Established in 1994, Fidus is one of the oldest financial institutions in Lebanon. It acts as a brokerage house subsidiary for Société Générale de Banque au Liban (SGBL). Fidus already extends its services to affiliates in Syria and Cyprus, in addition to its soon to be opened branch in Jordan. Fidus will also be present in Canada in 2009 and its next step will be a presence in Geneva by 2010. Fidus offers brokerage and advisory services, derivatives, structured products, mutual funds and alternative investments, as well as fixed income securities. Executive spoke to Mahmoud Ezzedine, director of the private banking department.
E How is Fidus structured?
There are several layers. We are composed of three main departments. First is the private banking and wealth management. Second is the trading and capital markets. Third is the structured products and funds department. Every portfolio that we have at Fidus is looked after by these three departments. Furthermore, Fidus operates on all financial instruments. That means we have an open architecture on all our structured products, funds and hedge funds. Our trading desk covers all major international financial markets, including the GCC. We have a futures and commodities desk, plus an FX desk and a fixed income desk.
E The global financial markets are currently fraught with risk. How do you deal with risk?
We have stringent risk controls. We do not have an investment division and we don’t do any proprietary trading. We only act on behalf of clients and we don’t take positions on our books. This is why we have no exposure to the subprime crisis. We have no exposure, as a company, to anything that affects the economy.
E Are your clients exposed to the crisis?
Unfortunately, all over the world, all asset classes have suffered tremendously in this crisis, no matter what clients were exposed to. Almost everyone incurred losses, except some clients who were short on some markets and on some assets. Taking that into consideration, our clients reacted well given the amplitude of the crisis. Some of them took advantage of some low pricing and increased their exposure by averaging at very interesting levels, yet most of them cut their losses early enough. We are still confident that our clients, with time, will again build interesting portfolios and have some good returns in the coming year.
E Do you believe that there are good valuations on the market currently?
There are lots of good valuations on the market but we are not comfortable going and buying aggressively because the volatility is still too high. That’s our only worry. When volatility goes down we can advise our clients to go in. Having said that, we always tell our clients, ‘you can never time the market.’ If you are a long-term investor, you have to ride the waves. These days, people are shifting from buying stocks into buying trackers like ETFs, which track indices. On the other hand, we have witnessed lately a big appetite on the credit markets. Investors are aggressively buying defensive bonds that have been yielding above average returns, more than 9%.
E Given the current market conditions, what do you think the prognosis is for mergers and acquisitions?
We will see more M&A activity after this crisis. Bigger banks will be buying smaller banks, bigger corporations buying smaller corporations and so forth. There will be lots of consolidation in the market place.
E What are your expectations for 2009?
We are working more and more on our positioning and on our product offerings. We will be opening another branch outside Lebanon. We are recruiting more people. Our private banking scene is expanding, enabling us to have more in-depth analysis on the level of products flow. This will help us to prepare our clients for new investment themes.
E Do you think the financial crisis will have an affect on your business for 2009?
The financial crisis will have a direct effect on our business but we hope it won’t last for a long period of time. We have witnessed more investor confidence in Lebanon with foreign investors, especially those from the Middle-East.