[ S U R V E Y
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A G E N T
B A N K S
I N
F R O N T I E R
Middle East
M A R K E T S ]
areas that matter most: settlement, asset servicing and tech-
nology. The last of these brings the bank its highest category
score: 6.33.
JORDAN
Given the small size of its economy and its proximity to the Syr-
ian and Iraqi crises, which have led to an influx of refugees and
an efflux of tourists, it is surprising that Jordan has received
any inflows of capital at all apart from foreign aid and remit-
tances. Yet the Amman Stock Exchange (ASE) actually attracts
a lot of interest from abroad. It is not large – it lists just 97 secu-
rities – and has trended gently downwards for most of the last
two years, but non-Jordanian investors, mostly from elsewhere
in the Arab world, own more than half of the companies traded
on the ASE.
BAHRAIN
A year ago, the Bahrain stock market – which is inevitably dom-
inated by the financial, investment and insurance stocks which
characterise any finance hub, and its status as a regulated fund
domicile for the region – was the best performing of any ex-
change in a Gulf Co-operation Council (GCC) member-state. It
had a more volatile 2018 and, although it has now recovered un-
equivocally from the lows of 2016, cumulative net returns over
a decade and half still trail the MSCI Frontier Markets index of
which it is a part. There is not much a sub-custodian bank can
do about stock market fundamentals, but it can certainly make
it easier for foreign investors to approach a market – indeed, the
MSCI classifications incorporate post-trade requirements – and
on that front Bahrain is a promising case study. The central bank
and the exchange have tried to boost liquidity by dematerialising
stocks and encouraging market makers and sought to improve
settlement and custody through the establishment of Bahrain
Clear in mid-2017.
Standard Chartered Bank
This is a strong performance by Standard Chartered in one of
the smaller Middle Eastern markets it supports, with scores in
half of service areas at or above 6.0 (See page 78). The bank will
be more concerned about an indifferent score for relationship
than liquidity management, since cutting liquidity costs for
clients is a challenging ask in a market such as this.
HSBC
The largest international bank in the Middle East has not at-
tracted the most responses here. Nor has it secured the highest
average scores. In fact, HSBC trails its local international rival
in two out of three service areas. The difference is particularly
marked in the area of pricing, where HSBC is seen as less flex-
ible and disinclined to share margin gains from infrastructural
price cuts and internalisation. That said, the bank excels in the
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Global Custodian
Spring 2019
Standard Chartered Bank
Standard Chartered has attracted many more responses than
its local competitor for inbound business. With its network
across the region, it is in a good position to service this busi-
ness. A small band of clients are less unhappy than the overall
averages on page 79 suggest. In reality, client concerns are
focused on a narrow range of issues: asset safety, the compet-
itiveness of cash management and foreign exchange services,
and the cost of liquidity. “They act very pro-actively,” notes
one client. Standard Chartered is also well-entrenched here.
The bank dates its history in Jordan back to 1925, and it now
operates half a dozen retail branches in Jordan and offers
corporate banking services to local companies as well as mul-
tinationals.
Bank of Jordan
Bank of Jordan, the second largest of five local banks, is the
indigenous contender for sub-custody business. It did not
receive as many responses as it did in 2018, but the scoring re-
ceived is extremely flattering. In only two areas is it anything
but excellent. One of them is relationship management, and
even there a respondent argues that the job is in fact “well
done.” The bank has a network that reaches into neighbouring
Palestine, where Jordanian dinars are one of the currencies
which circulates.
KUWAIT
A programme of stock market liberalisation that the Capital
Markets Authority has pursued since 2010 is approaching
fruition. The short-term aim of getting into the emerging mar-
ket indexes is close to realisation. FTSE Russell has already
raised Kuwait to emerging market status, leading to a surge in
passive inflows, and the more influential MSCI is considering
a similar elevation from its Frontier Markets Index. The long-
term aim of attracting foreign capital to drive local economic
development, driven by readier access to listed company
information, a clampdown on price manipulation and better
post-trade processing, was hampered by a dismal performance
in 2018. But last year the Kuwaiti government even permitted
foreign ownership of local banks, arguing it would improve