turned to one of the mainstays of the Bank as we see it today: market-making in Arab currency, forex and rates. It was new, no one was really doing it, and it turned out to be visionary. Since that time, BNP and subsequently BNP Paribas has always been thought of as one of the major players in these markets.
The Bank s Bahrain office also played a major role in the management of the BNP Group s short-term liquidity at this time. Eric, who was the originator of this business, explains:
We used to post aggressive spreads on interbank deposits and so we grew into a sort of clearing house for all the BNP Group treasury activities. We took in deposits from BNP Asia treasury operations in the morning, from Europe in the middle of the day, and finally cleared our positions in all currencies with the treasury departments in San Francisco and New York in the evening.
Bahrain becomes regional hub
The merger of BNP and Paribas naturally provoked much thought and discussion on how to best carry out the integration of the two banks and how the combined bank should be organised. One of the results of this process was the decision to establish a regional structure for the Middle East and Africa region, run out of one of the offices in the region for Corporate & Investment Banking.
Bahrain was the obvious choice to become the regional headquarters, as both BNP and Paribas had sizeable operations in the country. Furthermore, as a long-established aviation hub, the country had excellent air connections to major global capitals and enjoyed easy access to the Kingdom of Saudi Arabia, the most populous country in the Gulf, with the biggest capital market in the region and a rapidly expanding and diversifying economy. Conditions in Bahrain were also ripe for the future development of BNP Paribas and the banking industry as a whole, with high standards of regulation, favourable government policy, a well-educated workforce and an excellent physical infrastructure and telecommunications network.
The new regional hub began life in late 2001, under the leadership of Jean-Christophe Durand, and co-managed by the Corporate & Investment Banking and International Retail Banking divisions. It replaced a system where the Bank s branches in Bahrain, Abu Dhabi, Dubai and Qatar reported directly into International Retail Banking in Paris.
Over the next couple of years, regional support functions became centralised in the regional office, with IT support first to reorganise, followed by Finance & Control, and then the back office operations for Treasury & Foreign Exchange, Derivatives and International Trade.
140 T H E H I S T O R Y O F B N P PA R I B A S I N T H E G U L F S TAT E S