Since 2010, Ashok Aram has been one of the leading players in the Middle East business scene. As the head of Deutsche Bank’s business in the region and in Africa, he has been involved in transactions involving billions of dollars and affecting the economies of every country.
Mr Aram was promoted in the recent global shake-up at the German banking group, adding Europe to his existing responsibilities. He will be based in Frankfurt.
Today, in the first of a two-part interview, Mr Aram talks about the challenges and achievements of the past five years.
Tomorrow, he will reflect on the bank’s place in the global financial scene.
Deutsche Bank is withdrawing from some global businesses. What is the policy towards the Middle East under the new strategy?
The Middle East and Africa region was reviewed in detail just as all other regions in the world and subjected to the same scrutiny. I am happy to confirm that our geographic footprint in the Middle East and Africa region will stay intact and enabled. Crucial in the decision was that our focused and cohesive approach in the region combined with cost and capital discipline around our core clients and core geographies has contributed both to growth and a sustainable performance. This has held us in good stead during the strategic review and will continue to help us in the future. We, as a team here, see further room to grow. This is critical. In the Middle East region, clients also see Deutsche Bank, based in Europe’s largest economy, as a strong alternative to the some of the global US banks.
What are these core clients and geographies in the region?
Our client list and all our efforts centre around 25 central banks, 12 sovereign wealth funds, 90 corporate groups, 125 financial institutions and about 400 ultra high net worth and high-net-worth families. There are interlinkages around them and having a proper understanding of that is essential. These clients are keen to enhance their economic linkages with the rest of the world. High-focus geographies in the Middle East have been the UAE, Saudi Arabia, Qatar and Kuwait. This does not mean we don’t do business in other countries, we definitely do business in the countries we feel comfortable with. To our identified clients we provide corporate and investment banking, capital markets and risk management, as well as wealth management and institutional asset management services.
You took over as the chief executive in 2010 at the height of the financial crisis. What got you through that period to the growth of the past five years?
Three things come to mind. The first is to “stay the course” through the region’s cycles. 2009 and 2010 were very difficult years for the Middle East region and a real test. The region was affected by both global and home-grown issues at the same time. Staying the course was important, as it created consistency and trust with clients. Trust builds a successful franchise. This means not to drop capital discipline and client selection standards in good times and over-expand. At the same time it also means not to have knee-jerk reactions or go with the trend and withdraw in challenging times. We stayed the course in Asia in 1997 during the Asian financial crisis and have reaped rich dividends there. Similarly we stayed the course in the Middle East and continued to invest in a disciplined manner. This has contributed to sustainable profitability. Second, having strong and cohesive leadership teams in the countries in which we choose to do business is essential to develop business and manage risks. Third and equally important, staying connected to Deutsche Bank’s global network enables clients here to pursue opportunities and avoid risks. This global network is what distinguishes us from the strong local banks in the region, and at the same time makes these banks our partners.
What is your outlook for the Middle East?
The next couple of years will be challenging, but manageable. The oil price decline will inevitably lead to sovereign fiscal tightening and reduction in capital expenditure. Concurrently regional banks will see some reduction in stable deposits from sovereign entities and will find access to the international capital markets and interbank markets [to be] relatively more expensive. So the cost of money is going to go up. Control requirements on banks in the region will go up further, based on globally evolving standards. The region, as representatives of the emerging economies, should participate intensively in setting these standards. On the other hand, where else in the world but in the GCC do you have a young population base of about 40 million with in excess of US$2.5 trillion in sovereign reserves, relatively low levels of sovereign indebtedness and high levels of aspiration? Also you have defined deadlines in the UAE and Qatar around the Expo 2020 and the World Cup. The GCC region has done a very good job in establishing linkages with Asia’s major economies – Japan, South Korea, China and India – as well as in sectors such as petrochemicals, transportation and trade. They also have good exposure through assets in America and Europe. All this will make the challenges manageable. For the rest of the Mena region, issues of political stability and security will still dominate the agenda in the near term and public-sector support will play a bigger role until the private sector becomes more confident and fully active.
How will you stay connected with the region? When will your successor here be announced?
Most of the European operations come under the European Central Bank, which is now based in Frankfurt, so that’s where I’ll be based. I will also be spending a lot of time in London, still a critical base for us. I have had the fortune of building some deep relationships over the last decade with clients and policy makers in the Middle East who have been extremely kind to me over the years, and I plan to maintain and nurture those relationships. There are many people in the region for whom I care deeply. I hope to be back here as regularly as I reasonably can. My successor will be announced before the end of the year or January by the latest.
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