CaixaBank pins hopes on Arab Spring not Europe winter

Euro Zone: CaixaBank hopes to counteract a saturated banking market at home with an expansion in the Middle East.

CaixaBank, based in Barcelona, is seeking to capture a bigger slice of the increasing trade between the Arab world and Spain, as the euro zone's fourth-largest economy grinds to a halt.

Stocks: Caxiabank

The bank's share price in euros.

The bank, Spain's third-largest, was hoping to counteract a saturated banking market at home and a migration of clients to emerging economies, said Juan María Nin, the deputy chairman and chief executive, as he inaugurated the bank's representative office in Dubai.

"If our clients begin to have desalination plants in the Arab countries, if they begin to build up railways, if their engineering companies are the leading companies in this part of the world, then we have to be with them," he said. "Europe is mature, there's no growth and clients are coming here."

Among its projects in the Middle East, CaixaBank is involved in providing financial support for the planned high-speed rail link between Mecca and Medina in Saudi Arabia. The bank is also investing in Algeria and Egypt.

"Much better to have an Arab Spring than a terrible winter in Europe," said Mr Nin.

Spain's property bubble burst in the wake of the financial crisis, leaving the country with a battered banking sector and a 20 per cent unemployment rate. Real GDP is expected to grow at 0.8 per cent this year, according to the IMF.

Spain's regional savings banks were perceived as the weakest link in the banking system because of their links to the country's troubled property sector.

CaixaBank listed on the Madrid Stock Exchange in July, amid a consolidation of Spain's banking sector. The bank reported a rise in profits of 11 per cent to €833.4 million (Dh4.17 billion) in the first half of this year compared with the same period last year, writing down €1bn in financial assets.

The UAE committed €150m, alongside €300m from Qatar, to assist in the recapitalistion of the Spanish regional banks in March.

The sovereign debt crisis in the euro zone and slowdown in other banking markets has led financial services companies with small regional operations to invest in the Middle East to try to boost profits.

JPMorgan, Spain's Allfunds Bank and China's ICBC have all sought to capture a bigger share of the UAE's financial services sector.