BUSINESS ETHICS

Business Ethics Comparison of Bank in UAE and HSBC

[Name of College]

Business Ethics Comparison of Bank in UAE and HSBC

Introduction

The federation of seven small American Gulf emirates, UAE or United Arab Emirates is one of the most developed countries among the gulf state and its seven emirates include: Dubai, Abu Dhabi, Ajman, Sharjah, Ras Al Khaimah, Fujairah and Umm Al Qaiwain. UAE is a member of the Gulf Cooperation Council (GCC), and the country is traditionally an oil and gas exporting nation. Presently, every emirate has a comparatively stable political and economic system whereas; the country has dreamed to emerge as a service and financial sector leader among the Middle East. UAE has proven crude oil reserves of around 98 billion barrels (or 10% of the world's reserves). The emirate of Dubai has also become an important financial center in the UAE because of its significant financial and services industries. Abu Dhabi and Dubai have emerged as the two most important emirates of the UAE. (DeGregorio, and Gudotti, 1995)

UAE Banking Sector

The aim of this study is to analyze the business ethics of HSBC and to compare its ethics with local bank of the UAE. In 2009, the small United Arab Emirates banking industry have by 21 domestic and 25 foreign banks, therefore, the UAE banking sector is fragmented enough. Banks in Abu Dhabi and Dubai has taken hold more than 90% of the total domestic assets, an amount almost equal split between Dubai and Abu Dhabi Bank. Access to market for foreign banks was limited somewhat as they cannot open more than eight branches throughout the territory of modern banking operation (1980-2003). In 2003, however, the law has changed and now allows banks to open more than eight branches, but it requires special permits. Foreign banks face no obstacles, but if they want to open a representative office. End of 2004 there were thirty-six representative offices in the UAE. Thus, the UAE was also represented by the section of foreign banks. A list of all domestic and foreign banks in the UAE is available in Appendix 1. (El-Kuwaiz, 1995)

Federal Law 10, adopted in 1980, is the basis of banking sector (excluding Islamic banks) and 6 of the federal law was enacted in 1985 in order to legalize the Islamic banking in the UAE. Islamic banking is a small part of the banking sector in the UAE. By law, Islamic finance, banks may charge a fixed interest rate for deposits and loans. Variable interest rate on the profit / loss sharing model is the foundation of Islamic finance. In accordance with federal law 10, the Central Bank of the UAE has also been found, and it took over the duties of the IMF Board. Obligations of the Bank are to the government on monetary and financial issues, issuing currency, maintaining foreign exchange reserves and development to discuss monetary policy, all regulatory functions under the supervision of the Central Bank. The currency of United Arab Emirates pegged to the dollar, ...