The World Bank now forecasts that Gulf economies will contract by an average of 4.3 per cent this year, a 5.7 percentage-point cut from its April estimate. That's the cost of a war Iran started to reshape the region, and the bill is reaching balance sheets across the Gulf. One French lender, though, says it plans to expand anyway.
Natixis Corporate and Investment Banking expects double-digit growth in its Middle East and Asia business this year and next, according to Bruno Le Saint, chief executive of Natixis CIB for Asia Pacific and Middle East. The bank plans to hire more bankers in markets including the UAE and Saudi Arabia. “In the overall region, we want to grow in double digits on average. This is what we've been doing over the past years and going forward we'll keep that pace,” Le Saint told The National.
The War's Economic Toll
The Iran war began on February 28. All-out hostilities stopped in early April, but several attempts to reach a permanent agreement to end the conflict have failed. The pause remains fragile; diplomacy has yet to produce a settlement.
The International Monetary Fund also expects oil-rich economies in the region to contract this year, then recover strongly next year. That rebound depends on shipping operations returning to normal, managing director Kristalina Georgieva said. Maritime traffic, in other words, remains the hinge on which the Gulf's recovery turns.
Regional debt-capital-market deal volume has dropped by about 10 per cent this year. Le Saint called the market “relatively resilient.” He said borrowers are reluctant to tap markets because yields and rates are too high, not because liquidity is scarce. “I don't think that our clients are in any stress to find liquidity. Many of them are just waiting to see better conditions or to tap a new pool of liquidity,” he said.
Who's Filling the Gap
Le Saint said few international banks are adding staff in the region now. “I think it's important because, in the context of the current situation, I don't think there have been many international banks growing staff in this region,” he said. Natixis employs 80 personnel in Dubai and plans to add more, “expanding our workforce and our capabilities on the ground.”
Chinese lenders are moving in, too. “Chinese banks are coming back in the region and are investing massively, especially to support probably, the need to source and help the flow of energy to China,” Le Saint said.
The bank also wants to grow in Saudi Arabia, where it operates through Natixis Saudi Arabia Investment Company. “We still think that we are underinvested in Saudi Arabia,” Le Saint said. Riyadh's Vision 2030 agenda matches the bank's expertise in telecoms, energy, infrastructure, metals and mining. Turkey is under consideration as well. Le Saint called it “a big economy in the region” and said expansion there is “under exploration for now.”
Optimism With a Caveat
Le Saint said he's “quite confident” about the bank's prospects, arguing that “we have not yet reached our natural market share,” even as some regional economies contract. He acknowledged that reaching that share becomes harder in a shrinking market. The bank expects at least 10 per cent growth in the broader Middle East next year and hopes to approach 20 per cent in the next two to four years, depending on how quickly the rest of the business grows.
He also offered a warning. “Of course, if the conflict stays for the next two to three years, what I say might at some point be revisited. But for the foreseeable future, for the next year, I'm very optimistic that we will be growing 10 per cent at least,” he said.
Natixis CIB, part of Groupe BPCE, the eurozone's fourth-largest banking group, is marking its 20th anniversary and has operated from the Dubai International Financial Centre for two decades. It combined its Asia and Middle East operations at the beginning of last year. That platform accounts for more than 15 per cent of the bank's overall business, and Le Saint wants to raise the share to 20 per cent or more.
Why This Matters: A war launched by Iran has pushed Gulf economies into contraction, and the World Bank's 4.3 per cent forecast shows how quickly regional aggression creates a financial cost for neighbors who didn't start the fight. Banks like Natixis are betting that the Gulf's underlying strength will outlast the conflict, but even Le Saint concedes that a war lasting two to three years would force him to revisit his numbers. Repeated failures to reach a permanent settlement mean the region's recovery still depends on shipping lanes staying open and on a ceasefire nobody has managed to secure. From this perspective, capital is staying in the Gulf because investors see durable states there, while the unresolved Iran conflict limits how quickly that confidence can pay off.