An interview with Abdullah Abdulwali Nasher Banking more complex in post 9/11 world [Archives:2002/52/Business & Economy]

December 23 2002

The International Bank of Yemeni is a monetary organization that has achieved great success and improvement since its establishment in 1979 with a capital of YR 1 billion
Abdullah Abdulwali Nasher head of the administration board, spoke to Mohammed al-Masani of the Yemen Times about the bank’s experience in facing the financial and monetary challenges in Yemen while maintaining the well respected reputation of the bank.
Q. How do you evaluate the progress of the Yemen International Bank during the past few years?
A. The most important aspect of the bank’s policies which we maintained in the past and still preserve today is customer relations management, through providing the best high-level service to all our clients, as well as creating cooperative relations with different banks in Yemen and outside.
The bank has also played a significant role in supporting the Bank Committee and its activities. This committee is one of those civil society organizations, and through it a lot can be achieved in the monetary domain.
As for our accomplishments recently, our premises are counted as among the best. Considering externally, its beautiful architecture and size, which made it a landmark in the city, and internally the highly advanced banking instruments and machines it is equipped with.
The bank now provides on-line services and phone banking services. These, along with standard banking services provide our customers with quick, efficient and reliable computerized services.
In fact, we recently are going to include pipeline service with the latest technologies and equipment, and linking all these facilities in all our branches with a central database in order to facilitate and enhance customer transactions and services.
Another accomplishment credited to the bank is the automation of the working procedures and the enhancement of abilities and skills of our staff through proper training by experts. The bank has implemented system and process guides that was designed by KPMG-Hazem Hassan, being another achievement of the bank and a step forward towards the future.
Q. What are the challenges that face investment activities in Yemen?
A. The government has put in place legislation and rules that govern the monetary market and allow investment in the country. This encourages investors on the national, regional and international levels to employ their money in projects of various types.
The government also in its strategic development plan focused on investment activities where it planned an investment law project that eliminates all the shortcomings of the past along with granting investors many privileges, by this, reflecting the state’s good will and positive attitude towards investment in Yemen.
Nonetheless, most of the challenges that face the monetary market are related to the existing economic down phase. And this requires an economic and financial remedy through increasing expenditure.
Also, most banks refrain from granting loans or facilitating them due to the increasing indebtedness of clients, and not being able to retrieve these debts because of bias judiciary against the banks. Hence, most banks have preferred to invest their money in treasury permits rather than lend to clients.
Therefore, updating and fixing the law is a vital requirement in improving investment and should utilize more attention from the state. The monetary field in spite of the clear improvements still suffers from unfair proceedings by criminal, civil, and commercial courts, which influence the national economy negatively.
In addition, there is the great challenge of weak and inefficient management in the private, government and mixed sectors. The weakness of such management forms a great obstacle against investors and investment in the country.
Q. What does the term “Black List” that commercial banks and others publish mean? And how do you deal with clients’ loans and other services you provide clients?
A. After great discussions and reference to other countries’ experiences, active banks in Yemen have resorted to what was named the “Bad Loans List”. The purpose of this list is to enable banks to retrieve their rights from those clients who fail to fulfill their obligations. It is an executive method with a managerial aspect designed to avoid going to courts as much as possible.
The essence of this concept is to apply pressure on clients to pay their debts, especially that most such clients are able to do so yet opt not to betting on the court’s statements in the case of a court dispute with the bank. The method comprises of depriving those clients from dealing with any bank in the country, of course, unless his name has been crossed from the list. And since it is an imperative necessity to deal with a commercial bank for such clients, they eventually yield.
Actually, this method has proved to be very useful. And we in the Yemeni International Bank deal with the Bad Loans List in a proper and correct way. We are committed to our agreements with other banks and refrain from dealing with any party which is in the list in any matter.
As to how we act with loans, we must say that at this stage we are very careful in our loan dealing and we mostly operate with a predefined set of trustworthy clients. Hence most of our income is invested in treasury permits. This is not only our method, but most of the active banks in Yemen do the same. It is true that by this, banks in an indirect way contribute in the downfall of economy as they do not promote investments and projects in any sector, whether industrial, commercial, agricultural, services or tourism. Such investments could have improved the national income level and present opportunities for employment. However, we have our strong reasons for taking this manner of action among which, most importantly is the deficiency of the judiciary system.
Q. What are the challenges that Yemeni banks face, especially in present circumstances?
A. It is said that 9/11 was a turning point in the present history of the world, and most importantly, the international war against terrorism began. As a result of this, and combating money laundry as well, many obligations arose on banks.
As an example, Basel Committee on Banking Supervision had set a number of principles governing banking deals such setting up the basis of “Monetary Awareness” which concentrates on customer satisfaction and legal stand checking. These principles were referred to as “Customer due Diligence for Banks” from which a set of rules called “Know Your Customer” has emerged. It is these principles and rules which Yemeni banks should comply with in this era of globalization and information explosion.
Such process requires high level expertise and financial cadre, and this on its own is a great challenge facing Yemeni banks today. Especially that our Arabic and Islamic region has clearly become targeted. As a consequence, we need to avoid being in a position of suspicion and the Yemeni citizen needs to be aware of the needs of his homeland without being radical or engrossing in religious extremes.
Globalization forms a great challenge facing Yemeni banks, and so the standard and efficiency of our manpower must be improved. Simultaneously updating and enhancing monetary systems and equipment causing the banking sector in Yemen to be in place with the giant technology steps. Yemeni banks must take measures to merge in the future with the international banks in order to be able to face and deal with the international competition, which will increase after year 2005.
Q. What are your other investment projects in the region and your plans for future expanding?
A. We have set in place a strategy at the beginning of my taking charge of the bank. And we have transformed this strategy into a number of action plans based on the environment, and on human, material and technical resources research studies. In fact we have already started renovating the bank automatically in order to advance pays system and provide fast and efficient services to our clients.
The bank’s practical plans target growth and expansion, and speed in delivering satisfactory services to clients. And this is what we aim at achieving in the future through setting these plans and practical steps. We have started executing these plans and the process is still continuing.
Q. What are the negative impacts of 9/11 on the bank and money transfers?
A. In general, negative consequences of the attack on the United States of America hurt the global economy, and the Arab and Islamic countries in particular, among which, naturally Yemen is one. As a result of that event, banking and monetary procedures have become much more complicated, and there are consequence of the war against terrorism and the money laundering agenda as well.
The Arab citizen has become a source of doubt and suspicion and invariably, all his dealings required more careful assessment and investigation. Due to this, many innocent people have had to pay the price, and the banking transactions have become much more complicated, hence slower. The problem is that we depend to a great extent on migrants monetary transactions for our local income. These transactions have declined since 9/11.
Q. How do you rate the Central Banks policy in dealing with other banks? How do you think it should be?
A. The Central Bank’s policy with banks is good and is built on a foundation of cooperation and synchronization. The Central Bank works in unity with other banks to serve the economic purposes of the state. Yet we hope that the Yemeni Central Bank pays more efforts to support the growing and enhancements of the Yemeni banks according to a predefined plan that aims at serving the general welfare.