Eirvin Knox: Opportunity Knox

Banks across the region are making vast amounts of profit from the huge growth in real estate, newly liberalised property laws and an unprecedented demand for retail space and consumer spending. Eirvin Knox, CEO of Abu Dhabi Commercial Bank, tells James Bennett how he has taken the finance house to close to the top spot in only two years.

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By  James Bennett Published  June 6, 2006

He may, as he says reclining back in a white, leather, designer armchair, be “very straightforward” and “very American”, but Eirvin Knox has achieved spectacular results since becoming the chief executive of Abu Dhabi Commercial Bank (ADCB) in November 2003.

Since Knox took control of the purse strings the bank has experienced record results and become one of the UAE’s, and the region’s, most successful and fastest growing local financial institutions.

Over the last two years, ADCB’s net profits have grown by an enormous 233%, its customers climbed from 75,000 to 150,000 in 12 months with an end 2006 target of 225,000, while its share price has risen by a staggering 362%. Its net profit during the first quarter of 2006 also revealed record results of AED623 million compared to AED221 million for the same period 12 months ago.

Impressive reading, but the bank is not only doing well on the balance sheet, it is also progressing faster than the large majority of its competitors in the amount of products it offers to its customers, moving from high level, large-scale infrastructure and property deals such as Abu Dhabi’s Industrial City (and potentially the emirate’s enormous 12-year Saadiyat Island project) to ‘selling’ 6000 credit cards a month.

“A recent board meeting also approved a motion to open up 25% of ADCB’s stock to foreign ownership,” Knox nods, signalling that things at the bank are moving just as he planned.

This may all sound like hard work but Knox says he is having the most fun he’s ever had during his 35-year career. “I’ve been in banking all my life, and yes that’s a good thing, it’s been good to me,” he says. “I’ve been in Abu Dhabi for two and a half years, worked 25 years outside of the US in Holland, Italy, Austalia, Thailand and the Philippines and am having a great time.”

Previously to working in the heart of the UAE’s capital, Knox also achieved exceptional results as chief executive of the Alahli Bank of Kuwait where he sat on top of the corporate tree for three and a half years. During his tenure, net profits rose by two and a half times and the bank’s market capitalisation increased by just over three times – another impressive set of results.

Knox, however, refuses to accept that his achievements at ADCB are purely down to personal talent and says that a combination of the strength and passion of the senior management team to be a successful part of Abu Dhabi’s “growth story”, as well as positive market reaction, have been the major factors behind the bank’s rapid progression.

“The growth of the bank has been phenomenal. It’s not down to just one individual, there was a plan and we’ve executed it well, but the market itself has been much more positive than we had planned.”

He may be partly right but his wealth of experience and broad-based banking knowledge has done ADCB no harm at all.

Formed in 1985, the bank steadily performed until a restructuring strategy was put forward in 2003 and Knox was installed to implement the ‘masterplan’. “When I first came to the bank the board and the chairman had already carried out a strategy review and made some decisions on how they wanted to implement those and the way they wanted the bank to be restructured,” he says.

“I was hired to implement that. When I came the masterplan was there but I wanted to broaden the product range and bring the bank in line with the vision of Abu Dhabi.”

Knox explains that he spent a large portion of his time working on the infrastructure and expansion of products, and that the only way to bring new products to the market was to hire the best local and international talent available. “It was a tough task at first. I’ve worked in several locations and it’s difficult to identify the right people.

“Sometimes people may have the right skills and the right background, but can’t adjust into an entrepreneurial environment, which is what I wanted to introduce and maintain.”

The other deal Knox cites as contributing to the bank’s modern financial facelift was a duo of joint investment banking ventures between ADCB and Australian finance house Macquarie. The first move came in the form of a joint venture between ADCB and Macquarie’s treasury and commodities division bringing with it the benefits of Macquarie’s expertise in treasury and commodities, products, staff and resources to ADCB’s extensive franchise in the Gulf.

