JPMorgan has channelled more than $20bn into the Gulf since the Iran war began, while estimating that postwar reconstruction and economic diversification across the region could require hundreds of billions of dollars, reported The National.
Doug Petno, the bank’s co-chief executive of commercial and investment banking, said the lender had increased capital deployment and widened risk limits in the region.
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“We’ve deployed significantly more capital and we’ve expanded our risk limits across the region, one because the region needs it at the moment, but maybe more important than that is we’re just scaling it in dimension of the opportunity,” Petno told The National.
He did not give details on how far the bank had altered its risk appetite, but said teams were assessing country-by-country needs as governments and companies prepare for large capital expenditure demands.
“It could be our balance sheet, it could be the public market, it could be a private market, but the numbers are substantial, market by market,” he told the publication.
He said the total funding requirement would become clearer once the conflict ends.
“When it’s over, I think the world will get a better sense for what it’s going to cost to repair and what it’s going to cost to diversify,” Petno said.
“The one thing I think is certain, the number will be substantial – in the hundreds of billions of dollars.”
The war, which started in February with US and Israeli strikes on Iran and was followed by attacks by Tehran on Arab neighbours, has interrupted business activity and damaged energy and civilian infrastructure.
Petno said discussions with clients differed by country, depending on war damage, economic conditions and existing levels of diversification.
The bank, which set up its regional headquarters in Riyadh last year, plans to expand in the UAE and double headcount in the region over the next three to five years.
Petno said debt markets had stayed open despite disruption, while equity capital markets activity had been weaker.
“All things considered, I think the markets have been fairly resilient in the region,” he said.
