Fakhruddin Khalil

One of the financial phenomena in New York City during the past few years has been the mushrooming growth in the number of Arab-owned banks—and there surely could be no one who better symbolizes this new Arab presence than Fakhruddin Khalil, senior executive vice-president of UBAF Arab American.

For one thing, Mr. Khalil has been around since the growth began, a mere seven years ago. As the senior Arab executive at UBAF since it opened its doors in 1976, he is the dean of Arab bankers in the city, just as his bank is the dean of the Arab banks.

Mr. Khalil's position as dean is strictly unofficial, of course, but his seniority was recognized by his peers early this year when he was installed as the first president of the newly-created Arab Bankers Association of North America.

A New Momentum

The creation of such an association is in itself a symbol of what has been happening. In New York there are now a score of Arab banking institutions that have set up offices. They range from full banking branches 'of such institutions as the Saudi International Bank, the United Bank of Kuwait and Jordan's Arab Bank, to representative offices that have been established by Bahrain's Trans Arabian Investment Bank, the Paris-based consortium Banque Arabe et Internationale d'Investissement, and others. The bulk of these have been in existence for only the past three years.

What took the Arab banks so long to get here? Mr. Khalil, when asked this question during an interview in his office overlooking Park Avenue, looked pained.

"You must remember," he says, "that it's only been ten years since Arab banks began getting substantial funds, and began moving beyond their borders for the first time. The first moves were to London and Paris—places which were already familiar, and much closer to home. This was a natural, and sensibly careful, way to expand. The next step, as New York began to grow as an international financial center and as more Arabs began doing business here, was to come to the U.S. So now they are doing it. But considering that they started from scratch, for Arab banks to have gone international to the extent that they have is really a remarkable achievement in only ten years!"

Mr. Khalil acknowledges that the hostility to Arab investments which existed in the U.S. in the mid- 1970's—the syndrome of "the Arabs-are-coming!"—could have acted as a deterrent to bankers, but says the situation "has turned around 180 degrees since then. When our own bank started, it took us two years to get the paperwork finalized. Now, any well-established Arab bank can get a license in no time—just like any other foreign bank. The attitude of the banking authorities is very objective."

As the number of Arab banks and bankers began to proliferate, it made sense to organize a banker's association. "Our association is strictly business-oriented," says Mr. Khalil. "We are not lobbyists. Our aim, in the first instance, is to help the members in their cultural and professional activities, giving them opportunities to meet together and exchange information. The ultimate aim is to develop and promote business between the U.S. and the Arab world."

Membership in the association is open to Arab and Arab American bankers in the U.S., Canada and Mexico—whether or not they work for an Arab bank. So far, more than a hundred have joined, and applications continue to pour in. Americans who are not of Arab origin but who work for Arab banks or in the Mideast departments of U.S. banks are eligible to become associate members, and financial institutions may take out institutional memberships.

Targeting U.S.-Arab Business

Mr. Khalil's own bank is different from most of the others which have come to the U.S. in that it is not a branch, but a bank in its own right. Chartered in New York State, UBAF's shareholders include four U.S. banks, eleven Arab banks (two of them central banks) and five Arab consortium banks. All Arab countries are represented, directly or indirectly, through the bank's shareholders. It is a wholesale bank, and its target is U.S.-Arab business. With a capital base of $100 million, it had already made $5 million in the first nine months of this year, and Mr. Khalil says he expects profits to top $8 million by the end of 1983. Its assets are more than $1.5 billion.

Mr. Khalil, now 50, was a founding director of the UBAF Group, which was formed in Paris in 1970 and took the innovative step of opening banks in various capitals of the world in partnership with local banks in each of those capitals. For two years, he served as the Group's representative in the Middle East, where he was successful in soliciting new Arab shareholders.

From 1967 to 1971, Mr. Khalil was chairman and general manager of the Commercial Bank of Syria, and served earlier as manager of Banque du Caire for the Latakia and Tartous regions of Syria. He has a B.A. and M.A. in economics from the American University of Beirut. Mr. Khalil, his wife and his five children have recently become U.S. citizens.