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Strategic Management: Abu Dhabi Commercial Bank

1. Introduction

Abu Dhabi Commercial Bank provides Islamic banking products and services, investment, retail, commercial alongside with its subsidiaries. It also offers several personal banking products, including fixed deposit accounts, saving, debit and credit cards, call, NRI and investment services, banc assurance products and many other services. The bank also provides various banking products and services like cash management, treasury, financing, trade services, small and medium enterprises banking services and investment services. It also has additional offers of other banking products and services like Internet banking, brokerage and asset management services and many others. The headquarter of Abu Dhabi Commercial Bank is in Abu Dhabi, the United Arab Emirates (International Monetary Fund, 2011).

1.1. Background

Abu Dhabi Commercial Bank also known as ADCB was formed in 1985 as a public shareholding company with liabilities that are limited. It was then called Khaleej Commercial Bank that was started in 1975 and merged with Federal Commercial Bank and Emirates Commercial Bank. Through the Abu Dhabi Investment Authority (ADIA) the government owns 65% of ADCB shares, the remaining shares are divided between other institutions and individuals. Regarding market capitalization and stock market, ADCB is among the largest in the UAE. The bank recorded a high annual net profit of AED 3,620 million in 2013 in comparison to 2012 when it recorded a net profit of AED 2,810 million (International Monetary Fund, 2011). It is also categorized as a regional bank and it is a dominant player in financial and banking sector in the United Arab Emirates. It targets Islamic, Personal and Business Banking and as a result its unique selling point is Islamic Non-Interest Banking and leadership in markets across major business lines (Oxford Business Group, 2013). With Long Live Ambition as its slogan/tagline (Abu Dhabi Commercial Bank, 2015), the bank targets large, small and medium groups and individuals that are aiming at financial solutions that are diverse. It is rated among the best commercial banks and largest retail bank in the United Arab Emirates.


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2. Political, Economical, Social, Technological, Environmental Legal Analysis

2.1. Political Analysis

The UAE comprises of seven different Emirates each headed by a different ruler. In 1971, the seven Emirates united working together in all spheres of economic development. The Emirates rulers, such as H.H Sheikh Zayed bin Sultan Al Nahyan who was the ruler of Abu Dhabi, were very instrumental in the creation and realization of stability in the Emirates. The UAE has no elected government, but has a Federal National Council that is optional. The councils consist of 40 members who are chosen by seven Emirates. The United Arab Emirates is a member of the Gulf Corporation Council GCC (International Monetary Fund, 2011).

The Abu Dhabi Commercial Bank opened and operated in the UAE due to the positive political environment. In addition, the UAE strong and positive relations with different countries enabled ADCB bank operate well. The UAE frequently give foreign aid and grants to the poor and developing countries. The political condition in the country is conducive and it easy for both startups and established companies to operate, since the UAE has implemented peaceful ways of solving problems (Kothari Auditors & Accountants, 2014). Their approach to problem solving ensures peace and stability in the Emirates. Citing an example, the government of the United Arabs Emirates is trying to return its three islands peacefully from Iran without causing conflicts between the two countries. The UAE joined other GCC countries in 1994 in finding a solution on Arab stance against Israel. The UAE does not have links with Israel contrary to other countries like Qatar and Oman. The integrated Customs Tariffs of 4% of the Cost, Insurance and Freight value is applied by the UAE. Such Customs Tariffs contain a list of products and merchandise that are customs duty free. With all the political advantages, the Abu Dhabi Commercial Bank effectively operates in the UAE (International Monetary Fund, 2011).

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2.2. Economical Environment

The UAE economic environment bases on free trade and always encourages the foreigners and locals to undertake investments of their money in it. There are factors that have effect on the financial investments. They include Inflation, Total number of workers, Gross Domestic Production and Interest Rates. The factors and their impact on the Central Bank are discussed below.

I. Inflation Rates

2000’s inflation rate in the UAE is 1.5% to 2%, which is lower than in 1999 that was

3.1%. The exchange rate was 1 Utd. Arab Emir. Dirham = 0.27224 US Dollar (USD) and 1 US Dollar = 3.67320 Utd. Arab Emir. Dirham.

II. Total number of workers

Compared to 1999, in 2000, the workers total number rose in the UAE by approximately 60 thousand, hence reaching 1.6 million employees.

III. Gross Domestic Production (GDP)

In 2002, the GDP purchasing power parity increased to Dh246 billion (US$67 billion) compared to 2001 when it was $51 billion. The GDP per capita was $18,839 in 1997 to $19,173 in 2002, hence can be seen as changing in an interval of 6 years.

IV. Interest Rates

The other banks in the UAE are managed and controlled by the Central Bank of Abu Dhabi, which issues them the interest rates. Interest rates, in their turn, depend on the business activities and the demand share (Ernst & Young, 2011). Above-mentioned factors play a major role in the operation of ADCB. The reason why all the factors develop is that the UAE always encourages specialists and foreigners to invest in their economy (International Monetary Fund, 2011).

