CACEIS NEWS SIBOS 2013

The Asset Servicing Journal

special edition - sibos 2013 dubai 16-19 september

www.caceis.com

Banque Libano- Française has launched an asset management activity Walid Raphaël, General Manager, Banque Libano-Française. p.2 Middle East: strong potential for growth in asset management CACEIS brings its expertise to fund managers in the Middle East and assists in their local and international expansion. p.2 Solutions for SovereignWealth Funds CACEIS offers a full range of services for Sovereign Wealth Funds, meeting the needs of a variety of investment strategies by providing a solid, stable and secure framework. p.3 Interactive performance and risk analysis online Performance and risk analysis is essential for sovereign institutions to compare and measure performance, track risk exposure and finally take decisions. This is also a way to strengthen risk management, improve transparency and establish quality control over the entire investment process. p.3 Publishing Director: Régine Besnier-Docet Editor: Philippe Naudé Design: Sylvie Revest Photos credit: Yves Maisonneuve, Yves Collinet, CACEIS - FOTOLIA Printer : GRAPH’IMPRIM certified Imprim’vert®. This document is printed on Cyclus paper, 100% recycled fiber, certified Blaue Engel, Nordic Ecolabel and Ecolabel européen . Number ISSN : 1952-6695 For further information on our products and services, please contact our Relationship Managers/This newsletter has been produced by CACEIS. CACEIS cannot be held responsible for any inaccuracies or errors of interpretation, which this document may contain. www.caceis.com

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Raising Sovereign Institution Efficiency in the Mena Region

conversations about the issues facing our industry, as creating new business op- portunities and finding new efficiencies require a collaborative effort. Events like Sibos, which bring together so many in- fluential players from the industry, are key to this. The main topics of this year’s Sibos event are of great importance to us as a global asset servicing company, and have a large impact on the many types of client we ser- vice. One such client is sovereign institu- tions, which are faced with a number of complex issues including complying with incoming regulations, low interest rates and carrying out investment strategies in markets characterised by high levels of uncertainty. At CACEIS, we understand the needs of sovereign institutions, and have serviced several such institutions for many years. We have a business development team dedicated to the MENA region which is available during the conference to discuss the advantages for sovereign institutions of working with an experienced global asset

servicing company, backed by a leading fi- nancial institution like Crédit Agricole. CACEIS’s service offering is designed to cover the needs of such institutions, in terms of asset security and operational ef- ficiency. From custody in over 80 markets to liquidity management services includ- ing flexible securities lending programs, OTC derivatives services, investment re- striction monitoring, and performance and risk analysis reporting, CACEIS can provide effective support to sovereign in- stitutions as well as many other types of client. Aside from involvement in the dis- cussions during the Sibos conference, CACEIS is of course present in the exhibi- tors area, and there is a strong delegation of CACEIS professionals, including my- self, who will be on hand at the stand for the duration of the event. We would be more than happy to discuss the industry, your business, and the solutions CACEIS offers for increasing operational efficien- cy, adding value, and controlling risks, so please pass by our booth at any time ■

JOE saliba, Deputy CEO, CACEIS Group

C ACEIS is delighted to be present at Sibos, the most important confer- ence, exhibition and network event for the global financial community. We are keen to take part in the debates on the lat- est developments and trends in the areas of securities, payments, cash management and trade. We are also keen on joining the

We look forward to welcoming you to our stand D91 at Sibos in Dubai Key people from executive management, business development and operations from our international offices will be on hand to share with you our bespoke solutions for your specific needs. This year, the following topics will make the headlines at Sibos 2013 in Dubai: Islamic Finance, Russia challenges and opportunities, the accelerating pace of automation, regulation, the Asia-Pacific region opportunities. There will be an Africa & Middle East one-day programme looking at some key issues affecting both regions and the role of financial centres in the region and their contribution to the local economies.

