DUBAI/PARIS, Oct 16 (Reuters) - BNP Paribas is

planning to reduce headcount in Bahrain and scrap Manama as its

Middle East and Africa head office, after deciding that all of

its local offices in the region would report to Paris, two

sources close to the matter said.

Staff were told during a conference call this week that the

changes would lead to a reduction in the workforce in Bahrain by

early next year, one of the sources said.

The decision by France's biggest bank to do away with an MEA

headquarters comes as competition intensifies between Dubai and

Abu Dhabi in the United Arab Emirates and Riyadh in Saudi Arabia

for regional financial dominance.

BNP Paribus, which has offices in these three cities as well

as in Kuwait, Qatar, and Morocco, wants to avoid the appearance

of favouring any of the cities in the growing regional rivalry,

one of the sources said. The bank has been boosting its

sovereign wealth fund coverage teams in both Abu Dhabi and Saudi

Arabia, the source added.

The bank said in a statement to Reuters on Wednesday that it

"has been operating in Bahrain for over 50 years" and that it

"will maintain its significant presence in the country and

pursue its local business development."

"The BNP Paribas Group is constantly adapting its set-up in

all the countries where it operates, according to evolution in

the markets, technology, customer needs and its risk policy," it

added.

The bank's strategy echoes moves by other financial firms

looking to tap a growing pool of wealthy clients by opening more

offices in Riyadh and Abu Dhabi besides traditional regional

hubs like Dubai.

Saudi Arabia recently introduced rules mandating banks

and asset managers to pick the kingdom as their regional

headquarters to avoid missing out on lucrative government

contracts.

Bahrain, a vibrant financial hub in the 1970s and 1980s, has

struggled since the rise of Dubai in the early 2000s and

following Arab Spring uprisings in the country in 2011.

BNP Paribas' Bahrain base, which provides corporate and

institutional banking and investment solutions as well as

Islamic banking services employed 261 people as of the end of

last year, according to the bank's annual financial report.

(Writing Federico Maccioni; Editing by Tommy Reggiori Wilkes,

Mark Potter and Mark Porter)