Banking on passion: An interview with Salah Jaidah of Deutsche Bank
Salah Jaidah, chief country officer of Deutsche Bank in Qatar and its vice chairman for the Middle East and North Africa (MENA) talks to The Edge at great length on what Islamic banking means for a global financial institution such as Deutsche Bank and why the Qatar market is strategically important to the bank.
Making a difficult professional choice when he was younger, Jaidah opted to become a banker, he says, because he felt he was a good lender and a good collector of money and a career in finance seemed like a logical step.
Having served an Islamic bank earlier in his career, Jaidah brought in his experience to Deutsche Bank Qatar which is an notable institution within the Islamic finance market, and where he now exclusively oversees wholesale deals under the auspices of the Qatar Financial Centre (QFC).
Asked whether the bank’s focus on Islamic banking takes away any prospect of business growth that wholesale banking brings, Jaidah answers candidly, saying that the bank’s product profiling on Islamic banking is not local, but regional and global and hence is not at odds with wholesale deals.
“We happen to cover a part of the MENA region. We have taken advantage of the location of Qatar, and how we interact with clients within the country, but the rest of the team is in Dubai. So it is definitely a multi-location coverage model,” he furthers.
Islamic banking, according to Jaidah, faces a constraint which has two sides – one, the demand of funding and the other, the surplus liquidity within the industry.
Moreover, according to Jaidah, the bank’s view is that Qatar is well positioned `– both strategically and geographically – in the realm of Islamic banking. “There have been quite a number of initiatives, which will bring value into this industry and capitalise the steep growth curve in Qatar while complementing the business rationale of the firms within QFC,” he says.
Talking about the growth trends in the Islamic banking sector in the MENA region, Jaidah is of the view that on the wholesale side, there will be a double-digit growth for the coming year. “It should be around 13 percent and this figure is on the back of some very interesting initiatives coming from Saudi Arabia, Qatar and as well as from Malaysia and Indonesia. Turkey is also constantly looking to enter the regional market and we assume that they will come back again to tap the market,” explains Jaidah.
Islamic banking, according to Jaidah, faces a constraint which has two sides. One is the demand for funding and the other is the surplus liquidity within the Islamic banking industry.
“Most of the investors and depositors within the region would prefer to see alternative solutions within Islamic banking. Both the government and semi-government agencies are verifying that these surpluses are available and they are eagerly developing projects that will allow them to tap into these resources. Some countries are using it as control management within the ambit of liquidity management of the state to prevent inflation. So, the quest for alternative solutions has had multiple usage and multiple needs, and this trend will continue.” There have been interesting growth rates on the deposit side and the investment side, according to Jaidah. Because the alternative solutions coming from conventional banking may not always compare better with Islamic banking products, investors are eager to put their money into Islamic products.
This growth has also yielded a certain optimism in Islamic banking circles and Jaidah relates that barring some countries which, due to regulation, do not allow Islamic banking, there are Muslim nations (both within and outside of the Middle East and some countries in South-East Asia) where the encouragement comes from the state and from the regulators.
“This makes them position Islamic banking to the forefront, as a result of which they introduce new laws and new standards in order to flexibly attract and grow the industry,” he says. “We have also seen it in pockets of Europe, which shows interest into this alternative shari’ah compliant mode of banking and the regulators are very interested to address these alternative solutions because a certain percentage of their population is Muslim.”
Indeed, new markets are continually opening up for Islamic banking and Jaidah predicts that North Africa is going to be one of the leading markets, with growth concentrated in Egypt and Tunisia, which will be the lead players, to be helped by Libya and Morocco in the later stages.
Commenting on business segmentation of these countries, Jaidah adds that on the wholesale side of the business, it is going to be a double-digit growth story that encapsulates the governments as well as semi-government initiatives and appetite. “The trend includes global banks, capable of providing the alternative structures and capable of distribution and giving the right solution needed by clients.”
Achievements and brand strength
On the wholesale side of the business sector, Jaidah feels that Deutsche Bank in the region has been a key player. “We have been a strong solutions provider for a lot of the sukuk issuing.” he say, explaining that Deutsche Bank conducted the Indonesian government sukuk, as well as some transactions within Saudi Arabia. Most of these deals have been exceptional in terms of size and tenor, says Jaidah. “We did a Qatar Islamic Bank (QIB) sukuk last year. We are in the second position on the league table in terms of size and diversity but if one looks at the global ranking, we are probably number one because we work on a global scale.”
“We are building on a base, we are not short term, we are not suitcase bankers. Having a Qatari head the business here adds a degree of comfort to a lot of clients.”
With the brand strength of Deutsche Bank, he adds, having an absolutely positive impact on the business in Qatar, Jaidah says that it is this partly that helps the bank position itself as more of a solution provider. “No matter what kind of alternative needs the client has in mind, we stand firmly committed to his diverse needs and try to meet each one of his needs with tailor-made deals.”
