Bank of America Merrill Lynch (BofA) plans to increase lending to businesses in the Middle East as Gulf investors show more appetite for acquisitions, a senior banker at the US financial services firm said.
BofA's move comes at a time when global banks, mostly European institutions, faced with a slump in deal activity and pressure to save money at home, scale back their business in the region and pull out of funding big-ticket projects.
But the bank, which made senior hires in the Gulf region last year, expects investment banking activity to pick up in 2013, according to Wadih Boueiz, the bank's co-head of corporate and investment banking for the Middle East and North Africa.
"We are using our balance sheet more aggressively with strategic clients as part of our strategy to increase investment banking market share. We also see tremendous growth for our corporate banking platform," said Mr Boueiz, who also heads the bank's sovereign wealth fund business.
A wide range of financial institutions, including Credit Suisse, Japan's Nomura Holdings and UBS, have cut jobs in their investment banking teams for the Middle East last year.
Some have sold assets outright to raise capital.
"The Mena (Middle East and North Africa) region remains a strategic priority for Bank of America. We are taking a long term view of the region and are fully committed to further building our business here," Mr Boueiz said.
The bank is betting on a pick up in merger and acquisition activity in the Gulf region this year as high oil prices, stable markets and low valuations spur deals from sovereign wealth funds and large companies.
"Sovereign wealth funds and regional companies looking to expand should drive most of this M&A activity. We expect them to be more active in outbound M&A, whether it's out of their countries into the Gulf/Mena or globally," MR Boueiz said.
Though still far off activity seen in the boom years, the Middle Eastern M&A is showing signs of a revival after a three-year slump, with transaction volume totalling $20 billion in 2012, nearly double that of the previous year, according to Thomson Reuters data.
Mr Boueiz said Middle Eastern investors were increasingly looking into the US for investments, a shift from their traditional preference for Europe.
"Interest in the US has always been there but it went through a major slowdown. The US is starting to show signs of improvement in its fundamentals, banks are doing better and corporates are sitting on excess cash," he said.
* Reuters
