Dubai chamber mulls Dubai-Hamburg financial sector cooperation
Sunday, 21 October 2007
DUBAI, Oct 20: The Dubai Chamber of Commerce and Industry (DCCI) is recommending a formal cooperation between Dubai Financial Market and Hamburg Stock Exchange, saying an agreement would help companies from both sides significantly, according to Internet.
"Allowing companies to be listed in both markets is also another possibility," DCCI mentioned in a 10-page paper highlighting the opportunities in financial and commodities markets in Dubai and the German city of Hamburg.
In "A Study on the Development Aspects of Banking & Finance Sector in Dubai and Hamburg", DCCI said the two cities may explore opportunities outside of such direct market access as financing and joint ventures when it comes to banking and insurance sectors.
It noted that the two sectors in Dubai and the whole UAE are saturated, thus attracting German banks and insurance companies to Dubai "may not be possible". But it stressed that collaboration between banks and insurers from the two cities offers tremendous opportunities.
A formal deal is likewise feasible between Dubai Multi Commodities Centre (DMCC) and Hamburg Grain Exchange (HGE), the study said, as DCCI is preparing to host the Dubai-Hamburg Business Forum Tuesday and Wednesday.
It said the two commodities exchanges offer different products, but DMCC can offer Hamburg companies access to the Middle East market while HGE can help Dubai companies wanting to tap the European market.
"This can be done by expanding the commodities offered by each exchange to include those of the other," it said. "Finally, gathering the financial and commodities exchanges of both cities in various joint conferences and seminars would unmask additional possible cooperation fields."
The study said that Dubai's banking sector, one of the most developed and least monopolised in the region, is the backbone of its financial sector, which last year accounted for 10 per cent of the city's nominal GDP (gross domestic product not adjusted for inflation).
Until late 2006, majority of the UAE's 46 banks - 21 national and 25 foreign - had established either headquarters or branches in Dubai.
It also noted that this year saw a growing demand for Islamic banking, thus there are now six national banks offering Shariah-compliant services to 1.30 million people in Dubai or the more than four million residents across the UAE.
Despite the country being over-banked, the banking sector still has attractive profit indicators, enough reason for banks in Dubai and Hamburg to collaborate in providing better, easier and more services to clients.
"This could be achieved by signing an agreement for providing mutual financial services," the study said. "Here we recommend the preparation of specialised seminars that encompass both Dubai and Hamburg banks to explore further potential areas of cooperation."
It said that in 2005 the return on equity (rate of return on the ownership interest) for local banks was 22 per cent compared to 16 per cent for foreign banks while return on assets (how much earnings are derived from each asset) reached 3.2 per cent and 1.7 per cent respectively.
It added that sub-contracting can be an "interesting" collaboration between Dubai and Hamburg insurers, as the growing number of local residents and expatriates here have driven up demand for personal cover including health, motor, home and travel insurance.
The local insurance business has been growing at 15-20 per cent per annum due to large investments in infrastructure and increased trade transactions with regional and international companies, the study said. And the demand for health insurance, which was recently made compulsory, will increase to 13 per cent its share from among all types of insurance policies.
"Allowing companies to be listed in both markets is also another possibility," DCCI mentioned in a 10-page paper highlighting the opportunities in financial and commodities markets in Dubai and the German city of Hamburg.
In "A Study on the Development Aspects of Banking & Finance Sector in Dubai and Hamburg", DCCI said the two cities may explore opportunities outside of such direct market access as financing and joint ventures when it comes to banking and insurance sectors.
It noted that the two sectors in Dubai and the whole UAE are saturated, thus attracting German banks and insurance companies to Dubai "may not be possible". But it stressed that collaboration between banks and insurers from the two cities offers tremendous opportunities.
A formal deal is likewise feasible between Dubai Multi Commodities Centre (DMCC) and Hamburg Grain Exchange (HGE), the study said, as DCCI is preparing to host the Dubai-Hamburg Business Forum Tuesday and Wednesday.
It said the two commodities exchanges offer different products, but DMCC can offer Hamburg companies access to the Middle East market while HGE can help Dubai companies wanting to tap the European market.
"This can be done by expanding the commodities offered by each exchange to include those of the other," it said. "Finally, gathering the financial and commodities exchanges of both cities in various joint conferences and seminars would unmask additional possible cooperation fields."
The study said that Dubai's banking sector, one of the most developed and least monopolised in the region, is the backbone of its financial sector, which last year accounted for 10 per cent of the city's nominal GDP (gross domestic product not adjusted for inflation).
Until late 2006, majority of the UAE's 46 banks - 21 national and 25 foreign - had established either headquarters or branches in Dubai.
It also noted that this year saw a growing demand for Islamic banking, thus there are now six national banks offering Shariah-compliant services to 1.30 million people in Dubai or the more than four million residents across the UAE.
Despite the country being over-banked, the banking sector still has attractive profit indicators, enough reason for banks in Dubai and Hamburg to collaborate in providing better, easier and more services to clients.
"This could be achieved by signing an agreement for providing mutual financial services," the study said. "Here we recommend the preparation of specialised seminars that encompass both Dubai and Hamburg banks to explore further potential areas of cooperation."
It said that in 2005 the return on equity (rate of return on the ownership interest) for local banks was 22 per cent compared to 16 per cent for foreign banks while return on assets (how much earnings are derived from each asset) reached 3.2 per cent and 1.7 per cent respectively.
It added that sub-contracting can be an "interesting" collaboration between Dubai and Hamburg insurers, as the growing number of local residents and expatriates here have driven up demand for personal cover including health, motor, home and travel insurance.
The local insurance business has been growing at 15-20 per cent per annum due to large investments in infrastructure and increased trade transactions with regional and international companies, the study said. And the demand for health insurance, which was recently made compulsory, will increase to 13 per cent its share from among all types of insurance policies.