Consequences of the Iraq-Iran conflict
The intensification of the Iraq-Iran conflict, and the threat that hostilities might spread across the region, had a serious impact on economic activity in the Gulf. However, as the Bank points out in its Annual Report for 1987, Maintaining the price of oil at around US$18 a barrel has enabled some of the countries in the region to rebuild their currency reserves. The slight recovery in activity that we observed at our branches in 1986 has continued, in particular in Dubai and, to a lesser extent, in Bahrain. We have continued to diversify our activities there into third party asset management, financial market transactions with the establishment of a Gulf region Private Banking Department in Bahrain.
Running Middle East operations from Headquarters
The network of Paribas branches in the Gulf region was supervised from Paris headquarters by Hubert de Saint-Amand, who was in charge of the Middle East & Africa. From 1980 onwards, Philippe Drillet was entrusted with the responsibility of looking after all the Gulf States. He continued in this role until 1987, and, looking back on this period, he recalls, We only had a small team of three or four management assistants who helped me to supervise the network there, but I often went to the Gulf States myself. It was also my job to ensure that the people in charge of Paribas main business lines were capitalising on the opportunities that we were putting their way. One of the challenges we faced was to find good branch managers, as Paribas did not have a large domestic network in France. This led us to recruit outside of the Paribas Group. All in all, one could say that the establishment of branches and subsidiaries in the Gulf region during the 1970s, was the starting point for Paribas to develop its commercial network outside Europe, i.e. in Africa, Asia and the United States.
Paribas business in the Gulf region in the 1990s
During the 1990s, Paribas branches in the Gulf region remained closely involved with the business, financial and industrial sectors in the Arabian Peninsula, either working with European companies that had contracts in the Gulf, or providing services to major local firms and financial institutions.
In 1995, Paribas Belgium originated a deal which involved Paribas Brussels, London and Paris offices, setting up a large package of financial and export credit agreements. The deal was designed to finance the construction of a gas turbine power plant along with 186 kilometres of high-voltage lines and substations in the Sultanate of Oman. Structured as a BOOT (Build, Own, Operate, and Transfer) project, the contract was awarded to a local company. Paribas acted as paying agent for the multi-source loan, and also participated in the financing. Paribas also acted as co-lead arranger for the loan alongside BNP. In addition, the Paribas London office was joint book-runner for the Swedish buyer credit and acted as a co-lead manager for the associated back-up facility.
59B N P PA R I B A S I N T H E G U L F S TAT E S A N D I T S C O N T R I B U T I O N T O T H E E C O N O M Y O F T H E R E G I O N