Number of banks in Arab world too high, experts say
The number of Arab banks in the world’s top 1,000 banks for the current year stands at 84, which is 13 higher than last year’s figure of 77. The capital of these Arab banks, however, amounts to a mere three percent of the total capital of the 1,000 banks, and assets account for only two percent, according to Al-Hayat newspaper.
Currently, there are 450 banks in the Middle East, three-fold higher than the amount needed according to George Kardouche, chief executive of the Arab Bankers Association (ABA). In the United Arab Emirates alone there are 20 national banks and 27 foreign banks, with 253 branches and 110 branches respectively.
Mergers between banks is crucial in order to maintain and increase profitability, added Kardouche. The problem, however, is that banks refrain from merging as managers fear the move is seen as a weakness on the part of the bank, thus damaging its reputation. Just recently, plans to merge National Bank of Dubai and Emirates Bank International (EBI) was left uncompleted.
Several banks, however, believe that the number of UAE banks is not excessive in view of the recent surge in the growth of businesses. According to experts in these banks, cost-income ratios are still favourable and the net return on capital is rising. — (Mena Report)
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