Explaining that for Islamic solutions, Deutsche Bank believes in unique, individual deals, Jaidah explains that one can copy and paste certain terms from agreements but there definitely are distinguished needs that a client might need addressing and he says, “we will need to provide a distinguished alternative solution for those needs.” The bank always believes in proactively interacting with its clients, he furthers, understanding their needs and providing either Islamic or conventional solutions, as per the client’s needs. “This ability, to me, gives a global bank a little bit of an edge which many institutions may not have.”
Prospects for infrastructure funding
With reported infrastructure projects in Qatar to the tune of USD44 billion in the pre-2022 World Cup period (QAR160.16 billion), Jaidah is of the opinion that Qatar will definitely need funding beyond what has been budgeted for. On the project level, Jaidah also predicts momentum.
“We foresee ourselves capable of providing the necessary alternative solutions, be it for the sovereign or for semi-sovereign entities that are going to address the infrastructure overhaul of Qatar,” he says. “On the institutional side, there will be several categories of players – financial institutions, corporate entities (both local and foreign players), international contracting firms – and the bank has strategies lined up for each category.”
Deutsche Bank is capable of providing the necessary solutions, having proved their capability with previous transactions. Jaidah continues that even if the bank were to stay away from the sovereign, “we will look at the capital requirements of the financial institutions and addressing their ability to book assets is going to be a way for us to enter the market and give the right solutions. We also feel that most of the banks are going to readdress their capital adequacy, looking at themselves being the fund providers for those projects going forward.”
“Irrespective of the needs the client has in mind, Deutsche Bank is committed to his diverse needs with tailor-made solutions.”
On the corporate side, Jaidah believes that there will be many foreign corporates working jointly with the local firms. The former will will require the support of foreign banks for formal guarantee, tender guarantee and trade finance activities. “We will collaborate with local banks while addressing local corporate needs and would definitely like to work with local banks when it comes to local corporate credit in the private sector.” says Jaidah. Deutsche Bank will also partner with international contracting firms and address their requirements when they think about joint ventures with Qatari firms. “We will work jointly with the local banks on a full cycle. We see the possibility of a
number of European firms coming and bidding for these projects, in the service and in the infrastructure sectors and we have good working relationships with the European firms.”
Financial trends and recession
In Europe, within the domain of private wealth, following the recession of 2008 and 2009, Jaidah thinks that mortgage finance has been a leading trend for a lot of the investors, who looked at Europe as an alternative acquisition opportunity on booking property. This trend has to be looked at in the backdrop of a sharp price decrease that certain markets have experienced.
“We are very well positioned to provide mortgage finance for private wealth when they conduct their personal acquisition, or even commercial acquisitions for the investment sector. I think that wealth management and initiating alternative solutions to assist families on their European assets is an issue that we can address pretty well.” Deutsche Bank, Jaidah adds, has been operating with high net worth families who have multiple geographic asset allocation that needed a global bank to address those solutions and give them the right advice.
Talking about the local trend in private wealth management, Jaidah says that it is natural for many wealthy families here to have strong interrelations with corporate organisations. “For instance, within Deutsche Bank, our private wealth management arm has always had an interesting interaction with our investment banking arm that brings huge value to our family clients.”
Jaidah continues that, as part of strategy, Deutsche Bank brings the platform of the bank’s corporate services to the client and provides them the necessary advisory on their corporate needs. “This has added tremendous value to our services,” he says. “We have looked at a wide variety of asset classes within the region, addressed funding against local equities in the Kuwaiti market, but we are not as competitive as the local banks there when it comes to funding against local assets. We look at our private wealth division as a solution beyond borders and that is what we are to them.”
Stability in business
In banking, as in any other business, success comes to those that have a longer tenure in the country. In Jaidah’s opinion, one of the most strategic things for Deutsche Bank is that they are here to stay. “We are building on a base, we are not short term, we are not suitcase bankers. Every single interaction that we have is registered and the regulators here monitor it. So the customers should be satisfied that we are genuine bankers on the ground conducting business. That to me is a big message to clients who want to establish personal relationships with the bank.”
Being a global bank, Deutsche Bank’s product offerings (with the exception of retail) compare favourably with any international bank, he says. “In wholesale banking, in investment banking, in private wealth management, we definitely are equal to all of the international banks and sometimes we go beyond the basics of many international players because of our long-term commitment to the region.”
Jaidah adds that the bank has the commitment globally to bring people from within and employ them to be the face of the bank in each country that it operates in. “The philosophy behind this hiring policy is that we would like to reflect that Deutsche Bank, irrespective of which country we are talking about, believes in being part of that society.” Having a Qatari head the business here adds a degree of comfort to a lot of clients who can expect a personal touch and transparency in dealings.”