Deal-making to drive Gulf banking fee fest in 2017

DUBAI: A Middle Eastern investment banking fee bonanza should extend into 2017, spurred by a combination of bond and share sales and mergers and acquisitions as the region adjusts to lower oil prices, bankers say.
Deals such as Saudi Arabia’s $17.5 billion debut international sovereign issue and the sale of a majority stake in retailer Kuwait Food Co (Americana) to Gulf-based Adeptio have helped banks’ earnings, off-setting falls in other regions due to economic uncertainty and volatile markets.
Fees from the Middle East reached $581 million during the first nine months of 2016, an 11 per cent rise compared to the same period in 2015, according to data, while global fees for these services fell 11 per cent to $60.9 billion.
JPMorgan Chase & Co, HSBC and Bank of America Merrill Lynch are among the banks that have been most active in Middle East in 2016 and expect more in 2017.
“Next year could also be good. Five or six GCC (Gulf Cooperation Council) states will have to issue debt and they don’t need a long lead time as they’ve issued before,” Sjoerd Leenart, JPMorgan’s senior country officer for Middle East, Turkey and Africa, said in e-mailed comments.
Bahrain, Saudi Arabia, Oman, Abu Dhabi, Kuwait and Qatar could press ahead with new bond issues in 2017 as they seek to fill budget deficits caused by low oil revenues.
With the outlook for prices improved by Opec’s move to curtail oil output, borrowers in the region are likely to use the opportunity to fill their coffers.
“We expect the strengthened commodity fundamentals to create a good window for issuers in early 2017,” Matthew Wallace, HSBC’s head of global banking, Middle East and North Africa, said in e-mailed comments.— Reuters