French investment bank Natixis is looking to broaden its services to regional clients.
The bank is growing its presence in Saudi Arabia even as it plans to make cuts elsewhere.
The lender gained its licence to operate from the kingdom’s Capital Market Authority in May this year, and continues to hire new staff, its new Saudi Arabia chief executive Ammar Bukhamsin said.
“We’re looking to add incrementally in the kingdom, so we’re looking at probably three senior banker roles in addition to other supporting functions in Riyadh,” said Mr Bukhamsin, who was appointed last month.
Natixis is majority-owned by French bank Groupe BPCB. The bank already has 12-15 people serving the kingdom, mainly from other locations. It currently has three people in the kingdom and a total of about 60 people covering the Gulf, Egypt, the Levant and Turkey.
“It’s quite a substantial proportion of our regional workforce, demonstrating the importance of the Saudi market for us going forward,” he said.
Like many European investment banks, Natixis has had a tough year, contending with negative interest rates in Europe and making provisions related to potential loan losses as a result of the pandemic. Its group chief executive was replaced in August after the lender posted two successive quarterly losses.
Although the bank moved back into profit in the third quarter, it declared a €222 million net loss for the nine-month period, compared to a €1.53 billion profit in the same period last year. Global revenue also fell 18 per cent year-on-year to €5.08bn. The bank declined to say how much of this was generated in the Middle East.
Last month, the lender's new chief executive, Nicolas Namias, said the bank would withdraw from some of the more complex parts of equity derivatives trading and unwind a partnership with London-based fund manager H20 Asset Management. It also plans to generate €350m of savings by the end of 2024 through a "transformation and efficiency" programme.
“The cost saving is a global exercise that we are doing and I think everyone is doing post-Covid,” Barbara Riccardi, Natixis’s Middle East head of corporate and investment banking, said.
“For the region … the fact that we are still going ahead with investment in Saudi and for which we are hiring says a lot," Ms Riccardi said. "The bank continues to be interested in doing business, it will continue doing it in an efficient and selective way. But the Middle East is definitely an area where the bank is continuing to invest.”
As well as its geographic growth in the kingdom, the lender is broadening its range of services, Ms Riccardi said. It is best known in the region as a funder of infrastructure, with recent transactions including Adnoc’s $20.7bn oil pipelines deal, phase four of the Mohammed Bin Rashid Solar Park in Dubai and Saudi Arabia’s first utility-scale solar project, Sakaka.
“What we want to be able to do is to use the expertise that we have developed in the sector into more strategic types of business – project bonds or more general ECM (equity capital market) issuances,” Ms Riccardi said.
This has led to the creation of a regional mergers and acquisitions desk, which will also advise clients on “optimising their shareholding” once projects reach completion, she added.
The other market opportunity identified is green financing, Ms Riccardi said.
Last year, the company introduced a green weighting factor it assigns to risk-weighted assets when deciding whether to make an investment or not. It also recently announced that it would cease funding shale oil and gas projects globally.
However, Ms Riccardi said it fully intends to keep funding the broader energy sector, particularly as so many new projects involve reducing emissions intensity or diversifying business lines.
“We will continue doing oil and gas business, but more selectively and towards that transition kind-of angle. Which, frankly everybody is doing. I think every single oil and gas company have made announcements to this extent,” she said.
