French-based Banque SBA was founded in 1978 and is considered a major player in the banking sector within the Middle East particularly in the areas of trade finance and project management. Mr. Adnan Nuwayhed, Manager of Banque SBA in Limassol, discussed the company’s goals and developments towards the Cypriot financial sector and foreign investment.

How has the bank has developed over the years?

Banque SBA S.A. was established in Limassol, Cyprus in 1986 and today is considered the oldest established international bank in Cyprus among the other 26 international banks. Banque SBA S.A. is specialized in trade finance operations and in medium-size project financing whereby our employees have gained remarkable expertise in serving and facilitating the said operations.

As a result of that, the financial position of our bank has strengthened to reach approximately a Total Asset of €300 million today. Similarly, our profitability has always shown a gradual increase over the years especially and remarkably during the difficult years 2013 and 2014.

Our clientele base has historically been established abroad and is nowadays concentrated in Syria, Egypt, Saudi Arabia and Lebanon in addition to our Cypriot clientele.

The progress and success of Banque SBA S.A. in Cyprus is a result of the dynamic team serving the branch, the diversified and loyal clientele base as well as the continuous and strong support received from our Management.

What is your opinion about the new legislation that deals with NPLs?

This is a step forward towards assisting the banking sector. When a loans portfolio consists of 50% Non-Performing Loans, you definitely require legislation to effectively deal with this crucial matter. We consider the government as a partner which will help the banking sector to resolve this issue. Nevertheless, people need time to adapt to the new financial situation. The problem also needs time to gradually be sorted out and then, at some point, it will be behind us. People should not assume that we will overcome the financial crisis in a couple of years. All the signals are positive but we need time to recover, which in my opinion may take between six and eight years.

In August 2008, Europe and the USA were first confronted with the financial crisis. Only Germany was the exception at that time. Greece, Italy, Spain, Portugal and even France are still facing problems and the USA has only recently started to show signs of recovery despite its huge and diversified economy.

The Cyprus financial crisis is somewhat different, due to the size of its economy and the nature of its variables. I believe that it will take some time to deal with our sensitive financial position.

What is your view of Cypriot Entrepreneurship?

I was among the delegates who accompanied President Anastasiades to Doha last year. We went there as delegates because we have the experience of operating and working with the Arab countries. Since we operate in Cyprus, we considered it a good opportunity to accommodate Cypriot businesses with the required facilities. Given that these companies would take up certain projects in Qatar, it would be a good start for us to finance them from Cyprus. We were approached by a number of companies ready to handle some projects with a partnership in Doha. The observation was that these companies were highly indebted, which was a serious obstacle for our involvement. One of the main characteristics observed in Cypriot companies is this high exposure and indebtedness that prevents banks from providing the necessary facilities and guarantees. Nonetheless, we have made some contributions to companies in the maritime sector. There are a number of Cypriot companies that have bought vessels where we financed them up to 30%-40% of the vessel value.

Who should give these guarantees to companies?

Although it is not the conventional school of thought, what is really required is a government institution in coordination with the banking sector that would provide Cypriot businesses with the necessary guarantees in order to operate projects in foreign countries. This can even be used for local expansion as well.

Banks cannot take such a risk alone. This example exists in Lebanon; there is a facility called “Kafalat” which provides all businesses with guarantees in order for them to expand. We should not actually copy this type of institution; we should create one according to our needs.

This idea has to be sorted out between the Government and the banking sector, which will provide a significant support to the national economy.

Apart from a new government institution, in what other ways may the country’s financial sector be enhanced, in your opinion?

In February 2014, the banks’ associations in Cyprus (local and international) invited members of the Lebanese banking sector and the Governor of the Central Bank of Lebanon to Cyprus.  We organised a significant Cypriot-Lebanese banking day with the intention of encouraging a new partnership and cooperation between the Cypriot and Lebanese banking sectors and to encourage the Lebanese banks that operate locally to be more involved in the local Cyprus market and to finance the international trade of Cyprus, particularly with the Arab world.

We realised that Cypriot businesses needed guarantees in order to execute the projects outside Cyprus and that Lebanese banks have the potential to provide them with these facilities. The purpose of this conference was to introduce new partners to the Cypriot banks. It is essential to have partners all over the world. It is all about exchange of expertise and capital resourcing. We made an effort to attract new allies in order to progress and boost the Cyprus economy and the banking sector. We believe that new partners should work with Cypriot banks to enhance their operations, about which we held an extensive discussion on how to build these relations. However, I believe that in February 2014, the Cypriot banking sector was not ready to utilize the event and engage in new partnerships with the Lebanese banks mostly due to the position of Cypriot banks at that time.

In what ways can Cyprus attract investment?

It is worth noting that the Cypriot Government is doing its best to attract foreign investment. The President, accompanied by commercial delegates, has visited a number of countries including Bahrain, Kuwait, Qatar and Dubai.

The Ministry of Finance has also worked on lifting restrictive measures to promote confidence and trust in the local economy. Cyprus is not only an attractive country for investment but it is a strong base for successful investment. However, what we really need is time. I can assure you that a number of firms were looking to invest in Cyprus but they had to make sure that the economic and financial situation were stable first. We now have a stable banking sector compared to a year ago as there are no liquidity or equity issues and the international banking relations of Cyprus are improving. Frankly speaking, I expect the Greek crisis to enhance the position of Cyprus as an attractive country for investment.

On the other hand, I am well informed that a Lebanese group (Iktisad Wal Amaal) is preparing for an important conference during the first half of 2016 which will gather huge number of potential Arab investors in Limassol for the purpose of promoting investment in Cyprus.

Do you have any plans to expand in Cyprus?

We are seriously thinking of expanding our banking operations in Cyprus. We are continuously strengthening our presence locally in order to better and further support trade finance operations in Cyprus. This is our major domain and target, now that the economic situation looks more encouraging, since the Central Bank has reduced interest rates and the restrictive measures have been lifted.

We are mainly trying to expand our market share in the trade finance domain because this is where we are specialised.

In addition to the above, we feel it is our duty to promote Cyprus as a centre of investment and services and to deploy all our efforts to boost and enhance the Cyprus economy.