Mashreq Bank UAE
Introduction of the company (write about the company and its activities)
Mashreq Bank is the oldest bank in the United Arab Emirates. It has provided banking services and financial solutions to its valued customers and enterprises since its inception in 1967. The Mashreq Bank, formerly known as Bank of Oman, was established in Dubai under decree of the Ruler of Dubai, Shaikh Rashid Bin Saeed Al Maktoum; this occurred before the UAE was formed.
The bank renamed itself as Mashreq Bank in 1993 and became one of the biggest banks in the UAE. It is a household name in the corporate banking sector and retail segment of the Middle East, having branches in Bahrain, Kuwait, Qatar, and Egypt. Mashreq Bank is the most inventive of banks in the Middle East having robust customer-centric business policies. The Mashreq Bank network is spread all over UAE with as many as 50% of the households being aligned with this bank. Its branches are found in all prime retail locations, and it provides the biggest ATM networks in the region. Apart from that, the bank has branches in 11 nations including many in Africa, Asia, North America and Europe. From a historical standpoint, Mashreq Bank has funded economic projects in a variety of industries in the UAE. However, it remains cautious in its approach and uses risk management policies while funding projects. The Mashreq Bank has had high profile growth in the last 46 years in the UAE region. The success of Mashreq Bank and UAE are synonymous (World Finance, 2013).
2. Overview of corporate finance and investment strategy of the company
With the help of an able Corporate Governance structure, Mashreq Bank aims to balance the elements of accountability, controls, transparency, and success. Mashreq Bank is an authority over matters of credit and administrative approvals. Authority is assigned expertly on the basis of performance, experience, track record and individual's position. Acts of negligence and exploitation of authority are revealed via consistent audits; credit reviews are taken up to the board of directors in case issue(s) become critical. Mashreq Bank has well-set policies and procedures in place with documented manuals backed by both desk-top and Standard Operating procedures (Mashreq Bank Annual Report, 2013)
Mashreq Bank has been on the receiving front in cases of regional and domestic equity offerings that consist of:
• Dividends
• Rights issues
• Initial public offerings
The bank leverages its long time experience in collection, as a provident investor database having a state-of-the-art accumulation platform. During the past two years, Mashreq Bank has amassed $22 billion in offerings. Hence, it is now the first choice for public offerings (Mashreq Bank Website).
The business ideology of Mashreq Bank in all arenas of its business is formed on the principal of the bank meeting the needs of its clients. The Mashreq Bank is well aware that each business client has separate needs and/or demands, and seeks to provide optimal services and products to said client. Hence, the bank aspires to know the requirements of its business clients from the inside out in order to fully meet their requirements (World Finance, 2015).
3. How they make capital investment decisions and which rules are followed
While finalizing capital investment decisions, Mashreq Bank employs the Basel III framework. Basel III is an add-on to the Basel framework that banks employ for outlining the capital requirements. Simultaneously, Capital Standards and the International Convergence of Capital Measurement still hold true. With these new amendments in place in bylaws by the Basel Committee on Banking Supervision (BCBS), the aim is to provide:
• A bank/financial reservoir that works like as a stabilizing instrument on the economy during periods of monetary crisis, particularly those of Credit Crunch Type situations;
• Encouragement to adopt better risk management policies by the entire banking industry;
• Protection and/or risk aversion from any arising anomaly / inequality in the banking industry (Mashreq Bank Annual Report, 2013).
To attain these objectives, the Basel Framework is founded on three building blocks:
First block -- Minimum Capital Requirements
This outlines the method by which banks compute their regulatory capital requirements for safeguarding themselves against credit risk, operational risk and market risk. The new amendment has outlined three different approaches for computing credit risk: Foundation Internal Rating Based (FIRB); Standardized, Advanced Internal Rating Based (AIRB); market risk (two approaches -- Internal Model Approach and Standardized Approach); and lastly, operational risk (three approaches -- Advanced Measurement Approach, Standardized Approach and Basic Indicator Approach) (Mashreq Bank Annual Report, 2013).
Second block -- Supervisory Review Process
This provides the policymakers with a framework to determine the capacity of a bank to control the credit...
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