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2.3. Social Factors

In any world market, social factors are very important information in the process of their analysis. The cultural and the demographic aspects of the entire external environment are included. It aids the organization to make sound decisions in regards to customers’ needs. The social factor in the UAE has a great impact on the determination of the UAE labor force size, thus, making the Central Bank receive more customers.

The Abu Dhabi Central Bank has considered the following vital forces for any business in the UAE: it has followed the rules and regulations of Islam as majority of people are Islam, their first business language is Arabic followed by English as most customers are Arabic, they operate considering the population growth of the country and try to help in ensuring that many of them become literate (Ernst & Young, 2011). Such policy is a good example of the social aspect of the Abu Dhabi Commercial Bank, which may act as a good strategic plan, as well (International Monetary Fund, 2011).

2.4. Technological Factors

Credit analysis and risk management, distribution channels, marketing and transaction processing are greatly affected by technology. The technology enables the new business processes, products and services to do the management of the business and do competition differently. Moreover, modern technology encourages customers to think about opening a web site for their own businesses. The bank has benefited from number of technological developments in the region, which have made its operations effective and fulfilling to its customers (Abu Dhabi Commercial Bank, 2009).

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In the UAE all establishments like schools, the government, as well as individuals widely utilize the Internet. The monthly average usage is 1.6 million hours for over a half a million people as per the claims of the ETISALAT. Also, the ETISALAT made a discovery that average usage per an individual per month is 72 hours. Accessibility to the Internet is high as almost 20% of the population has access to it. ADCB has greatly impacted the technology by merging their services with the Internet, making their operations easy by using Internet banking (International Monetary Fund, 2011).

2.5. Environmental Factors

To operate well in the UAE, any company needs to abide by the rules and regulations of the Islamic culture. ADCB meets all the requirements and that is why it is among the best banks in the region. In order to meet the requirements regarding the environment, the management and employees strive for observing ethnical issues (The Government of Abu Dhabi, 2008). The employees have to perform their tasks as expected, respect themselves and customers in all they do, as well as obey and respect their seniors and learn to live in a society where people have to support each other (Oxford Business Group, 2013).

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For the management, to meet the environment issues they should create appropriate democratic conditions where anyone can air their views, respect customers and employees and ensure that they do not engage in corruption deals. In addition, the management has to be realistic when setting employees goals and always show commitments to their actions. Moreover, all other stakeholders also have their ethnic issues. First and foremost, when making any transactions with the bank, customers must maintain ethics i.e. show some degree of respect. Secondly, cases that may foster corruption must be avoided by the government officials as they have a responsibility of maintaining ethics. Finally, the stakeholders have to play their role in encouraging ethical behaviors, especially during the time of making the organizations relevant policies. An example of the environment factor of ADCB is its employees’ benefits like medical cover, leave fares, good pay and co-curricular activities among others. Moreover, the effective performance results in providing high quality services to the customers (Oxford Business Group, 2013).

The Abu Dhabi Commercial Bank’s regulatory risk is managed and owned by the compliance functions. The most important of them is to adhere to the regulatory needs that are presently available. Such regulatory risks comprise of risk of reputation, earnings and capital that are in association with failure to comply with regulatory expectations and requirements (Oxford Business Group, 2013).

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The legal risk, which is closely connected to the regulatory risk, is managed by the Legal Department. Non-compliance may be emanated by legal and compliance risks with regulatory or legal provisions, which regulate the activities of the bank. Such legal regulation also governs, enforces and validates the legality of the bank’s activities (KPMG, 2006). As a result, ADCB may face a number of fines, reputation damage, sanctions or litigation claims if such risks are not covered. A good example of the bank handling a legal risk is the case of ADCB against Moody’s Investors Service and Standard & Poor’s (Oxford Business Group, 2013).

3. Scenario Planning

ADCB uses scenario planning also known as Guaranteed Savings Plans is designed for the customers to provide them with guaranteed benefits. Thus, the ADCBA Capital Guaranteed Savings Plan helps people achieve their goals and dreams. The Bank has two scenario planning namely Education and Retirement Savings Plans, which will be discussed in current article (Oxford Business Group. 2013, 2013).

I. Education Saving Plans

The foundation of preparing your child to become a prominent and successful member of the society is investing in his/her future. In this case, the success can be reached by an activity of Educational Planning. In order to guarantee the growth of one’s contributions over the years, it may be useful to design a Savings Plan. To do it, a parent has to let the bank know his target and the best plan to facilitate such goals will be provided. Based on the education fees requirement, the needed sum from the plan will be paid out over a period of 3, 4 or 5 years (Oxford Business Group, 2013).

