In 1974, the main shareholders of FRAB Bank International set up a holding company, FRAB Holding, in Luxembourg with capital of US$5 million. Four years later, the bank set up an offshore subsidiary in Bahrain, FRAB Bank Middle East, with a view to establishing a presence in the heart of the region, which was emerging as a major financial centre.

Société Générale de Banque s participation in the European-Arab Bank (Eurab)

In December 1971, the lure of petrodollars prompted EBIC member banks, especially Deutsche Bank, to study the potential of joint action in the Middle East. To quote Roger Alloo, who represented Société Générale de Banque on the EBIC board, the consortium needed to make a concerted effort to establish an operational unit in association with important banks in the Arab world. This effort was seen as all the more essential given that an increasing number of US and Japanese banks were starting up in the Middle East.

Discussions began with representatives from financial institutions throughout the Middle East, North Africa and the Near East.

However EBIC ambitions in this region soon clashed with the attitude of one of its members, the Midland Bank, which was keen on a more independent role. Early in 1972, members learned that Midland had been negotiating with other British banks in the Midland and International Banks Limited (MAIBL) consortium, set up by a banking group active in the Middle East in which several Arab banks were also shareholders. A sprint for the line ensued between MAIBL and EBIC, with EBIC in March 1972 becoming the first to publish a press release announcing a soon-to-be up-and-running Euro-Arab partnership.

One sticking point in the preliminary discussions between Arab and Western shareholders on the establishment of the new bank consortium was the name they should adopt - European-Arab Bank or Arab-European Bank? Eventually the former prevailed. Some Arab partners also wanted their share in the consortium to total 60 percent. Iraq pressed the Arab League to support this proposal, but EBIC members rejected it, and the two sides finally agreed each would hold an equal share of the capital.

Right from the concept phase, Société Générale de Banque played an important role in proposing in conjunction with Deutsche Bank a structure that involved setting up a holding company in Luxembourg and two subsidiaries, one in Brussels a Eurobank and the other in Frankfurt, focusing more on documentary credits.

A memorandum of understanding on the venture was signed by all partner banks in early June 1972. Inaugural meetings took place on 19-20 July in Luxembourg to set up two distinct companies - the European Holding in Luxembourg and the European Arab Bank in Brussels. The capital of the European Arab Bank was fixed at US$22 million. A third entity, the Europaïsche Arabische Bank, was established later in Frankfurt.

218 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