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Banque Libano-Française has launched an asset management activity Walid Raphaël, General Manager, Banque Libano-Française

has seen strong growth in both its balance sheet and its earnings. Net income was $18 million in 2005; it is close to $100 million now. Over this period we have deployed a strategy of growth on a number of fronts. In addition to our core business of corporate and commercial banking, we have developed our investment banking, retail banking and private banking activities and, more recently, our asset management business. At the same time we have continuously adapted our product offering to meet the needs of our clients. We are currently concentrating on consolidating this growth and on operational excellence. A recent Ipsos survey indicated a customer satisfaction rate of 94%, but we want to improve this still further. To this end we are investing in new IT systems to ensure continued improvements in the quality of the services we provide to our clients. Does Banque Libano-Française have new local and international growth plans, over and above its presence in France, Switzerland, Cyprus and Syria? Banque Libano-Française already has several foreign subsidiaries: a bank in France with a branch in Cyprus, a financial company offering private banking services in Geneva (LF Finance Suisse), a bank in Syria, a representative office in Abu Dhabi to cover the Gulf region and another recently opened in Lagos, Nigeria, to cover Africa. In December 2012 we opened a branch in Baghdad, Iraq, which will soon be followed by branches in Erbil and Basra. These three new locations – Abu Dhabi, Iraq and Nigeria – will enable us to grow our business in regions where

there is a sizeable Lebanese diaspora. At the same time we have expanded our local network by 20% in the past two years, and plan to open a further ten branches over the next three years. How has CACEIS supported Banque Libano- Française in its growth? We have a strong partnership with CACEIS, which supplies us with traditional global custody services and also, more recently, fund administration and depositary bank services. We have developed a new fund management business, and as part of this in September 2012, we launched the LF Total Return Bond Fund, registered in Luxembourg, which offers private and institutional investors a vehicle through which to invest in international bond markets. Since launch the fund has performed remarkably well, far outstripping its benchmark. Encouraged by this performance we are attracting new investors and expanding our fund management business. We plan to create two new funds, which we will place with CACEIS, given our satisfaction with its services ■

The IMF is forecasting 2% GDP growth for Lebanon in 2013. Against this background, what are the factors driving growth at Banque Libano- Française? The IMF’s 2% growth forecast for 2013 is becoming highly uncertain given the particularly volatile situation in the region due to the events in Syria. Despite these difficult conditions, Lebanon has a solid banking sector, which has been strengthened since the financial crisis of 2008 by the high inflow of liquidity. This has favoured economic activity. Over the last five years, Banque Libano-Française

The development of local financial markets Middle East: strong potential for growth in asset management CACEIS brings its expertise to fund managers in the Middle East and assists in their local and international expansion.

managed by local fund managers are limited compared to those managed by international competitors. However, a growing number of local compa- nies are offering their expertise both locally and internationally, either by tying up agree- ments with non-GCC fund managers, or by directly marketing their expertise abroad. Thus in recent years, more and more promot- ers from GCC countries have elected, in coop- eration with managers of offshore structures, to launch funds for distribution in Europe, Asia and the USA. In 2012 and 2013 in Lux- embourg and Ireland, new promoters from the GCC zone created UCITS as well as Real Estate-Private Equity structures. These funds are distributed in Europe and in the countries and regions where investors look for this type of vehicle, such as Switzerland, Asia and Latin America. Although the proportion of promot- ers from the GCC countries seeking to boost growth internationally remains modest, there is no doubt that this development strategy will gather pace over the coming years. CACEIS is staying ahead of these trends by continuously adjusting its full range of services to changes in the profile of traditional and al- ternative fund management as well as meeting the growing demand for services that address the needs of Islamic finance ■ 1 Bahrain, Kuwait, Oman, Qatar, Saudi Arabia, UAE. 2 Source: Capital Standards Industry Research, May 2012.

