The global financial turbulence has not affected programmes by the Abu Dhabi Commercial Bank (ADCB) to fund small and medium enterprises (SME) given their significance to the domestic economy, a senior ADCB official has said. Colin Sean Fraser, Head of the Wholesale Banking Group, said ADCB is facing challenges in such activity but remains committed to financing the projects, adding that the bank has set up specialised units for this purpose. In an interview with Emirates Business, Fraser also said he saw no real increase in non-performing loans by ADCB this year as a result of SME funding. He said ADCB is willing to co-operate with all government-specialised funds in supporting the SME activity in the UAE. "There is absolutely no restriction on SME lending in ADCB in the current year. We are actively soliciting creditworthy customers to support them with a comprehensive suite of lending products," he said.



What is ADCB's SME strategy?

ADCB's strategy is to place SME clients at the centre of our business. We are and have been open to business for SME clients, which is why we have seen a big increase in SME customers last year. We have made a big investment in resources to work with SMEs and launched new products, both financing- and deposit-related, to help our customers. In 2007, we re-launched the business under a new leadership team headed by Nilanjan Ray. ADCB has branded the SME proposition as ADCB BusinessEdge. The brand reflects our objective to deliver cutting-edge banking solutions to the SME segment through efficient distribution and superior customer service. The branding also denotes innovation and stresses on benchmarking in designing the products and services.

Do you have dedicated products to cater to the SME needs?

Yes, we offer a comprehensive suite of banking products under the BusinessEdge proposition. We offer a multi-tier transaction banking product that allows SME customers a wide range of solutions to choose from, making ADCB the liquidity and deposit bank of choice for SMEs. We also offer an entire gamut of trade finance solutions to the SME segment and currency risk management solutions to SMEs engaged in international trade. Our lending solutions range from collateral-free loans for small entrepreneurs to full-fledged working capital solutions to mid-size companies. We also offer niché solutions to customer segments such as logistics (through financing of commercial vehicles and construction equipment), healthcare (through dedicated financing programmes for medical equipment) and other professional services.

Do you face any challenges when catering to the SME sector?

While the SME segment is undoubtedly very vibrant, banks that cater to SMEs do have some challenges. ADCB is no exception to this. As the segment becomes even more important to banks, those that are interested have planned ahead, such as ADCB, to help SME customers. Issues we manage include non-availability of audited financials, absence of credit bureau, distribution challenges and limited capital/finance. ADCB has thought through these issues and our team is well placed to manage that so both the bank and the customer win.

The current economic and liquidity crises have affected the SME sector at large. What's your take on it.

In spite of the current credit crises we remain committed towards the SME sector and are in fact lending proactively to qualifying SMEs. We have not, at any time, stopped lending to SMEs. Our commitment is also exemplified with the recent launch of our lending products such as the BusinessEdge Insta Loan, an unsecured credit facility that offers amounts up to Dh500,000, and Enterprise Credit, a working capital solution that will lend up to Dh5 million. And our unique asset-based funding for the construction and commercial sector… where we lend up to 90 per cent of the invoice value. We know times are tougher now, but we want to keep supporting our SME clients.

How different are you compared to other banks in the region?

I believe ADCB is different when it comes to SME clients. We have invested in this segment because we know of its importance to the UAE economy. We continue to lend to SMEs and many SMEs now bank with ADCB as new customers, too. We are proud of this and I believe the BusinessEdge offering, lending based on expert scoring and transaction scoring models, a wide array of products and dedicated SME centres and RMs are the outstanding characteristics of our proposition.

What is your lending strategy for the current year?

There is no restriction on SME lending in ADCB in the current year. We are actively soliciting creditworthy customers to support them with a comprehensive suite of lending products. Our only criteria is that lending should be properly assessed and that requests for finance are valid and can be repaid on time, as any prudent bank would ensure is the case.

Do you see any increase in non-performing loans in the SME sector this year?

We have not seen any perceptible increase so far. We would attribute this to our portfolio mix which is balanced across different regions and business segments in the UAE. Further, we see this as the result of our supporting high-quality clients with great business that is bearing out our confidence in the strength of SME businesses in the UAE.

What is your stand on funds created for supporting SMEs and youth projects in general?

We in ADCB are always willing to co-operate with various government agencies to support and develop small and medium enterprises. Of course, we would not miss this opportunity to commend the efforts of the Sheikh Khalifa Fund, which last year supported 154 projects with a total amount of Dh246 million mainly in industry and service segments. The

fund's scope of activities extends to encompass the training of young businessmen where more than 720 young UAE nationals benefited. We consider this as an excellent track record.


Colin Sean Fraser

Head of the Wholesale Banking Group, ADCB

Born in Britain, Fraser completed his master of arts in financial economics from the University of Dundee. He joined the Associated Chartered Institute of Bankers thereafter. In June 2002, he joined Barclays Bank, London, and headed the multinational corporate division. He was promoted as Commercial Bank Development Director for International Retail and Commercial Banking in February 2005 and was in the position until December 2006. In January 2007, he was appointed Corporate Banking Director – GCC for Barclays Bank in Dubai. Fraser joined Abu Dhabi Commercial Bank as Executive Vice-President, Head of Wholesale Banking Group in August 2008.

 

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