GCC equity markets need more reforms and consolidation to encourage family firms to list on the stock exchanges and drive higher volumes of merger and acquisition activity, top regional banking executives said.

The bankers gathered in Dubai to discuss Middle East Capital Markets performance and outlook for 2010-11 at the Thomson Reuters Middle East Investment Banking First Quarter Leaders Roundtable.

'Some private family firms in the region are the size of listed companies in Europe,' said Abu Dhabi National Bank co-head of investment banking Robert Mohamed.

'If some of these begin the process of listing this could drive further mergers and acquisitions (M&A) in the region.'

'There needs to be reform of equity markets and businesses in order to bring some of the larger family firms to the equity markets,' said HSBC Middle East chief economist Simon Williams.

'From the point of view of consolidation, now is a good time as a number of the risks that the GCC faces are borne out of duplication of industries', said Citi Middle East chief economist Farouk Soussa.

He said there are clear arguments for consolidation in the Middle East's banking and corporate sectors.

Thomson Reuters recently released its first quarter 2010 review of the Middle East investment banking industry, covering the region's debt and equity capital markets compared with the first quarter of last year.

The review found that the volume of Middle Eastern targeted M&A more than tripled, Investment banking and advisory fees rose 11 per cent, Middle Eastern debt issuance increased more than seven times while equity issuance rose 67 per cent, and loan activity doubled.

The bankers say that there has been very recent evidence to suggest that confidence and growth are returning to the region, but there are still some issues for investors.

'Three to four months ago we were seeing corporates doing five-year transactions which is certainly encouraging,' said Standard Chartered MEPA capital markets managing director Steve Perry.

'Market participants in the Gulf remain relatively upbeat despite volatility in global markets, ongoing debt restructuring issues in Dubai, and slower economic growth in the region.

Expectations around debt financing and M&A in the medium term remain broadly positive,' added Thomson Reuters International Financing review editor Keith Mullin.-TradeArabia News Service