The stakes are high for banks, fund managers and financial advisors given the substantial potential reserve of accumulated wealth in the region. The assets of sovereign and private in- vestors have grown steadily in recent years, ac- cording to different sources the sums involved are well above $1 trillion. Private banks and local and international fund management companies are working closely with the region’s governments to liberalise regulation and modernise the financial in- frastructure of local markets. Such reforms are necessary to meet the needs of investors in terms of active management, transparency and risk control. There is also a call for a steady move towards harmonisation, as was the case in Europe with European directives on UCITS and alternative funds. At present, Saudi Arabia, Kuwait, Bahrain, Dubai, Abu Dhabi and Qatar are all jostling for position as the region’s lead- ing financial centre. Each has its advantages but also its own regulatory complexities which can discourage some potential investors. At present, the asset management offering for private investors takes the form of wealth man- agement rather than collective investment. In 2012, Saudi Arabia, Kuwait and Bahrain were the three biggest domestic markets in the GCC, with 381 local collective investment funds with a total of some $31 billion under management 2 , a very modest amount in view of the region’s potential. As a result, the sums Local fund management is being exported

T he member states of the Gulf Coopera- tion Council 1 (GCC) and the countries of the Middle East more generally are attracting growing interest from both local and international fund managers. With its substan- tial cash reserves built up from exports of oil and gas, the region continues to attract both in- stitutional and private investors. Recent down- pascale tilloles, Business Development Manager, MENA and Asia clients, CACEIS

vincent marc, Head of Regional Coverage, MENA and Asia clients, CACEIS

grades of US and European sovereign debt, and the economic and financial crisis, have estab- lished the region as an attractive source of di- versification for fund managers and investors. The Middle East is also opening its doors to other markets, such as Turkey and the conti- nent of Africa, where Arab nations have high hopes of seeing economic expansion.

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Solutions for Sovereign Wealth Funds CACEIS offers a full range of services for Sovereign Wealth Funds, meeting the needs of a variety of investment strategies by providing a solid, stable and secure framework.

vincent beaujeu-Dumontel, Business Development Manager, MENA and Asia clients, CACEIS

C ACEIS, Europe’s premier depositary bank and fund administrator backed by Crédit Agricole, a leading banking group, meets Sovereign Wealth Funds criteria in terms of credit rating, financial performance and operational efficiency. CACEIS is present in Europe, in North America and in Asia, and has built up a vast wealth of experience in its centres of excellence, allowing it to deploy its global asset servicing offer across all international financial markets. CACEIS’s commercial teams are organised by geographical area and client type, with Business Development Managers specialising in sover- eign institutions based in Middle East, North Africa and Asia. They are entirely familiar with the specific needs of Sovereign Wealth Funds and build relationships of trust over the long term to provide them with global custody, cash management, securities lending, Middle Office, derivatives services and support for investment in real estate and private equity funds. Awide range of global custody services CACEIS provides Sovereign Wealth Funds with access to more than 80 markets across all asset classes. Its specialists inform them on the various local regulations, tax regimes, settle-

ment procedures and foreign exchange restric- tions. CACEIS has the infrastructure to ensure that transactions are processed on any market within an agreed timeframe and in full security. Through the OLIS client website, fund manag- ers have access to consolidated reporting updat- ed in real time on their instructions, portfolios and cash positions. Enhance returns through securities lending programs and liquidity solutions A dedicated contact in the CACEIS’s dealing desk team provides support to clients to help them meet their strategic objectives, preserve capital and optimise revenue, whilst at the same time minimising risk. Sovereign Wealth Funds are structural lenders and their stock of securities represents a source of revenue which, if properly managed, can cov- er the institutions’ operating costs. Such a ser- vice can only be provided if there is an exact fit with the investor’s risk profile. The service takes account of the nature of the securities held, regulatory constraints, the collateral guarantees required and the expected rates of return. Lend- ing operations never interfere with the client’s portfolio management activities: securities can be sold at any time. Collateral investment solu-

tions can be offered to help optimise revenues. Furthermore, CACEIS provides assistance in developing an effective cash management strategy and offers deposits, repos, bonds and notes in most currencies. Its experienced FX desk brings clients analysis to develop their currency strategy. They benefit from services that include spots, forwards, swaps, NDFs, NDSs, options and structured FX products. Tailored Middle-Office services A bespoke service for processing UCITS orders, extended to include offshore funds, covers monitoring, reconciliation, associ- ated cash and forex management and, sub- ject to Sovereign Wealth Funds agreement, outsourced investment management, of pre- determined amounts, in a selection of funds. With CACEIS, clients have control over the two main risks associated with listed and OTC derivatives: counterparty risk and op- erational risk. From a single account, they benefit from the integration of their transac- tions in portfolio valuations and reporting. This consolidation of transactions is accom- panied by a service covering the entire chain of back office and middle office functions. A complete range of listed and OTC derivatives services

