and Paris. Al-Hamad wished to foster co-operation with Paribas on international financial deals, treasury operations and liquidity placement, as well as possible participation in financing deals on which Paribas might act as lead bank.

The banking system in Dubai and Abu Dhabi in 1969

Although geographically very close, the two emirates of Dubai and Abu Dhabi used different currencies. Dubai signed a currency agreement with Qatar to set up the Qatar- Dubai Currency Board and issue a single currency. In 1966, H.H. Sheikh Zayed bin Sultan Al Nahyan, the Emir of Abu Dhabi, decided to replace the Indian rupee, which had been seriously devalued in June 1966, with the Bahraini dinar. But this did not prevent the two emirates from rapidly developing their banking systems. Until 1963, there was only one financial institution in Dubai: this was a branch of the British Bank of the Middle East, which had been opened at the end of World War II to provide payroll and banking services for British troops stationed in the region.

Between 1963 and 1967, seven more banks received authorisation from the Ruler of Dubai to open branches. So by 1969, there were eight banks in total, of which two were local. The total assets of the banks increased very quickly16, growing from QDR (Qatar-Dubai riyal) 187,686 million in 1965 to QDR 591,900 million17 in 1968.

Dubai seems to have been the most suitable of the emirates in which to set up a bank. Traditional trading activities were expanding, buying and selling gold remained a lucrative activity and moreover there was the prospect in the near future of capital flows from the substantial oil revenues.

The situation in Abu Dhabi was somewhat different, and it took rather longer for banks to establish themselves. The only local bank was the National Bank of Abu Dhabi, set up on 13 February 1968, with BHD (Bahraini dinar) 1 million in capital, 85 percent subscribed by the State and its residents. Of the remaining share, 10 percent was put up by the Gulf Finance Corporation based in Vaduz (Liechtenstein), while the Westminster Bank Ltd of London, which actually ran the bank, held 5 percent of the capital. There were also two other banks from the region: the National Bank of Dubai and the Bank of Oman. In addition to this, there were five foreign banks: the Eastern Bank and the Ottoman Bank, which had established themselves there in 1963; the British Bank of the Middle East; the United Bank of Pakistan, which set up there in 1967; and the Arab Bank, which opened a branch in 1968.

16. Information given in a memo from the French Embassy in Kuwait, 25 April 1969

17. The figures expressed in Qatar-Dubai Riyal (QDR) represent respectively, very approximately, USD 1.9 billion and USD 6 billion correct as of June 2014

42 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