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Wed 16 Dec 2015 11:50 AM

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Deutsche Bank Saudi unit to post record year, despite oil price slump

Frankfurt-based lender says growth was mostly driven by structured financing, mergers and acquisition work

Deutsche Bank Saudi unit to post record year, despite oil price slump
The headquarter of the Deustche Bank, Germanys biggest lender, is pictured in Frankfurt am Main, western Germany on January 29, 2014 ahead of their annual results press conference. (Daniel Roland/AFP/Getty Images)

Deutsche Bank’s Saudi Arabian unit expects to post its best-ever performance this year even as oil slumps and the kingdom’s economic growth slows, according to Jamal Al Kishi, chief executive officer of the business.

“2015 has been a record year for us in Saudi Arabia, mostly driven by structured financing and M&A work,” Al Kishi, head of Deutsche Securities Saudi Arabia, said in an interview in Riyadh.

“For Deutsche Bank, the business in Saudi Arabia is one of the largest contributors to the Middle East and Africa sub- region, and we see that reflected in the continued investment and commitment here.”

The Frankfurt-based lender was among banks that arranged a 2 billion riyal ($530 million) bond for Riyadh’s Arab National Bank in September and participated in a $10 billion loan for oil producer Saudi Aramco in March. The bank is also advising Aramco on a potential acquisition of some marketing, retail and refining assets from China National Petroleum Corp., people with knowledge of the matter said in October.

A drop in the price of oil - Saudi Arabia’s principal form of revenue - is leading the country to report its first budget deficit since 2009, while economic growth is expected to slow to 2.5 percent next year, from 3 percent in 2015, according to the median estimate of 12 economists compiled by Bloomberg.

Despite that, deal activity remains active as state-owned companies seek investments abroad and to raise capital.

“The opportunity here is great and really the international banks here are only just scratching the surface,” Al Kishi said. “We definitely see a lot more opportunity in Saudi Arabia even with the oil price where it is.”

Such bullishness may mean Deutsche Bank’s business in Saudi Arabia will escape cost cutting measures being considered by co- chief executive officer John Cryan. His plans involve eliminating the dividend for two years, pulling out of businesses in 10 countries and shrinking headcount by about a quarter to revive profit and reverse a share slump.

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