Extensive services for investment in real estate funds and private equity CACEIS provides clients with assistance and customised solutions for a broad spectrum of structures, strategies, sectors and countries of investment, from the initial plan to set up a fund, through to its daily administrative needs, including cash management and bespoke re- porting to meet the specific needs of Sovereign Wealth Fund managers. CACEIS has been providing services to Sov- ereign Wealth Funds for many years. Major funds have placed their trust in CACEIS, and benefit from services that perfectly match their requirements in terms of confidentiality, risk control and bespoke reporting ■

Performance and risk analysis is essential for sovereign institutions to compare and measure performance, track risk exposure and finally take decisions. This is also a way to strengthen risk management, improve transparency and establish quality control over the entire investment process. Interactive performance and risk analysis online

ment, contribution analysis, and performance alloca- tion. This range of options helps clients understand the value added by their various investment processes. In addition to the reports outlined above, CACEIS as- sesses portfolio risks and potential losses due to market change. VaR estimations and stress-tests are computed by our team of specialists using various methods (his- toric, Monte Carlo, Parametric etc.) and extreme sce- narios. Consolidated data are produced by portfolio to enable management of a “risk budget”. ▷ Interactive web-based performance reporting In addition to traditional monthly financial reporting, CACEIS offers a full range of performance analysis in- dicators on its OLIS client website. Managers can select the criteria of their choice, such as maturity, country or economic sector, which are updated in real time, and get immediate results in the form of detailed tables and graphs. For example, as part of an analysis of performance al- location and contribution, as well as the top-down al- location analysis, it is possible to model a bottom-up al- location, analyse asset allocation and identify the main effects of exclusion or over- or under-weighting relative to the benchmark. Reports are produced in English and can be downloaded whenever required. CACEIS’s powerful performance attribution and risk management tools are just one of the many aspects of CACEIS’s full service offering that is designed to add value to your portfolio and increase the operational ef- ficiency of your day to day business transactions. For more information, please contact our dedicated MENA business development team who can help you understand the benefits for sovereign institutions of working with a leading global asset servicing ■

▷ A powerful data warehouse of high-quality informa- tion Thanks to its industrial-scale valuation platform, CACEIS has a genuine data warehouse of standardised data. This open platform gathers external data flows from the main market data providers. CACEIS specialists enhance and track information on indexes and individual financial instruments to ensure that they are standardised and reliable. As a consolida- tion platform that is unique in terms of its broad scope, it offers a wide range of on-line portfolio analysis cri- teria. ▷ Consolidated asset valuation CACEIS capitalises on experienced operational teams with advanced tools and interfaces with major fund administrators enabling us to gather portfolios valua- tions from third parties. When investments are made through intermediate vehicles, CACEIS provides sover- eign funds with timely access to fund holding positions and analysis reports from a single source and in a stan- dardised format. ▷ Prime report: performance & risk analysis CACEIS offers a wide range of performance analysis indicators, based on market standard methods suitable for all investment strategies. Clients using the turnkey Prime Report solution can choose from a range of fea- tures: asset allocation tracking, performance measure-

gilles de foucault, Product Manager, CACEIS

As a world-leading partner in asset servicing, CACEIS of- fers sovereign institutions a single technology platform that incorporates a powerful data warehouse, asset valuations, calculation engines and online reporting. CACEIS’s dedicat- ed Prime Report solution fully answers clients’ requirements and allows the measurement of performance, contribution, attribution and risk. Our high-quality, industrialised, yet flexible reporting solutions give our clients a significant de- gree of comfort, security and cost optimisation .

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