Transaction bank profiles: Abu Dhabi Commercial Bank


Duncan Kerr
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Since 2009 ADCB has invested heavily in developing and growing its transaction banking business. It is gaining market share and recognition in the Middle East and beyond, as Euromoney’s results confirm.

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In the aftermath of the 2008 financial crisis, ADCB needed to implement a change in strategy. The crisis had hit the bank hard so rebalancing its banking business was crucial, and transaction banking was seen as an important element in being able to achieve long-term sustainable growth.

In 2009, and as part of that change, the bank consolidated its previously separate cash management and trade businesses under a new transaction banking group and appointed Murali Subramanian, formerly Citi’s head of global transaction services, Middle East and north Africa, to oversee it.

The business today accounts for 44% of ADCB’s wholesale banking revenues and 19% of group revenues. It is also winning it recognition among its corporate and financial institution clients too.

ADCB broke into the top 20 best global cash managers for non-financial corporates for the first time in 2012, dropped out in 2013, but this year has returned and has improved its ranking among financial institutions too. Moving up to 19 from 23 and 17 from 18 in 2014, respectively, is still some way from the top tier, but it’s a very credible achievement for a UAE-based bank.

And while ADCB’s ranking is highest in its main regional markets – it maintained its third place ranking this year among non-financial corporates in the Middle East region, and remains the number one cash manager in the UAE – the results show it is gaining international recognition.

Strategic importance

For Subramanian, the strategic importance of the transaction banking business to ADCB is in attracting new corporate clients at the same time as deepening and retaining existing key client relationships.

“While many strategic client relationships are founded on balance-sheet commitment, a transaction banking cross sale provides the client with a whole new perspective on enhancing their operating efficiency rather than just financing it effectively,” he says.

Murali Subramanian3-large
The consequent
reputation risk of a
sudden platform or service failure far exceeds the investment required to assure reliability

Murali Subramanian

“The transaction banking business also acts as a trusted adviser to clients on improving their IT/enterprise resource planning and security architecture, allowing them to justify the investment required to upgrade their operating platforms. This frees the CFO and treasurer to focus on their main responsibilities of managing liquidity and risks rather than having to focus on managing their banking operations.”

Subramanian says some of the main strengths of ADCB’s transaction banking business include seeing its “mission from the eyes of corporate treasury rather than be product or solution led” and its size, which allows for swifter “execution of initiatives rather than having to navigate complex multi-level bureaucracies” and higher emphasis on more tailored solutions.

Being able to maintain those strengths requires continued investment. “We anticipate IT to be an area that will require and attract more investment as client operations depend on our service reliability,” he says.

“The consequent reputation risk of a sudden platform or service failure far exceeds the investment required to assure reliability.”

ADCB is also investing in its mobile platform across all its transaction banking products, as well as developing electronic capabilities for corporate treasurers such as forecasting, self service for investments, electronic account management (eBAM), and better quality account reconciliation.

Subramanian says ADCB banks everything from large, small and medium-sized corporate, financial institution and public sector clients in the UAE and GCC region, to select multinationals out of Europe. And across each segment, Subramanian says ADCB sees growth potential.

Economic powerhouse

“As the UAE grows steadily into an economic powerhouse for the region, we are seeing increasing willingness from multinational corporations to work with us, and an increasing willingness from government clients to move their efficiency-seeking operating businesses over to us from other Abu Dhabi banks. We are also making deeper inroads into the SME and mid-market segment,” he says.

Growth will predominantly come from business in the UAE and the Middle East region, but there is also promising scope for more international business where ADCB, working in strategic partnership with other banks, can service clients in other markets as well as partner-banks’ clients in the UAE.

“Our existing strategic relationships with Bank of America Merrill Lynch and Banco Santander have added a lot of value to clients of both institutions and to ADCB,” says Subramanian.

He adds that over the next couple of years the transaction banking business has three main strategic goals: to continue to innovate and evolve best practices for transaction banking in the region; to continue to expand the cash management and trade products suite ADCB offers its clients; and, to be the dominant supply chain finance and service provider in the Middle East.