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British banker Michael Tomalin has been chief executive at National Bank of Abu Dhabi for a decade. For most of that time it's been the country's biggest bank, and while it lost the distinction when two rivals merged recently, NBAD is still a hugely important institution.
So when Tomalin warns that the country is heading for a rough ride, people listen. “The liquidity tightness in the UAE has yet to have its full effect on the real economy,” he said this week. “We therefore expect a difficult 2009.” Tomalin was reporting the bank's quarterly results: net profit fell by more than a third, missing analyst estimates, mainly due to provisions for bad loans.
But falling profit is still profit, and Tomalin stressed the sound fundamentals of his own bank and the wider national economy. Set against the performance of global banks, he suggested, the UAE looks in pretty good shape.
Compare, for example, the current plight of NBAD with that of Barclays, where Tomalin worked for many years before moving to the Gulf. In terms of assets, Barclays' $2 trillion still dwarfs NBAD's $44 billion. By other benchmarks, though, the lines are blurred.
NBAD had a market value of $4.1 billion yesterday, against $11 billion for Barclays. Barclays is bigger, but that probably puts them in the same league. They also have identical credit ratings from Moody's, after the agency cut Barclays to Aa3 on Monday.
Then there's the issue of shareholders. The Abu Dhabi ruling family has a large stake in NBAD through sovereign wealth funds. And as of last year, Barclays also boasts a member of that clan among its major shareholders, after Sheikh Mansour bin Zayed Al Nahyan stumped up about $5 billion in new capital.
Tomalin must have felt he was dropping down several divisions when he left a global giant like Barclays for a regional minnow like NBAD. Today, 10 years on, they're closer than anyone would then have imagined.
* More debt drama for Dubai. Ratings agency Moody's has put six government-backed companies on review for possible downgrade, as the economy slows. Still, HSBC analyst Chavan Bhogaita remains bullish: “Moody's action does not change our view of the fundamentals of these Dubai Inc. credits, which we continue to believe are strong.”
* Dubai hotels are feeling the pinch. In December, revenue per available room fell 26% from a year earlier, according to research firm STA Global..
