World Bank 'changes its policy in GCC' Regional banks 'must keep up with new system'

Dubai: The World Bank has changed its policy in the GCC region, a top official said yesterday at the Gulf Wealth Forum.

Mahdi Ismail Al Jazzaf, executive director for the World Bank, Middle East said that the International Finance Corporation (IFC) decided to change its policy in the Gulf.

"The IFC will offer $300 million refundable aid to the Middle East and GCC private sector this year," said Mahdi.

He added that some GCC companies already have loans through the International Finance Corporation.

"Let us not forget that GCC countries are shareholders in the World Bank and they deserves to benefit from the bank services," he added.

Ras Al Khaimah Ceramic Company has applied for a new loan from the International Finance Corporation, he added. Also, Saudi British Bank borrowed $50 million for a residential property project.

Jazzaf said that the International Finance Corporation is concentrating of developing partnerships with the private sector in the region, especially in emerging financial markets.

Denial

Mahdi, however denied that the World Bank moved its regional International Finance Corporation head office from the Egyptian capital Cairo to Dubai, as rumoured.

"Dubai's office will work beside the Cairo office. Our operation has increased in the Gulf region so we've opened this new office here," said Mahdi, adding that the official opening was announced but the office hasn't yet opened for business in Dubai.

"Low cost, speed, and diversification of banking services are the advantages of electronic systems, yet we must face the challenges of electronic fraud and the disconnection of services for technical reasons ... Every delay puts the future of GCC banks at risk."

Experts have warned that GCC banks might lose clients once foreign banks offering advanced electronic services enter the market.

At the Gulf Wealth Forum, Joseph Tarabay, Chairman of Arab Banks Union warned Arab and Middle East Banks not to lag behind in technical developments and electronic banking systems.

"Lagging would give international banks a chance to enter the local markets and offer more diverse banking services with competitive rates, which puts GCC and Arab banks at the risk of losing their local clients," said Tarabay.

He added that Arab banks' use of electronic banking and the internet would increase their efficiency and services, and thus their revenues.

"Low cost, speed, and diversification of banking services are the advantages of electronic systems, yet we must face the challenges of electronic fraud and the disconnection of services for technical reasons," he said.

He added that the lack of awareness of electronic services and their benefits is caused by the scarcity of internet users in the region, who are not more than six per cent of the population, compared to 50 per cent in Europe and 70 per cent in the US.

But still, electronic services are on the rise in the region, along with tele-banking services.

"Every delay puts the future of GCC banks at risk, and gives foreign banks future chances of monopolising the local markets, as the liberation of financial and banking services under the agreements opens the doors to competition," said Tarabay.

Participants at the forum launched an initiative to establish a GCC bank union of all the banks in the region in order to compete with international banking alliance.

The GCC bank union aims to coordinate banks and GCC financial institutions to help them keep up with global progress in banking systems, and develop the quality of banking services, said Atef Al Tayyeb, executive chairman of Etlala Company, the forum's organiser.

"The Union will keep track of banking developments and monetary policies of GCC countries, and compare them to international developments, analyse them, and show how they affect the activities of GCC banks," said Al Tayyeb. In a press conference, Al Tayyeb said the proposed union would prepare studies to develop bank legislation in GCC countries, unify bank terms and bring accounting systems closer in the GCC and world.

"The union will follow up on developments in GCC labour markets, organising training courses and performance-improvement seminars," he said. "The GCC union will not complete with the Arab Bank Union, but will cooperate and work side by side with it," said Al Tayeb.

"Dual and international Free Trade agreements need unified GCC economic decision, especially with the latest GCC Summit's decision of collateral negotiations in free trade agreements."