GCC Investment Banking Boom: Shifting Focus From Oil to Assets

The Gulf Cooperation Council (GCC) region is witnessing a significant transformation in investment banking. Traditionally centered around oil, the sector is now diversifying rapidly, with increased focus on infrastructure, renewable energy, technology, and other asset classes. Governments and financial institutions are driving this shift to build more resilient, future-ready economies. This evolution reflects broader economic reforms and a strategic move to attract global capital, reduce oil dependency, and enhance long-term financial sustainability in the region.

Banks are increasingly optimistic about business prospects in the Gulf, thanks to strong signals from companies in the region. Corporate and investment banking (CIB), which already represents a significant share of banking income in the GCC, is growing at an annual pace of 14%, more than double the regional norm, according to McKinsey. Industry experts believe that CIB revenues in the region could reach $100 billion by the end of the decade, fueled by ongoing economic reform.

Wissam Haddad, CEO of SICO Capital in Riyadh, notes that every country in the GCC is actively pursuing economic diversification beyond oil, which is expected to unlock widespread growth across industries. His firm is focusing on developing offerings tied to cutting-edge technologies.

From Saudi Arabia’s Vision 2030 to the UAE’s focus on green and digital initiatives, Gulf nations are channeling billions into transforming their economies. These large-scale efforts are driving increased demand for advanced financial services. Abbas Husain from Standard Chartered emphasizes that with governments prioritizing infrastructure upgrades, clean energy, and tech innovation, banks have become pivotal partners. Today’s financial needs are becoming more intricate, prompting demand for solutions that blend traditional lending with wider capital market access.

The GCC’s CIB clientele is broad and diverse, ranging from sovereign entities and multinational corporations to wealthy individuals, institutional investors, publicly listed firms, and smaller businesses. Many of these clients are instrumental in executing national strategic plans and are deeply engaged in initiatives that promote innovation, sustainability, and infrastructure. According to Husain, they now seek comprehensive financial strategies that can support cross-border and multi-market ambitions, covering everything from debt structuring to risk and advisory services.

Capital markets in the region are also undergoing a shift, with increased activity in equity sales, debt instruments, and mergers and acquisitions contributing to the CIB boom. In Q1 2025 alone, M&A transactions jumped 66% to $46 billion across 225 deals, according to Ernst & Young, with the UAE accounting for the lion’s share. Both the UAE and Saudi Arabia have seen IPO markets expand consistently by 10–15% each year for the past ten years.

Karim Shoeib, group CEO of investment banking at Al Ramz, attributes the IPO surge, especially in the UAE to government privatizations and listings of family-owned firms. These developments are opening new investment opportunities for institutions and individuals alike. While the UAE and Saudi Arabia remain dominant, he suggests investors should monitor markets in Bahrain and Oman, where Al Ramz recently secured regulatory approval.

Family-run companies, which represent about 90% of the private sector in the UAE and 60% in Saudi Arabia, are poised to significantly influence capital markets. As the region prepares for a major transfer of generational wealth estimated at over $1 trillion by 2030, investors could gain access to legacy businesses. One notable case is Majid Al Futtaim, the prominent Emirati retail group, which may go public following internal disputes after the founder’s death.

According to Haddad, the rise in public listings, strategic developments, adoption of sophisticated financing tools, and continued industry consolidation reflect a maturing landscape. Sectors like hospitality and insurance, which are still fragmented, offer opportunities for mergers. Many GCC nations have robust long-term strategies centered around privatization and sector diversification, which are driving strong demand for CIB offerings.

International financial institutions are expanding rapidly in the Gulf. BNY Mellon established a regional base in Riyadh, joining Goldman Sachs and Citigroup, which gained licenses the previous year. On the investment front, U.S.-based I Squared Capital pledged $1 billion to infrastructure in Saudi Arabia, while Azura, a Monaco wealth manager overseeing $5 billion, is relocating operations to Abu Dhabi. UBS plans to launch an office in the UAE capital, and JPMorgan is hiring over 100 new staff to bolster its footprint in the region.

Shoeib sees this increased foreign participation as a positive sign, showcasing the region’s strong fundamentals and growth outlook. He views it as a natural progression in the evolution of a sophisticated financial ecosystem. Although regional banks maintain advantages in client relationships, cultural fluency, and understanding of local regulations, especially in areas like Islamic finance, global players bring broader balance sheets and cutting-edge digital tools.

While foreign entrants increase competitive pressure, Haddad points out that they also elevate industry standards, introduce global expertise, and help attract more capital. He believes their presence supports local efforts by expanding market involvement, rather than posing a threat. Still, to remain competitive, local institutions must go beyond offering capital. Husain highlights that success now depends on being a comprehensive financial partner with both regional insight and global capabilities. Providing end-to-end services, from strategic guidance to execution and long-term funding, is becoming essential. What clients want most is a trusted advisor who supports them throughout their growth journey.

Despite strong momentum, the sector faces multiple challenges. Geopolitical instability, oil market fluctuations, new tax regimes, and rising interest rates are raising capital costs and slowing deal-making. Shoeib remarks that inflation, interest rate cycles, and broader global uncertainty continue to influence investor confidence. Since most GCC currencies are pegged to the U.S. dollar, navigating these macroeconomic variables requires resilience and a long-term focus.

There are also internal challenges, such as talent shortages and keeping up with fast-paced tech advancements like generative AI. Husain says the future of CIB in the Gulf will be defined by institutions that can align innovation with execution, combining global networks with local ambition. Firms that can span jurisdictions, connect international investors with regional opportunities, and offer clarity amid complexity will lead the way. At the same time, liquidity is becoming an issue, as demand for credit increasingly surpasses deposit growth. In Saudi Arabia, the loan-to-deposit ratio has surpassed 100%, with lending expected to grow 12–14% per year, while deposits rise by only 8–10%.

McKinsey’s report highlights that these rising ratios could constrain liquidity across the region. Compounding this, falling interest rates are eroding returns, with 85% of bank income tied to interest-based products. To keep up their growth trajectory, Gulf banks must adapt. McKinsey recommends actions such as improving operational efficiency, diversifying lending strategies, expanding capital market activity, and enhancing foreign exchange and transaction banking services.

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Source: gfmag‍