Royal Bank of Scotland expects revenue in Gulf Arab countries to double in two years, a senior executive said on Tuesday, as petrodollars fuel growth in the region and swell the coffers of its sovereign wealth funds.
The group has beefed up staffing in its Middle East operations, most of which it acquired through its 2007 takeover of Dutch bank ABN AMRO, even as banks in London and New York slash thousands of jobs due to the credit crunch.
Colin Macdonald, head of the Middle East for RBS, Britain's second-biggest bank, said the division had roughly doubled profit over the past two years despite adding 1,500 staff to reach 2,700 over the past three years.
"I don't expect any significant change" to revenue growth, he told Reuters on the sidelines of a news conference. "I do expect some slowing in some areas of the business but others will be growing."
The sunny Gulf outlook stands in sharp contrast to the outlook elsewhere as the credit crunch causes billions in losses. RBS itself posted one of the biggest losses in UK corporate history in August after a 5.9 billion pound writedown on risky assets.
RBS aims to expand its Gulf footprint with operations in retail banking, wealth management and wholesale financial services. Serving sovereign wealth funds will also be a key part of the group's business.
"There is a significant increase in resources dedicated to clients in the Middle East and that includes sovereign wealth funds," Macdonald said.
Sovereign wealth funds (SWFs) such as the Kuwait Investment Authority and the Abu Dhabi Investment Authority are becoming increasingly important clients for banks like RBS and already form part of the group's client base, Macdonald said.
The value of SWFs has increased to between $2 trillion and $3 trillion, analysts estimate, due to record energy profits booked by governments in the region.
Many funds are becoming key investors in some of the Western banks who were forced to raise capital to cover losses stemming from the subprime crisis.
