deals and investment vehicles outside the Arab world via the International and Arab Investment Bank. The bank did not engage in day-to-day commercial banking activities.

The non-Arab shareholders in CAII were BNP, Banque Nationale de Paris Intercontinentale, Société Financière Européenne, Banco Central, Canadian Imperial Bank of Commerce, Oesterreichische Länderbank and the Union Bank of Switzerland (UBS). The Arab shareholders included the Kuwait Investment Company, the Government of Abu Dhabi, Bank of Kuwait & The Middle East, Banque du Liban et d Outre-mer, Banque Nationale de Tunisie, National Commercial Bank and Union Bancaire pour le Commerce et l Industrie. The President of CAII was Abdlatif Al-Hamad, Managing Director of the Kuwait Investment Company. Pierre Ledoux, President of the Banque Nationale de Paris (BNP) acted as vice- President.

Ledoux explained the raison d être of CAII. CAII is basically a service company which acts as a catalyst, generating opportunities for various financial institutions, he said. While endeavouring to provide opportunities for Arab capital to invest in European countries, it will also continue to promote investment in the Middle East and other developing countries.

BNP also helped to set up the Saudi International Bank Limited. While the Banque Arabe et Internationale d Investissements was headquartered in Paris and managed by French bankers, Saudi International Bank Limited, founded in London in 1975, was 55 percent owned by Saudi interests. Morgan Guaranty Trust held an additional 20 percent, and the remaining 25 percent was shared between five international banks, including BNP, which took a 5 percent shareholding.

Opening of the BNP branch in Bahrain

During the 1970s, BNP was expanding internationally, especially in the United States and Asia. Until then, the Bank s policy was to approach the Gulf States through the International and Arab Investment Bank, while monitoring the situation from a representative office in Beirut. It was only in 1975, that BNP decided to establish a presence on the ground in the Gulf region.

Bahrain became BNP s favoured choice for a branch location as the country was starting to benefit from the decline of Beirut as a financial centre. Among its advantages were: A stable government, a good social climate and excellent relations with neighbouring countries; Strong government support for the financial services sector; Its proximity to the Kingdom of Saudi Arabia, the most populous country in the Gulf, where oil wealth was leading to rapid economic diversification into energy-intensive industries; No taxation on either income or profits, and foreign bank branches with offshore status only had to pay an annual fee of US$25,000;

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