IslamicFinance.de

Bahrain-based Gulf Finance House (GFH) expects to complete a proposed capital reduction by the end of the second quarter. Under the proposal, which still requires regulatory approval, GFH will reduce the nominal value of its shares by 13.8 per cent to $0.265 per share from $0.3075. As a result, paid-up capital will be cut to $837 million from $972m. The cash reduction will not involve any cash transfer and will not change the bank's net equity. However, under accountancy rules, it will help remove accumulated losses from GFH's balance sheet.

The first UK-Bahrain Islamic Finance Summit was held in London and highlighted the importance of co-operation in the area of educational and training development in Islamic finance. The BIBF presented a paper on that topic, saying that a million professional Islamic finance jobs are expected to be created worldwide by 2020. The paper highlighted several trends and facts within the Islamic financial sector. It also highlighted that this has produced a paradigm shift from an educational standpoint in Organisation of Islamic Co-operation countries and will generate multiple specialised training opportunities for human capital development within the sector. The BIBF team also participated in many panel discussions during the event, focusing on investment, education, and regulation.

Gulf Finance House (GFH), the Bahrain-based Islamic investment bank, yesterday held the first meeting of its new board members following their election earlier this month. The eight-member board includes Dr Ahmed Khalil Al Mutawa (chairman), Musabah Saif Al Mutairy (vice-chairman) Faisal Abdulla Fouad Abubshait, Bashar Mohammed Almutawa, Yousef Ibrahim Al Ghanim, Dr Khalid Mohammed Al Khazraji, Shaikh Mohamed Daij Al Khalifa and Mohamed Ali Talib.

Bahrain-based Gulf Finance House (GFH) plans to issue a sukuk or arrange new debt facilities of up to $500 million. The funds raised will be used to restructure the current liabilities, develop projects and for acquisitions of new businesses. The announcement follows ordinary and extraordinary general meetings of the bank yesterday, with the board getting authorisation from shareholders to determine the final structure of the sukuk or the debt facilities. GFH chairman Dr Ahmed Al Mutawa said that the bank reported a net profit of $6.3 million, reduced operating cost by 20 per cent and successfully restructured debt last year. Additionally, the shareholders approved the appointment of eight new members to the board for three years. The auditors and the Sharia supervisory board have been reappointed for the year.

Khaleeji Commercial Bank (KHCB), a Bahrain-based Islamic retail bank, has completed due diligence on a proposed merger with Bank Alkhair, a Bahrain-based Islamic wholesale bank. KHCB shareholders were told by chairman Dr Fuad Al Omar that the matter was under discussion and no decision had been taken yet. When compared with 2012 levels, the bank's total assets grew by 14.6 per cent to BD542.2 million last year with the consumer finance portfolio increasing by 66.7pc. However, the provision of an aggregate amount of BD17.7m in impairment provisions and marked to market losses resulted in net loss of BD19.2m. Dr Al Omar said the bank continued to improve its profitability with increase in revenue from core operations and control of costs. On future plans, he said KHCB would launch new products based on customer needs.

The board of Bahrain-based Ithmaar Bank has initiated several measures aimed at reducing costs this year. The initiatives include a combination of increased revenue, improved margins and cost reductions across Ithmaar Group which are expected to result in savings in the range of $25-$35 million annually. The bank now plans to leverage existing resources and share information technology systems and infrastructure between Ithmaar Bank in Bahrain and its subsidiaries, mainly Faysal Bank (FBL) in Pakistan. Moreover, the lender has identified areas to reduce costs, including staff and other overheads, and now wants to realise the full potential of these cost synergies through rationalisation of human resources and IT infrastructure.

ABC Islamic Bank has announced that its net profit for last year was $12.2 million, 48 per cent higher than the previous year of $8.3m. Net profit for the fourth quarter of last year was $3m, 112pc higher than the same period of 2012. Total operating income grew 12.8pc to $18.1m compared to the previous year while operating expenses decreased by more than 20pc to $5.5m. No impairment provisions were required during the year. The bank's capital base remains very strong with a capital adequacy ratio of 27.6pc, predominantly Tier 1, which totalled 26.2pc. ABC Islamic Bank's total assets stood at $1.002 billion, compared to $1.067bn in 2012.

Al Wefaq Islamic Society, led by Shaikh Ali Salman, explicitly sought to achieve its political goals by putting Bahrain's leadership in an economic stranglehold. Al Wefaq failed but this organisation has cost Bahrain a lot in purely financial terms. Money was wasted on policing, rebuilding vandalised property and compensating those harmed by the unrest. The economic growth slowed down to a record low of -6.6pc in March 2011. It is estimated that the total loss to Bahrain is in the region of $3bn to $5bn. This, however, fails to reflect the sufferings of small businessmen and their families who have lost everything. Other damage done by Al Wefaq cannot be quantified, such as the economic impact when commercial banks permanently relocate to Malaysia or Dubai, and the damaged reputation.

