While both CAI and CL had a presence in the Middle East prior to the merger, there was minimal overlap between their activities and the fusion was smooth. CAI's presence on the ground was far stronger, aptly symbolised by its postal address in Jeddah - PO Box 1. The bank entered Saudi Arabia in 1949 as Banque de l'Indochine et de Suez, and during nationalisation in the 1970s took a 40 per cent stake with management control of Banque Saudi Fransi (BSF). Calyon's stake has since been slightly diluted, to 31.1 per cent, as a result of a capital increase, but the French bank still manages BSF. CAI also established a presence in Yemen in 1975 and is - with Arab Bank - one of only two foreign banks operating in the country. And while it also had full branches in both Bahrain and the UAE, CL had only a representative office in Abu Dhabi.

'The main overlap - apart from on a few project financings in Oman, Qatar and the UAE - was less in the region and rather back in Europe, where CAI was doing the same out of London as CL was out of Paris,' says Michel Anastassiades, Calyon's global head of project finance. Now all Middle East project finance is done out of Paris, except Saudi deals, which for historical reasons are handled out of London, as are global syndications. 'The two operations complemented each other,' says Amr Alkabbani, Calyon's senior country officer for the Gulf. 'CAI covered full banking activities while CL did very little outside project and asset finance.'

The unified institution is now working to become more than the sum of its parts. 'When we merged, the management took the decision that both banks were strong in the region and that the position should be maintained and developed,' says Anastassiades. While structuring is done out of London and Paris, the regional team is being beefed up and increasing use made of local networks. 'It doesn't make sense to have too many people in the local offices because of long fallow periods, but there has been a mini-migration to Bahrain [Calyon's regional base],' says Anastassiades.

Calyon, like its legacy banks, has a strong position in the Gulf project finance market, which in 2004 saw it join as a mandated lead arranger (MLA) on the Al-Ezzal, Ras Laffan B and Taweelah B private power deals and liquefied natural gas (LNG) transactions in Oman and Qatar (see table, page 34). Looking forward, priority markets are first Qatar, then Saudi Arabia, then the UAE and Oman, with the hydrocarbons and power sectors the main focus. 'Qataris a very rich market with a dynamic government which has entered clever partnerships,' says Anastassiades. 'Saudi Arabia has huge potential but is a more difficult environment - the processes are long and syndication can be problematic given varying appetite for Saudi projects from the banking community.' Calyon backed the consortium led by International Power planning to bid for the Shouaiba independent water and power project (IWPP) but the consortium eventually declined to submit. Outside the Gulf, Egypt is regarded as a promising market and the bank is acting as one of the pathfinders on the financing of Egyptian LNG's second train.

In expanding its activities in the Gulf, Calyon's ambitions are three-fold. Firstly, the bank is aiming to break into the advisory market - a considerable challenge. 'It is a very difficult market to crack, since clients tend to stick with the established players,' says Alkabbani. 'A client recently told us our pitch was impeccable, but the mandate still went to