THE RETURN OF RISK?

UAE, Dubai 2013 | FINANCE | INTERVIEW

TBY talks to John Vitalo, CEO Middle East & North Africa at Barclays PLC, on the bank's branding, risk appetite in Dubai, and the MENA region.

John Vitalo
BIOGRAPHY
John Vitalo joined Barclays in 2002 as the COO of the Emerging Markets business within the Investment Bank in London. In 2005, he was appointed CEO of ABSA Capital, Barclays’ affiliate in South Africa. He was appointed Chief Executive of Barclays Investment Banking and Investment Management division in the Middle East in May 2009. He has a degree in Business Administration from Georgetown University in Washington, DC, and prior to Barclays held several senior positions at Credit Suisse First Boston in New York. He additionally worked in Mergers & Acquisitions at Gleacher & Co. and in private equity at Morgan Stanley, both in New York.

What are Barclays' growth prospects in MENA?

I am cautiously optimistic, specifically about the investment banking sector in the Middle East region. We saw the trough in 2011, and the investment banking wallet in 2012 was definitely higher than it was in 2011. We experienced a good start to 2013, which makes me cautiously optimistic that we will extend our growth period following the 2011 low. I am slightly more bullish about the growth of profit pools for private banking in the region. There is new wealth being created at all levels of the population and the economy. In the Middle East, a large segment of the population qualifies for the affluent or private banking proposition, which translates into several market opportunities for our Wealth and Investment Management. Furthermore, I am more optimistic about our Corporate Banking business given the continuing trend of GCC governments investing within their own economies with the objective of diversifying into non-hydrocarbon related sectors.

Do you think an appetite for high-risk investment has returned to Dubai?

I would not say that a high-risk investment appetite has returned. Although this is a great commercial climate—the economy is growing, people are doing business, and investments are taking place—I would not characterize it as the same high-risk environment that we experienced prior to 2008, when people would throw all caution to the wind. I believe we are back in an environment where it is important to be invested. In the aftermath of the financial crisis, investors were very risk-averse, which led the majority of them to sit on the sidelines, mainly in cash. However, the risk appetite is gradually returning. This does not mean that investors are being more aggressive; it means that they are assessing their risk and return objectives and aligning them to their financial constraints, while taking into account their financial personality. As a result, we are witnessing a growing trend in balanced and healthy portfolios.

Would you advise people to invest in MENA capital markets right now?

The MENA region, particularly the GCC, still offers some attractive investment opportunities. As some large global institutions may be reluctant to invest in the region due to their perception toward equity market size and depth, as well high geo-political risk, the MENA region represents a good geographic diversification to global investments, complementing positions in emerging markets. The MENA region also has an active market for bonds issued by corporates, sovereigns, government-related enterprises, and banks, where there is decent value that provides institutions with the ability to take good positions while also benefiting from strong credit fundamentals.

How important are emerging markets to Barclays?

Emerging markets are very important to our clients globally; that means emerging markets are also important to us. Considering trade and investment flows today, we see large movements from the Arabian Peninsula northward through Turkey to the former Soviet Union, westward to North Africa, south into Africa, and east into the Indian Subcontinent and beyond. The Arabian Peninsula sits on the crossroads of five of the world's eight largest trade corridors and, hence, is at the center of a significant proportion of global trade and investment flows, especially those taking place among emerging markets. Furthermore, the world's major sovereign wealth funds are clustered in the Arabian Peninsula and Asia. This region is vital to multinational clients, especially to corporations in the US, which still has the world's largest investment banking wallet.