BNP denies Dubai shift a move to diversify

BNP Paribas, the largest foreign bank in Bahrain, has opened two offices in Dubai as part of a drive to protect itself against the disruption it faced during last year's unrest in Manama. While BNP denies it is diversifying operations away from its regional headquarters, some other bankers say its move reflects a wider nervousness among big companies about the Gulf state amid the year-long protests against the government. Crédit Agricole, Robeco and Nomura are among those who have shifted headquarters or staff from Bahrain — where the financial services sector accounts for a quarter of national economic output — to Dubai. BNP, which has an estimated 400 staff in Bahrain, has opened a back-office operation, BNP Paribas Services, at the Cisco building in Dubai's technology and media free zone. Staff say a significant number of back-office staff, including those from information technology and payments departments, are being asked to move to Dubai. BNP says this "secondary functions platform" is meant to ensure business continuity "in line with the group's global policy". The main platform will remain at the regional head office in Manama. The Dubai office would act as an emergency back-up. Last year the head office and its off-site back-up in Manama were affected by unrest, as clashes broke out on the doorstep of the financial district. Wealth management In November, BNP also incorporated a wealth management office in Dubai's financial centre, to "support clients" near the Dubai International Financial Centre (DIFC), according to the statement. Staff from another Dubai office, as well as Manama, are also set to move to this new DIFC location, where the regional head of wealth management will be based, a BNP executive said. Some of the Manama headquarters' employees want to leave after a year of turmoil, but others, including many Bahraini staff, are keen to stay. The bank declined to comment on staff numbers or moves, saying its decisions are always driven by "commercial business needs". The chaotic scenes caused by last February's demonstrations in Manama prompted most foreign banks, including BNP, to relocate staff temporarily outside Bahrain. The Bahrain government says it is implementing judicial and police reforms after an independent commission last year concluded there had been an excessive use of force and systematic torture. Opposition activists say police brutality remains widespread as authorities try to limit dissent to Shiite villages, whereas the state insists it uses force only when necessary to protect the public. Bahrain established itself as the Gulf regional offshore banking hub in the 1970s, but during the past decade it has lost its pre-eminence to Dubai. It aims to prevent its position being eroded further by the damage to its reputation done by a year of revolt and repression. The Bahraini government says that despite a difficult year, the number of institutions based in Manama has risen from 401 to 414, including asset manager Notz Stocki and Canara Bank. "The key economic fundamentals that make Bahrain an attractive destination for investment — low costs, a trusted and transparent regulatory framework, skilled workforce and ready access to the trillion-dollar Gulf market — all remain in place," said Shaikh Mohammad Bin Eisa Al Khalifa, chief executive of Bahrain's Economic Development Board. The DIFC, which hosts 21 of the top 30 global banks, in 2011 increased its client base by 7 per cent. Abdullah Mohammad Al Awar, CEO of Dubai International Financial Centre Authority, said: "BNP realised DIFC is a good platform to operate globally, as we cover a wide area, but that doesn't mean BNP has left Bahrain."