has improved. As far as banks are concerned, they are now willing to lend depending on the quality of the borrower and the risk profile. This should have been assessed carefully some time ago but this process is definitely in place now. However, availability of credit to the real estate or other speculative businesses is still restricted.

Can you give us a brief background of Sarasin-Alpen in the region?
Bank Sarasin-Alpen was established in the Dubai International Financial Centre in 2005 and is a subsidiary of Bank Sarasin & Co, Switzerland. The Sarasin Group’s majority shareholder is Rabobank which enjoys the highest credit rating of ‘AAA’ from Standard & Poor’s and Moody’s, since 1981. Bank Sarasin-Alpen, Dubai the first subsidiary of Bank Sarasin in the region started operating as a relatively unknown brand and in the last five years has come to establish itself as a boutique private bank offering tailor-made solutions for clients.

It was awarded the “Best Private Bank” Award by Banker Middle East Industry Awards for two consecutive years – 2007 and 2008. In 2008, it also expanded its business to Qatar and Oman where it is incorporated as Bank Sarasin Alpen (Qatar) Limited and Sarasin Alpen, Oman respectively. In Oman, we operate as an organisation providing private banking advisory solutions and we are proud to be one of the first private banking advisory solutions providers in the country of Swiss origin. In addition, we also launched an asset management company in Dubai called Sarasin-Alpen & Partners limited in 2008. The company launched its first fund, the GCC Equity Opportunities Fund (USD) in January 2009.

We see Oman as having a great potential and our expansion to this market significantly supports our growth initiatives in the GCC. We have a unique business model wherein the private banking activities of Bank Sarasin-Alpen are complemented by our Investment Banking arm, Alpen Capital. Alpen Capital provides advisory solutions in the areas of debt & equity capital markets, syndications, M&A advisory, corporate restructuring and private equity to institutional and corporate clients in the GCC and South Asia. The same model is followed in all our locations.

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