Global Custodian Spring 2019 | Page 69

[ S U R V E Y | A G E N T market liquidity as well improve the capital strength and corporate governance of Kuwaiti banks. The exchange is now planning a venture capital market as a feeder for main market listings. HSBC Kuwait hosts one of the oldest stock markets in the Middle East, and HSBC can trace its lineage here back to at least 1959, three years before the exchange first opened for business. As befits a steady presence over such a long period, the overall average outcome for the bank is unchanged on a year ago. Value, the principal weakness in 2018, remains an issue. Though one client has a complaint (“Disclosure requirements of KYC/AML must be simplified”), it is neither an unusual one nor borne out by the scoring. B A N K S I N F R O N T I E R M A R K E T S ] securities depository (CSD) has expanded beyond securities safekeeping and settlement into asset servicing, mutual fund administration and repo. Two years ago, it bought the technol- ogy to build a central counterparty clearing house (CCP) from London-based GMEX Group. However, Midclear serves a local stock market whose performance more or less stood still for six years before declining sharply last year. Responses are too few for a rating. Standard Chartered Bank There is at last a credible challenger to the incumbent here, and one with equivalent geographical reach. Though SCB does not collect as many responses as its regional rival in Kuwait, the scores are outstanding in every field bar one, liquidity management. Citi The American bank opened for business here in 2011 to sup- port clients enticed by the liberalisation of the Kuwait Stock Exchange (it was re-branded as Boursa Kuwait in 2016 as part of the privatisation process, finally accomplished this year). Although investment opportunities here are burgeoning, Citi has not attracted enough responses to be assessed. Predictable strengths in asset safety, settlement and liquidity management are still visible.] First Abu Dhabi Bank The product of the 2016 merger between two banks in the United Arab Emirates, First Gulf Bank and National Bank of Abu Dhabi, First Abu Dhabi Bank is present in Kuwait. Users of its custody services, which are led by bankers with experience at the international custodians active in the Middle East, tend to buy on a regional basis, including the Kuwait Boursa. They reward the bank with exceptional scores. Unfortunately, there are not enough of them to warrant a rating. LEBANON After the bank-financed construction and real estate boom was brought to halt by the central bank at the end of 2017, economic growth faltered. The economy, and especially the public financ- es, are now staggering under the efflux of people from neigh- bouring Syria. The regional crisis has certainly not encouraged foreign investors, even of the intrepid kind, to increase their exposure to Lebanese assets. Midclear This year marks the 25th anniversary of the establishment by the Central Bank of Lebanon of the “custodian and clearing centre” for Lebanese – and, more recently – non-Lebanese financial assets. Financial services are an important source of activity here and, since its foundation in 1994, the central OMAN The Muscat Securities Market (MSM), which is in the MSCI Frontier Markets Index, has had a third dismal year in succes- sion. Last year was the worst since the commodity bust of 2011. Turnover was down too, squeezing settlement income. Like every hydrocarbon-based economy, Oman is subject to the tyr- anny of the oil price and has struggled to diversify. The public deficit is proving intractable and growth is not high. Foreign investment also tends to be direct and focused on the oil and gas sectors. HSBC The overall outcome for HSBC is little changed on a year ago. The strengths (settlement, asset servicing, client service) and weaknesses (price) are much the same too. But then it was more-of-the-same in the Oman stock market too. In fact, HSBC will have felt the pain in more ways than one since its local oper- ation – created in 2012 by the merger with Oman International Bank (OIB) – is itself listed on the MSM. Standard Chartered Bank By comparison with its international rival, Standard Chartered is a relative newcomer here – it can trace its history in Oman back only 50 years – and, although respondents indicate the bank can certainly settle their trades and collect their entitlements, they are not sufficient in number for the bank to be assessed properly as a sub-custodian in Muscat. First Abu Dhabi Bank The Oman arm of the 2017 merger between Abu Dhabi-based First Gulf Bank (FGB) and National Bank of Abu Dhabi (NBAD) Spring 2019 globalcustodian.com 69