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The contributions can be made in form of single payment, monthly, quarterly, annual or semiannual basis. It is necessary to remember that the earlier parents start contributing the lesser will be the required amount of payments. To perform all this, ADCB has two children savings accounts, namely: Child Saver Account and Active Saver Account.

1. Child Saver Account

Children are the most precious investments as realized by ADCB. However, a parent needs to open an account on their name as it is the best way of investing in the long-term education. Such Savings Account is an instrument for a parent to plan for his/her children’s education. Such account can be opened for any young person below 21 years old and available in AEDs and most major currencies. ADCB child Saver Account is provided with a range of attractive benefits and features. They are:

  • The Child Saver Account has free debit card.
  • The customers enjoy free statements, free teller transactions, free banking, free funds transfers and many other services.
  • Savings have high interest rates, many rewards, including touch points rewards on transaction and against the account balance.

It is easy to open a Child Saver Account on behave of the child if the parents are already account holders at ADCB. In other case the customers can be advised to open an account with the bank.

2. Active Saver Account

Another account offered by the Abu Dhabi Commercial Bank is the Active Saver Account. Such account is designed to ensure that a customer receives the best possible returns on his/her earned savings. The best thing with it is that there is no need to visit the ADCB branch as it can be opened online. The more savings a customer has with Active Saver Account the more he/she earns. It is possible due to the fact that the bank’s daily calculation of interests and bank’s tiered interest slabs. In addition, an active habit can be aided to be built by the active saver. Such habit of savings has been made easier as transferring money into account can be easily performed at customer’s computer. Another way such account encourages savings is that it does not involve checks and ATM card, thus there is no need to withdraw cash from the account.

In such way ADCB encourages customers to open accounts because they are good for their children’s future and generally very attractive in terms of future planning (Oxford Business Group, 2013).

II. Retirement Savings Plan

With the bank, the clients are helped to insure products available based on their request and analysis. Respective insurance providers underwrite the insurance products and subjects issued to their terms and conditions. The Abu Dhabi Commercial Bank does not manage nor offer insurance advice, issue insurance policy or underwrite. For the claims of rejected applications of the insurance company, ADCB does not hold responsibility, as well. Moreover, the premiums of insurance plans received by ADCB are not deposits of the bank. Such premiums range from life insurance, family protector plus accident insurance to secure life insurance and many others. The bank does not guarantee investment products as they are not bank deposits. However, the investments are subjected to investment risks that include loss possibly due to the invested amount. Regarding such facts, it can be observed that future results are not guaranteed by the past performance (Oxford Business Group, 2013).

4. Abu Dhabi Commercial Bank ADCB SWOT Analysis

SWOT Analysis








1. The bank serves approximately 37,000 SME and corporate clients and it is networked with over 40 branches country wide.

2. In the UAE, the bank is among the largest in terms of capitalization of markets and shareholder funds.

3. ADCB is the first bank to implement the Abshar Emiratisation Program.

4. The bank provides financial services like brokerage, retail, investment, commercial services and many others.

5. Operates not only in the UAE but also in the UK and India (Oxford Business Group, 2013).




1. Its operating income was affected by the regulators’ decision of encouraging banks to make large loan losses provisions as a precaution in the third quarter.

2. The banks competition is based on the profit margins and its internal capital generation remains weak (Market Publishers, 2015).









1. To benefit from the government’s budget, the bank focuses on continuing growth.

2. A general boost to profits may be provided by a strong economic growth.

3. The bank has a possibility to grow from profitable segments, which include mortgage financing and Islamic banking.

4. The loan loss provisions interfered with in the last quarter as regulators became satisfied with the precautions of the bank. It is free to offer more loans, which is risky but lucrative consumer sector (Oxford Business Group, 2013).

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5. ADCB acquired the Royal Bank of Scotland that joined with Federal and Emirates Commercial Banks.








1. It has high risk that is associated with real estate exposure and capital markets.

2. ADCB needs to do an increment of its market share in order to grow as most mature markets are competitive. However, such increment is expensive and difficult.

3. The intensive high competition of the lending environment in Saudi Arabia between local banks. The meaning of it is that the margins will be tightened, while banks will have a possibility to receive new assets.

4. There is a continuous weakening of the global demand for goods that are made by evolving market manufacturers (Oxford Business Group, 2013).

5. ADCB has strong competitors, including: Mashreq Bank psc, Union National Bank, Abu Dhabi Islamic Bank, Invest Bank, National Bank of Fujairah and Dubai Islamic Bank P.J.S.C. (Oxford Business Group, 2013).

Impact of Abu Dhabi Commercial Bank on the UAE

The UAE greatly benefits from the market and financial services offered by ADCB. As the bank utilizes a good PESTLE plan, every aspect of the community is fully adhered to and operation is effective and friendly to everyone. The UAE’s technology is known to be growing and the ADCB is among the institutions that implement it to the full extent. Considering the above-provided information, it can be stated that the bank plays a major part in economic growth of the UAE (International Monetary Fund, 2011).



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