Diversification efforts are paying off, while technology is rapidly expanding possibilities, leading corporations and banks in the Middle East to focus on efficiency and optimization of cash management.
Treasury and cash management in the Middle East region is complex and unique—reflecting the different economies and companies that operate here. The region is home to some of the most advanced corporate treasuries in the world—and a host of smaller treasury operations that are becoming increasingly sophisticated. Regional banks have worked hard to provide services that meet the needs of these diverse client bases, to ensure that companies have the tools they need to excel as their focus turns outward from home markets.
The region saw limited economic improvement in some countries, rather than broad-based progress in 2016, according to Focus Economics. It also saw geopolitical stability improve in some markets, such as Iran and Iraq, while others, namely Syria, continued to deteriorate.
But those countries dominated by the oil and petrochemical sectors continued to suffer as a result of low-for-long oil prices. One of the key impacts has been less liquidity, as governments struggle to cover budgets and pull liquidity from the region’s banks to do so. A related effect is higher costs and reduced funding access for corporations.
This means that companies have had to become more efficient in their cash and working-capital management, leading them to look for better tools and services. This is especially true for small and midsize enterprises and family-run businesses. Many companies had grown accustomed to easy access to funding and liquidity in the heady days when oil was priced at $100 or more a barrel.
But given the sophisticated operations of the region’s largest companies, many are looking to treasury solutions that can increase enterprisewide visibility across the working-capital cycle.
Economic and regulatory reforms to increase business friendliness have been a key plank in the agenda of some of the region’s largest economies in recent years. Companies can make use of regional solutions, such as cross-border cash pooling, to increase efficiency of liquidity and cash management.
In addition, digitization of payments is a key area of development for corporations—although it is hampered by the fact that many markets continue to be driven by cash and checks, and by payments infrastructures that vary greatly from market to market.
The year 2017 started out on a positive note for the oil-exporting economies of the region, as oil prices began to rise following the oil-output cap effected by OPEC. But souring that for many countries was the immigration ban, currently under review by the judicial branch in the United States, that was enacted by President Trump’s administration in late January.
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Middle East |
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Best Overall Bank for Cash Management |
National Bank of Abu Dhabi |
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Best Bank for Liquidity Management |
National Bank of Abu Dhabi |
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Best Provider of Short-Term Investments/Money Market Funds |
Banque Misr |
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Best Bank for Payments and Collections |
Samba Financial Group |
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Best Bank for Working Capital Optimization |
Citi |
MIDDLE EAST
Best Overall Bank for Cash Management
National Bank of Abu Dhabi
National Bank of Abu Dhabi has consistently invested in building its cash management and transaction banking product offering and services in recent years, with the rollout of a number of solutions in the past year.
For example, the bank recently launched a receivables management and integrated information reporting solution to help simplify complex reconciliation and reporting requirements. It released an Escrow Management System and dramatically increased escrow management services. And it continued to improve its regional transaction services, rolling out its iBANKING digital banking solution in Oman and Egypt.NBAD is also keenly focused on how new fintech developments are changing the banking landscape. As the bank noted, “We are the first commercial bank globally to successfully execute a Blockchain pilot with Ripple.”
Best Bank for Liquidity Management
National Bank of Abu Dhabi
The bank offers a full suite of liquidity management and interest optimization solutions for its local and regional clients, including a range of cash concentration and reporting options. NBAD’s flexible sweeping solutions, multi-entity sweeping for 100% owned subsidiaries. Third-party sweeps are managed via SWIFT MT101 arrangements, and the bank can provide back-valued solutions—where sweeps for previous dates can be recalculated on back-valued transactions. Reverse sweeps—where the balances are returned at the start of the next working day from the Master back to the Participant account—are also supported.
The bank provides cash pooling for interest optimization, with support for tiered interest rates and interest allocation options for different accounts.
Liquidity and interest optimization solution can be accessed via NBAD’s iBANKING corporate digital banking platform.
Best Bank for Payments and Collections
Samba Financial Group
Samba stands out in particular for its tailored and unique payments and collections services for clients. The bank won a number of important new mandates in the past year on the strength of that position—and its soundly modern technological infrastructure.
For example, the bank was mandated to provide real-time online payments with host-to-host connectivity for Umrah pilgrims.
It also launched a unique service to manage dividend and coupon payments to shareholders or investors electronically through its Samba Access platform, using data feeds from the Saudi Stock Exchange (Tadawul). The bank released a billing and settlement engine for clients to upload, manage and pay invoices.
Best Provider of Short-Term Investments/ Money Market Funds
Banque Misr
Banque Misr is one of the largest banks in Egypt. Established in 1920, Banque Misr now boasts 580 branches across the region and worldwide. The bank offers MMFs denominated in Egyptian pounds, dollars and euros.
With an extensive distribution network, and given the flexible, low risk structure, its Yom B Yom MMFs have seen impressive growth. They hold significant market share on the back of higher yields versus current accounts and deposits—and as a result of the bank’s flexible liquidity and investing solutions.
Best Bank for Working Capital Optimization
Citi
The combination of Citi’s longstanding, deep penetration of Middle Eastern markets coupled with its global, market-leading solutions for working capital optimization make it easily the best bank for companies in the region to work with in this area.
It boasts a full suite of financial supply chain solutions to help companies improve efficiency in their working capital cycles, including a wide range of trade finance and supplier finance programs, distributor finance and export-credit agency backed working capital programs. Its powerful Working Capital Analytics service can help companies have a clearer picture of their working capital cycle, benchmark that to peers and determine effective working capital enhancement opportunities.
