Dubai: French banking giant Societe Generale will commit more resources including more funds, expertise in arranging global finances and more human resources from its global talent pool in the Middle East region, said Frederic Oudea, CEO of Societe Generale on Monday.
The bank, marking its 20th anniversary in the region in 2017 doubled its balance-sheet exposure and tripled its client base in the GCC region during the last 4 years. The low oil prices during the past few years has resulted in a significant increase in demand for financing from the region.
In the context of oil prices remaining low for long, regional sovereigns are trying to structurally transform their economies through economic diversification while balancing their budgets through a combination of spending cuts and revenue augmentation, and at the same time filling their budget gaps using debt and government reserves.
“A long period of low prices have increased the financing requirements of sovereigns in the region. Many governments have already raised funds in the international markets. GCC governments’ efforts to structurally transform their economies have increased demand for longer term financing from governments, government-related entities and private sector,” said Oudea.
Although there has been a slowdown in economic activities across the GCC due the pressure from lower oil prices, the economic situation has increased the region’s demand for international funding from varying sources ranging from governments, private sector, public private partnerships and financial services sector.
“While debt capital market financing is a very important component of funding in the region, we expect to deliver innovative financing solutions to a number of governments and private sector entities through our expertise in project financing, infrastructure financing, Export Credit Agency (ECA) financing and structuring complex financing solutions for public private partnerships,” said Richad Soundardjee, Chief Executive Officer Middle East, Societe Generale.
The bank is currently involved in five large systemic project financing deals in the region that goes beyond direct financing. In a number of such projects bank is using its global expertise to arrange financing involving appropriate global agencies.
While many sovereigns in the region attempt to structurally change their economies to move away from excessive dependence on oil sector, many of them want to strengthen their industrial base. This calls for large investments in infrastructure. Soundardjee said ECA financing is a great option for many of these infrastructure related investments.
In addition to its role in structured finance and debt financing, the bank is keen on participating in large projects that require participation of global investors.
“The structural transformation of GCC economies will require implementation of a number of very large projects. There are a lot of very ambitious projects planned for the future in the next 5 to 10 years. So far we have seen big demand coming in for debt finance and advisory from the region. We think a lot more opportunities to participate in financing infrastructure projects are coming up in the region,” said Oudea.
The bank became active in the region from the region in 1997 with the creation of a representative office in Bur Dubai, which led to the opening of a full-fledged branch in 2007 in the Dubai International Finance Centre. Its geographical footprint has expanded since then, with offices being opened in Abu Dhabi and Riyadh, and participation in transactions across the GCC and North Africa.