Abu Dhabi. These would serve as intermediaries in the regional effort being co-ordinated from Bahrain.
Office in Abu Dhabi, stake in Kuwait
In 1979, BNP opened a representative office in Abu Dhabi, intended to cover the United Arab Emirates. The following year the Bank acquired a 22 percent share in the Arab European Financial Management Company (AREF), a financial company based in Kuwait, to facilitate the provision of financing to its clients in the region.
René Thomas trip to Kuwait and the economic difficulties of 1985
In the spring of 1985, BNP President René Thomas travelled to Kuwait to meet the directors and partners of AREF, in which BNP held a significant stake. Just a few months after this trip, on 9 December 1985, the OPEC countries agreed to considerably reduce the price of oil in order to boost demand, a move designed to help them meet their under- used production capacity and regain some lost export market share. However, the decision coincided with lower overall world demand, and resulted in a substantial drop in OPEC oil revenues.
As a result of this economic shift, the Gulf States introduced a raft of budgetary control measures and either postponed or cancelled a number of development projects. As state spending was the main source of economic activity in the region, the measures in turn led to a substantial economic slowdown. These events and the reaction to them prompted BNP to concentrate on its most profitable and least risky areas of business, namely wealth management and investment consultancy.
In June 1990, BNP opened a representative office in Bahrain, alongside the offshore banking unit. Its purpose was to institute a network across the region, looking to attract investment capital from both institutional investors and private clients throughout the Gulf countries.
BNP s position in the early 1990s
During the 1980s, BNP had made its enterprises in the region profitable but, by the beginning of the 1990s, a slowdown was increasingly evident. The 1990-1991 Gulf War brought business to a halt, as the conflict interrupted AREF dealings. After the cessation of hostilities, regaining momentum at AREF proved difficult, particularly given the difficulties that the International and Arab Investment Bank was experiencing. However, the commitment of both BNP and Paribas to the region was unwavering, and the two banks stepped up operations as business confidence returned to the Gulf in the 1990s. This included the opening of a BNP representative office in Abu Dhabi.
66 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