GCC firms 'emerging stronger from downturn'
Manama, August 12, 2010
Many GCC companies are emerging from the global downturn in a strong competitive position as they are cash-rich, said a report.
Even at the height of the crisis, top companies on Dubai Financial Market, Abu Dhabi Securities Exchange and Nasdaq Dubai were sitting on a cash pile of $578 billion in 2009, said a Bain & Company report.
This spells good news for GCC banks whose relatively un-leveraged balanced sheets put them in a position to support and grow with the region's consumers and businesses.
“The competition will be stiff as financial institutions in the region race to achieve the scale and breadth required of market leaders,” the report said.
'Mergers and acquisitions are one path to realising greater economies of scale and expanding into attractive business lines still nascent in the region, such as asset management, investment banking and private wealth management.'
The firm analysed 24,000-plus transactions between 1996 and 2006 - which saw the Asian currency crises and global recession. The analysis shows that acquisitions completed during or just after the 2001-02 recession generated almost triple the excess returns of those made during the preceding boom years. – TradeArabia News Service