Business Review Wholesale Banking Group (WBG)
We significantly enhanced our Wholesale Banking proposition in 2020, incorporating leading digital technologies to enrich the customer experience and offer faster virtual services. We also implemented a new organisational structure that has allowed us to achieve major efficiency gains, serve our customers more effectively and emerge stronger from the global health crisis of 2020.
Despite the impact of the coronavirus pandemic on the global economy, the Wholesale Banking Group has secured a number of significant achievements during the course of 2020.
As of 31 December 2020, total assets for Wholesale Banking Group stood at AED 161 billion, whilst total liabilities were AED 102 billion. We have greatly enhanced our current and savings account (CASA) deposits by delivering enhancements to our leading-edge digital services and attracting new customers through our intuitive platforms.
In response to the extreme impact of COVID-19 on businesses, we engaged actively with all our corporate clients, with a strong appreciation for the acute needs of mid-sized corporates and SMEs. This approach drove an effective roll out of extensive relief measures in conjunction with the UAE Central Bank’s TESS programme, and continuation of active dialogue is helping customers to transition out of the scheme.
COVID-19 has provided additional impetus for ADCB’s ongoing digital transformation across our Wholesale Banking operations and services. The Group has developed a strong digital proposition in recent years and accelerated the transition of clients to our advanced online and mobile platforms in 2020. As of year-end, 60% of trade finance transactions were conducted digitally on the ProTrade platform and 96% of cash management transactions were carried out digitally through the ProCash platform.
Our ability to serve our customers faster and more efficiently has resulted in highly encouraging results in our net promoter score (NPS1), which rose five points to reach 71% in 2020.
In 2020, we also successfully completed a complex and comprehensive transition to a coverage-based model from a relationship-based one to better serve our clients and implemented a series of effective cost-saving initiatives.
As ADCB has scaled back its international banking presence, including the exits of our operations in London, Singapore and India, the Wholesale Banking Group continues to maintain strong strategic banking partnerships that enhance our global reach through Bank of America, Banco Santander and Kookmin Bank.
1 In line with our digital transformation strategy and the impact of COVID-19, NPS methodology was changed to digital channels in H2’20, therefore reported NPS scores are for Q1’20 only.
A NEW STRUCTURE FOR GROWTH
In 2020, we embarked on a major transformation journey by introducing a new coverage structure, a redefined service culture, a centralised digital model and a new portfolio management approach.
The initial phase of this development plan focused on redefining our organisational structure by standardising our front and middle office operations, rationalising our portfolio distribution and enhancing our digital channels.
Our new structure allows our relationship managers to focus purely on client relationships and revenue generation, while our experienced senior bankers concentrate on building new business leads.
A Portfolio Management Division has been created to manage and monitor the Wholesale Banking business, while a new International Banking Division provides coordination of overseas activities following the closure of our representative offices. The Transaction Banking Division has also been restructured to bring greater focus on operational efficiency and process automation.
FUTURE-READY DIGITAL TRADING
ADCB has adopted a holistic approach to digitisation that encompasses the complete lifecycle of trade transactions to drive efficient service provision.
ProTrade — our digital trade finance platform — provides our clients with the freedom to transact online at any time, from anywhere in the world. Using the platform, clients can submit applications, view a live dashboard of all transactions and generate customised reports.
ProTrade is designed to streamline and reduce trade cycles, automate supply chains and lower operating costs, making international trade financing quick, easy and secure.
Since the launch of ProTrade in December 2018, we have successfully onboarded over 3,500 clients to the platform and around 60% of trade volumes for letters of credit (LCs) and guarantees are processed through ProTrade.
In 2020, we implemented a complementary automated trade finance workflow process through a new solution that speeds up the internal referrals process, tracks pending transactions and sends transaction status notifications to clients via email.
The past year has also seen significant progress toward our objective of automating clients’ transactions by attracting new clients to our ProCash cash management platform, which offers businesses an efficient, convenient and safe way to manage money flows online.
New clients onboarded to ProCash reached over 24,000 in 2020; and the platform processed 549 service requests during the course of the year. Furthermore, all of our customers from Union National Bank and Al Hilal Bank were successfully migrated to the ADCB digital platforms.
To enhance the service, we launched Mobile Token 2.0, a new app that has dramatically increased the efficiency of ProCash. The app was named ‘Top Innovation in Payments’ at the Global Finance awards, and best ‘Innovation in Cash Management’ at the Top Innovators 2020 Awards by Global Finance.
As part of our efforts to enhance our existing digital channels and customer experience, we rolled out solutions for additional payment types that propelled our ProCash mobile app to the top of the market. Users of the app now benefit from a streamlined registration process, corporate salary transfers, pension and tax payments, international fund transfers, Immediate Payment Instruction (IPI) for low value near real-time domestic payments, and salary payments via a Wages Protection System (WPS).
We remain dedicated to providing the most effective and efficient customer service to our clients. Therefore, to improve the efficiency of our service requests (SRs) we added an online Customer Self Service module in the ProCash app that allows WBG customers to raise requests. This brings multiple benefits, such as the elimination of paperwork and process optimisation. Thanks to these enhancements, we secured an increase in our net promoter score (NPS) in relation to the ProCash experience to 91% from 80% in 2019.
