In December, Dubai World, a government-owned investment giant, shocked global markets when it announced an estimated $14.4 billion debt restructuring plan. The announcement undermined the emirate’s global investment appeal at the end of the year. Yet it did little to dent Standard Chartered’s ambitions for the region, despite the fact that UK banks collectively had an estimated $50 billion exposure to the troubled investment company.
Over the past year, the emerging markets-focused bank has crafted a plan to double its Middle East revenues to $4 billion over the next three to five years, which would see the region contribute 20% of the bank’s total revenues.
Underscoring the newfound strategic importance of the region, Standard Chartered in March posted Vis Shankar, CEO for the Middle East, Africa, Americas and Europe, to Dubai from the group’s headquarters in London. In June, the firm applied for a banking licence in Saudi Arabia, to grab a rising share of Islamic banking revenues, which the bank expects to increase by 35% this year.
Over the past year, the bank has entrenched its market-leading status in foreign exchange trading, with the establishment of a Shariah-compliant forex platform. The bank now operates the largest forex trading team in the region, with 200 seats at the Dubai International Financial Centre.
Standard Chartered is proving it is a long-term player in the region and can weather violent shifts in the economic cycle. Nevertheless, Dubai’s debt debacle, exacerbated by the concentration of wealth among family-owned investment firms and the lack of transparency of creditor rights in state-backed firms, underscores the perennial dangers of emerging markets.