In a year of considerable market volatility and business disruptions, the Treasury and Investments Group continued to deliver a strong performance and enhanced operational efficiency.

The Group was decisive in its response to the external shocks and has successfully mitigated, and benefitted from the continued volatility. It has adopted an effective tactical approach in response to the low interest rate environment by exiting expensive time deposits while broadening its relationships with key clients and expanding CASA (current and savings account) deposits. This contributed to a significant reduction in cost of funds during the year. The Group also opportunistically increased the size, tenor and duration of the Bank’s investment portfolio as well as the fixed rate risk of the book to improve interest income.

Reacting rapidly to remote working requirements, the Group implemented specific measures that ensured the necessary level of access. This enabled the Group to operate effectively in a real-time trading environment, while extending the security infrastructures to allow for working from home.

The Treasury and Investments Group also succeeded in achieving an impressive NPS score of 77% in 2020, following a seamless transition to remote working in response to the requirements and directives issued by the UAE government to safeguard the population.

During the year, the Bank also achieved accreditation to become a primary dealer in the Monetary Bills Programme recently launched by the UAE Central Bank.

WHOLESALE FUNDING

Treasury completed a number of major capital markets and other wholesale funding transactions, including:

PREPARING FOR REGULATORY ROADMAP AND TECHNOLOGICAL EVOLUTION

By taking a proactive and holistic approach to developing technology and systems — including hardware, software, databases and models — the Group is now well positioned to adopt the latest models and international best practices in treasury, and to adapt to future changes.

The Murex Upgrade, New Collateral and the Standard Initial Margin Model implementation projects were delivered to plan and under budget in 2020. The projects spanned around 18 months and involved the Treasury Front, Middle and Back Offices, Market Risk, Finance, IT and Operational Risk as well as Credit Admin and external vendors.

This vital upgrade represents the early stages in a broad regulatory roadmap and an important precursor to the Bank’s full LIBOR Transition project. The Bank has established a cross-functional committee and put in place detailed plans for this forthcoming transition.

The Treasury and Investments Group is also in the process of revising and updating its internal treasury and risk management systems to calculate Secured Overnight Funding Rate (SOFR), which is the preferred replacement for US Dollar LIBOR. In addition to internal training regarding this transition, the Group launched a preliminary communications exercise in 2020 to foster customer awareness and knowledge of the new mechanism.

Other new changes in compliance include the introduction of the full range of Basel III guidelines, including for Capital Value Adjusted (KVA), Market Value Adjusted (MVA), Standardised Duration Approach and settle-to-market (STM).

OBJECTIVES FOR 2021

In the coming year, the Treasury and Investments Group will continue to focus on increasing scale and optimisation, as well as further streamlining the efficiency of its systems and processes, while also collaborating closely with other areas of the Bank to better support clients.