Broadening the scope of our digital transformation further, we launched a new corporate cheque scanning solution (CCSS) in 2020 — a market-leading web-based service that allows clients to upload data and image files in addition to manual inputs and scans, and to send cheque images and data host-to-host (H2H). The app provides for full post-dated cheque (PDC) management — including the scanning of PDCs with several dates in the same batch — and a detailed dashboard featuring comprehensive reporting metrics. All of our customers were seamlessly transitioned to this new system during 2020.
Our success in providing service excellence, particularly through digital solutions, was recognised by the Euromoney Survey, which presented ADCB with the ‘2020 Best Service Euromoney Cash Management Award’; and we were also named ‘UAE Domestic Trade Finance Bank of the Year’ at the Asian Banking and Finance Awards for 2020.
Key Digital Highlights
Procash Registered Clients
16% increase YOY
ProTrade Registered Clients
64% increase YOY
Virtual Accounts
AED
CASA collection value as of end-2020
Digital Account Opening
New-to-bank SME & MCD clients onboarded digitally to date
SME Financing
Applications logged across products using digital channels to date
1 Life to date
VIRTUAL ACCOUNTS
Our Virtual Accounts service, a ground-breaking cash management technology solution rolled out in 2019, saw significant increases in customers, transactions and volumes in 2020.
The Virtual Account solution provides support for any company that deals with numerous clients and suppliers, improving the reconciliation of financial statements. Under a single physical account, a client is able to manage an unlimited number of virtual accounts, improving account clarity and saving costs without compromising functionality or reporting.
Over 750 clients now benefit from the solution, with total incoming transactions valued at AED 3 billion.
In 2020, we became the first Bank to offer an application programming interface (API) for opening and closing Virtual Accounts, providing instant account opening, improved reconciliation and virtual account management, and instant account closure.
PRO-ACTIVE RESPONSE TO NMC HEALTH ISSUE
When disclosure of accounting irregularities and potential fraud emerged at London Securities Exchange-listed NMC Health PLC and associated companies, ADCB as a significant creditor took a proactive and transparent approach to resolving the issue and defending the interests of the Bank and its stakeholders.
ADCB’s actions during 2020 have safeguarded the operations of NMC Health Group (NMC Health) at a critical period due to the global pandemic and introduced an orderly administration process to manage a turnaround of the company, its financial restructuring and repayment of debt.
The issues at NMC Health came to light through a series of announcements by the company in February and March 2020 that exposed the full reality of the financial issues, including an additional USD 4 billion in previously undisclosed debt that indicated a significant risk of insolvency.
ADCB was among more than 80 major regional and international financial institutions that had extended credit to NMC Health.
ADCB Group had provided credit facilities at the corporate level to NMC Health, which were guaranteed by the London listed entity NMC Health PLC. Following the three-way merger in May 2019, ADCB’s total credit exposure of USD 981 million to NMC Health comprised USD 767 million of facilities extended by ADCB, USD 147 million by the former Union National Bank (UNB) and USD 67 million by Al Hilal Bank (all exposures prior to the merger).
Following the disclosures by NMC Health, ADCB took immediate action to protect its interests, successfully filing in UK courts for NMC Health PLC to enter into administration. Alvarez & Marsal was subsequently appointed as joint administrators with a mandate to ensure stability and the continuation of uninterrupted healthcare services at NMC Health’s medical facilities. The administrators were also tasked with implementing robust governance, conducting a full, transparent investigation into suspected previous irregular financial activity and taking adequate steps to initiate the recovery of any missing assets and funds.
ADCB continued to work closely with the administrators and other creditors on a restructuring plan that builds value at the company for the benefit of all stakeholders.
In 2020, the Bank recorded significant provisions and interest in suspense (AED 1.656 billion) on NMC Finablr and other NMC associated companies. The Bank is comfortable with these provisioning levels, which are in line with independent assessments on value and recoverability, given the positive developments in NMC’s recent financial performance and its ongoing restructuring process.
NMC adopted a three-year business plan under the auspices of the ADGM-regulated administration and its financial performance has made measurable progress in the second half of 2020. ADCB, together with a syndicate of lenders, participated in a USD 325 million Administration Funding Facility (AFF) to ensure operational continuity of NMC and to pave the way for restructuring. Participation in the AFF has placed the Bank in a stronger position to maximise the potential for its recoveries. NMC’s restructuring plan is scheduled for approval by creditors in the first half of 2021.
FUTURE FOCUS
The Wholesale Banking Group continues to pursue opportunities for growth in line with ADCB’s robust risk management framework, which reflects the challenging global macro-economic environment.
Following the successful transition to our new coverage system, we will continue to leverage our scale and the multiple new digital services introduced in 2020 to deliver world-class services, with a particular focus on continuing to increase CASA deposits, fee income and corporate market share.
The Group will move forward with our digital transformation programme to increase our offering of products and services, and enhance convenience for our customers, while delivering significant operating efficiencies.