The second installment of what Knox calls one of the “quickest deals he’s ever made” is entitled ADCB Macquarie corporate finance and is built around the existing corporate finance capabilities of both banks, particularly in the infrastructure sector. It provides mergers and acquisitions and project finance advisory to clients in the UAE, GCC and the Middle East and North Africa. ADCB holds the majority ownership (51%) with Macquarie Middle East Holdings as the joint venture partner.

Following the deal, the Australian-Gulf partnership almost immediately secured its first mandate, advising on the development of the infrastructure for the second phase of the Industrial City of Abu Dhabi – one of the largest projects the emirate has underway.

Then came a sudden flow of even more finance deals. Under the ADCB board and its chairman and member of Abu Dhabi’s ruling family, HE Saeed Mubarak Rashid Al Hajeri, and Knox’s guidance, ADCB and the Higher Corporation for Specialised Zones, introduced a US $272 million ten-year closed end fund, entitled the Zones Corp Infrastructure Fund, which will invest in the emirate’s industrial and commercial zones. ADCB will provide 75% equity, while Macquarie will put in 25%.

A further 13 infrastructure mandates are already underway, including a joint venture with multi-sector business the Al Futtaim group at Dubai Festival City that will spread to a vast two million square feet of retail space. US $3 billion (AED11 billion) has so far been invested in developing Festival City, which will reach US $5.45 billion by the time current projects are completed.

The bank clearly works closely with the Abu Dhabi ruling family and the government, however Knox refuses to confirm that all the deals the finance house receives are down to their influence and control. He does add, however, that it helps.

“We don’t get business because of that, but there is an opportunity if we do a good job and we have a hand in every deal. The government wants to develop the local financial institutions and deliver those so it forces us to raise our standards.”

The tall American CEO says that in some cases the bank may fall short as it doesn’t have “as much variety” as a large European bank, but that it is better at “local knowledge, contacts and long-term relationships”.

“This is very important. What we’ve tried to do over the last two years is bring in incredibly successful people and products and also carry out some important joint ventures. We were very anxious to get it going as soon as possible. And we are still growing,” he says.

“Take one that’s already been put together – Industrial City – that has a combination of local and international investors. There’s a lot of interest from abroad in this region and we want to be there and stay there,” he says.

“We’ve made proposals on Saadiyat Island but they [the government] haven’t awarded the work on it and they haven’t finalised the plans. They have the masterplan but they’re working through proposals,” he says, hinting that ADCB could well be involved in the deal somewhere along the line.
The bank has not only got a series of ongoing multi-billion dollar projects on stream such as a deal with property developer ETA Star for its flagship Grandeur Residences on the Palm Jumeirah, it has also expanded extraordinarily within the consumer and retail markets, seemingly advertising its products in every free space available.

Knox says this is down to “opportunism” and taking advantage of large local projects. Planting the largest billboard in the Middle East directly in front of the world’s future tallest building, the Burj Dubai, and its surrounding Business Bay complex was certainly one of those “opportunities”.

“Like the rest of the mandates we have, we’ve been very opportunistic I’d say. For example, another bank would have taken a lot longer to put those together. We saw business opportunities and we said to ourselves, no we have to do this now,” Knox explains.

He says that the bank’s success over the past two years is largely down to a combination of his and the board’s masterplan, spreading the word about what ADCB can offer customers, wanting to become the number one bank in the region, diversifying its products and taking advantage of the massive expansion underway in Abu Dhabi. This is not to mention the huge growth and interest real estate and large-scale developments are attracting from foreign investors, says Knox, also admitting to a large project he has had up his sleeve since he arrived in the UAE.

“The issue of internationalising the economy is huge. You’ve got a lot of international companies coming here and a lot of specialist skills being brought in.

“We hope to fit in with the regional economy and we’ve got a big project going on with two major players. The idea is much broader than just the UAE, we’ve been looking at this frankly since I first got here.”

His greatest success since joining? Knox hesitates for a second and jokingly recalls playing a recent Pro-Am tournament with US golfing legends Tom Watson and Greg Stadler and getting his handicap down to 15. He then states his real achievement, “the overall success of the bank”. This may be a “very straightforward” and “very American” answer, but he’s not wrong.

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