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Middle East Banking Insights and Experiences

There I was working away quite happily in a Swiss Bank in London when I got a phone call. Someone somewhere knew that I had dealt a lot with Oil Letters of Credit and would I be interested in working overseas where the oil came from? Oil comes from many places but the place they wanted me for was Saudi Arabia. Oh, and my wife could come too… if she wanted.

Yes, I was being head hunted and although it was very flattering it wasn’t somewhere high profile like New York or Paris, but more exotically Al Khobar in Saudi Arabia.

Now try looking for that on a map, go to the Gulf, look for the island of Bahrain (half way up, on the left hand side) and next to it is Al Khobar, also tripled with Dammam and Dhahran. The distinction is that Dammam is where the Arab community lived, Al Khobar was where the majority of the Western and Asian population lived and Dhahran was a completely closed city where the Americans (mainly) and employees of Saudi Aramco, the oil giant, lived. It was like a city in Little America and unlike the rest of Saudi it has a cinema and a theatre, things which are totally banned in Saudi. This was a totally cosmopolitan area, and I was told the curry was good too.

My boss when he interviewed me called the place where I was to work, the Kingdom of Saudi Arabia, and believe me what I saw and learnt there is not taught at any school or college.

I arrived one evening after saying goodbye to my family at the airport, as I was going out for a short while, 3 months to see if I liked it, and they liked me. After being in an air conditioned airport for 2 hours, and air conditioned plane for 7 hours you arrive at the magnificent Riyadh airport, marble and chandeliers everywhere, through a tunnel from the plane. I immediately felt as though something was different yet could not quite put my finger on it. Then I stumbled and put my hand on the wall of the tunnel and it was HOT, very hot. That was the difference. The tunnel had been sitting out in the blinding sun all day long and it was hot. I had not only put my finger on what was different but my hand, and I had the scars to prove it!!

After an interminable time while they unpacked all my clothes just to see that I was not carrying drugs, booze, racy novels etc. I was allowed in to be met by my interviewers from London and my new boss, an Egyptian who had lived in London for 30 years but had in fact trained in Saudi.

On the way in to Riyadh, I got the first taste of driving in the Middle East, and believe me that term is loosely applied to what happens on the roads out there. I could write a novel on my driving experiences so we will leave that for later. Funnily enough as we were approaching the City a red Ferrari zoomed passed us and I quipped to my companions that “I bet you get a lot of these here”, to which they replied it was the first they had seen. And funnily enough I never did see another all the time I was there. Oh, I did see the Ferrari again, about two miles further on, wrapped around a lamp post, the driver and passenger were OK just the car damaged, but as I said, driving can be a nightmare.

Straight to work the next day to meet all the staff and trying to master all the names, the nationality mix was Indians, Pakistanis, Gulf Arabs, Egyptians, Moroccans and Filipinos. I was encouraged.

I was told straight away that instead of two weeks orientation in Riyadh and then off to Khobar I was required to go to Jeddah on the West coast the very next day. They had received a VERY large Letter of Credit which was back to backed by 50 (yes, 50!) smaller letters of Credit. I was required to handle it as they did not think that the branch staff were adequately trained in this type of transaction. What astounded me was the sheer size of the transaction, a staggering 130 Million US Dollars.

Strangely enough the beneficiary of the 50 Letters of Credit is a name which is very well known now, but then just another name that I had to get my tongue around.

Everything in the Gulf is personal.

You do not meet say, the Export Manager, you meet the founder/chairman of the company and he introduces you to his Export Manager. This is an honour and a pleasure that he has taken the time to see you. I might add that he and his sons that I met were very charming and gracious hosts and only interested in business and the building to which the large Letter of Credit related. That was a hospital for Saudi Arabia and was to have all the latest apparatus and equipment to hand. I was considered an honour an indeed it was to be charged with the management of payment and financing such prestigious transactions.

My mentor in the Bank was a very old Saudi gentleman, he did not need to work but did so as he was one of the first members of the bank when it was founded and had worked for them for 45 years, and so felt it was his duty to pass on all he knew to the newcomer, me. He himself was over 65 but he did not know exactly how old, although he had just married his second wife. Although they are allowed four, he told me he could just cope with the two. Strangely enough neither wife had met the other yet, although they knew of their existence. I was amused yet confused by this but it all seemed quite normal to my colleagues. After some time I became familiar with and gained an appreciation and understanding of many local customs and traditions.

When my mentor started work, he was paid in gold sovereigns and pieces of silver as Saudi Arabia did not then have it’s own currency. He was a charming and knowledgeable man with many many years of experience.. He retired a couple of months later but as a mark of the respect his retirement party was held in the Head Office in Riyadh hosted by the Chairman and some Government officials. I gained a lot of valuable insights and knowledge from this gentleman who was more than willing to share his experience with his new ‘Western’ colleague.

One afternoon I was approached by the operations manager who stated that as my department had done so well that month the bank was going to hold a lamb banquet on the beach and as I was the “honoured” guest and only Westerner I was offered one of the sheep’s eyes. I replied “I will if you will” which raised howls of laughter from all the other staff who were in on this regular joke for unsuspecting ‘Westerners’. Needless to say I was not expected to eat it but my instant reply earned admiration from my staff for not flinching at the ‘exotic offer’. Things were looking up.

I managed a big department in Jeddah. It is on the Red Sea and the major sea port for Saudi Arabia. We processed about 50 Letters of Credit a day plus over 70 collections. We worked very closely with our customers in respect of all documentary products . This close collaboration was a great sign of trust to our valued customers. During my time, all documents were honoured without delay within a ‘reasonable time’ to the ultimage satisfaction of beneficiaries and applicants alike. The integrity of the Documentary Credit was always considered of paramount importance.

On the day I received my first statement for my own personal bank account I found a credit item on there called “special commission”. I asked my mentor what this was. He replied “As we are an Islamic country and usury is against the Koran we call it ‘special commission’. That way everyone is happy and we do not offend”.

The hours that we worked were different as well, from 7 in the morning until 1 p.m. and then from 5-7.30 in the evening six days a week. This certainly disrupts the day of the individual who is familiar with western banking hours. After the long “siesta” in the afternoon it is very difficult to drag yourself back to the office. Friday was our day off. With this day off and the time difference one had to think very carefully concerning value dates applied to overseas payments. Many customers were therefore confused that their accounts were debited on Thursday with value date Monday, explanations were the norm of my working day. Customers greatly valued such personal interaction.

Another interesting aspect of my Middle East Banking experience was when a mutual fund was launched but unfortunately due to the situation in the stock market it lost value. After a couple of months a prominent customer (a sheik in fact) came to the bank and wanted to cash in his mutual fund. When he was told the surrender value which was less than his initial investment, he was shocked and stated “I want to see the manager, I gave you X amount of money and that is what I want back”. I did not envy the manager of the mutual fund department that was directed to provide an explanation. The end result was that the sheik got the full amount back and the bank avoided mutual funds for some time afterwards.

All in all I can say that this was a valuable and positive experience that I shall never forget; I learnt a lot, not only about banking in the Middle East, but more so, I gained a personal and valuable insight into Saudi culture, traditions and business practices.

John Coles
Senior Partner
Coles Consultancy Services

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