Natixis Corporate and Investment Banking expects at least 10 per cent growth in its Middle East business next year, despite uncertainty over the economic effects of the Iran war and forecasts that Gulf economies will contract. The French lender plans to add staff and capabilities in the UAE and Saudi Arabia as it pursues expansion while the conflict’s economic fallout remains unclear.
Bruno Le Saint, chief executive of Natixis CIB for Asia Pacific and Middle East, said the bank remained confident about its regional outlook. “For the foreseeable future, for the next year, I'm very optimistic that we will be growing 10 per cent at least,” he told The National.
The Iran war began on February 28. All-out hostilities stopped in early April, but several attempts to secure a permanent agreement to end the conflict have failed. Le Saint said the bank might revise its forecast if the fighting continued. “Of course, if the conflict stays for the next two to three years, what I say might at some point be revisited,” he said.
War uncertainty and economic forecasts
The World Bank expects Gulf economies to contract by an average of 4.3 per cent this year, revising its April forecast down by 5.7 percentage points. The International Monetary Fund also expects the region’s oil-rich economies to shrink this year, followed by a strong recovery next year if shipping operations return to normal, managing director Kristalina Georgieva said.
Some economies are contracting from a GDP perspective, Le Saint said, making it harder for Natixis CIB to reach its natural market share. He said the bank’s franchise and expertise match client needs, and that it can keep growing at its current pace. “We are expanding, we are investing, so we are capturing market share at a time where not everyone has full attention on growing the business here,” he said.
Regional debt-capital-market deal volume has dropped by about 10 per cent this year. Le Saint called the market “relatively resilient.” Borrowers, he said, are reluctant to access markets because yields and rates are too high, not because liquidity is unavailable. Clients can wait, turn to other funding options or use their own liquidity.
“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. He added that clients aren't under pressure to find liquidity. Many are waiting for better conditions or a new pool of liquidity.
Expansion in the Gulf
The UAE and Saudi Arabia are Natixis CIB’s two largest regional markets. The bank is part of Groupe BPCE, the eurozone’s fourth-largest banking group, and operates from the Dubai International Financial Centre. It employs 80 people in Dubai and plans to expand its workforce and capabilities there.
“I don't think there have been many international banks growing staff in this region,” Le Saint said, referring to the current situation. Natixis CIB also plans to continue expanding in Saudi Arabia, where it operates through Natixis Saudi Arabia Investment Company. “We still think that we are underinvested in Saudi Arabia,” he said.
Saudi Arabia’s Vision 2030 agenda fits the bank’s financing and investment-banking expertise in telecoms, energy, infrastructure, metals and mining. Natixis CIB is also weighing expansion into Turkey, which Le Saint called “a big economy in the region.” The possibility, he said, remains “under exploration for now.”
Natixis CIB recorded double-digit regional growth over the past five years and wants to keep that pace. Its Asia and Middle East platform accounts for more than 15 per cent of the bank’s overall business, and Le Saint said it aims to lift that share to 20 per cent or more. The bank combined its Asia and Middle East operations at the beginning of last year, connecting Middle Eastern clients with Asian markets and giving Asian clients access to funding pools in oil-rich Middle Eastern countries.