GFH Capital, a fully-owned subsidiary of Bahrain-based Gulf Finance House, yesterday announced the acquisition of a prime central London residential property. Located in Kensington, the property is a Grade II listed building, overlooking the Queens Gate Gardens. GFH Capital expects above average capital appreciation to continue over the medium term. Demand for this type of property is reportedly coming from investors all over the world. However, the firm also sees value and upside potential in other real estate markets such as the US and expects to make additional investments in these markets as well.

Borealis and First Energy Bank of Bahrain have jointly bought 20.3 per cent stake in Bulgarian Neochim AD. For the acquisition, Borealis and First Energy Bank formed a joint venture in Bulgaria called Feboran AD. Neochim is a publicly listed company and operates one ammonia plant, two nitric acid plants and an ammonium nitrate plant in southern Bulgaria. Borealis executive vice-president for base chemical Markku Korvenranta said the company believed fertilisers offer attractive business opportunities with further potential for growth particularly in Central and Eastern Europe. First Energy Bank chief executive Mohamed Ghanem said that the investment extended the bank's investment portfolio both geographically into Europe and into a fast-growing market. Furthermore, it reinforced its strategy of participating in the energy sector.

The Central Bank of Bahrain yesterday announced that the monthly issue of the Sukuk Al Salam Islamic securities for the BD36 million issue, which carries a maturity of 91 days, has been oversubscribed by 102 per cent. The expected return on the issue, which begins tomorrow and matures on February 26 next year, is 0.85pc, compared with 0.85pc for the previous issue.

Al Salam Bank Bahrain has led investment into a new waste-to-biodiesel plant in Hong Kong. The plant is operated by ASB Biodiesel, a Hong Kong-based company under the chairmanship of HRH. It is capable of processing waste oils into 100,000 tonnes of biodiesel annually. The construction cost of the plant was $165 million. Specifically, ASB Biodiesel collects waste cooking oil and up to 550 tonnes of grease trap waste per day, then processes the waste using multi-feedstock technology from Austrian designer BDI Bioenergy International.

The financial crisis changed the focus of Bahraini investment banks away from bumper projects and the preference now is for slimmer balance sheets, according to GFH founder Essam Janahi, who last week stepped down as chairman. GFH has now reduced its liabilities to $223 million, from over $2bn at the peak of the crisis, and is rolling out a more conservative strategy. Future investments will shy away from aggressive rates of return and favour smaller deals to better manage risk, Mr Janahi said. Bahraini firm Arcapita filed for bankruptcy protection in a New York court in March last year, emerging from Chapter 11 last month with a five-year plan to sell legacy assets to pay creditors. Last week, the reorganised firm appointed a new seven-man board of directors that includes a representative from Bahrain's central bank and the chief executive of Bank Alkhair.

Gulf Finance House (GFH) is now well on its way to long-term profitable growth, Esam Yousif Janahi said after he stepped down as chairman of the Islamic investment bank last week. The exit was a well-planned move and follows the achievement of key objectives of the restructuring exercise, he explained. The bank's liabilities have been brought down substantially from $2.6 billion in 2009. The capital adequacy ratio is now over 20 per cent as against single-digit levels in 2009, at the height of the crisis. Mr Janahi said he continues to remain a major shareholder. On future plans, he said he would focus on managing personal investments and strategic partnerships with partners.

Accounting and Auditing Organisation for Islamic Financial Institutions (AAOIFI) yesterday announced that the certification granted to Islamic banking and finance information systems offered by Path Solutions has been withdrawn with effect from September 1. Therefore, AAOIFI no longer certifies that the Islamic banking and finance information systems offered by Path Solutions as being compliant to AAOIFI standards, and bears no responsibility on the Sharia compliance of their systems.

Kuwait's Warba Bank will be listed on the country's stock exchange tomorrow after a restriction on public trading of the stock ended. A majority of the shares in the lender, set up with a capital of 100 million dinars ($351m), were gifted to Kuwaiti nationals as part of the state's wealth sharing, with each citizen receiving 684 shares. The remaining 24 per cent is owned by the sovereign wealth fund Kuwait Investment Authority. The listing does not include sale of any new shares. Shareholders were restricted from trading their stock on the exchange for three years after the April 2010 establishment date.

Tunisia's El Wifack Leasing has applied to regulators to become the country's third fully-fledged Islamic bank. El Wifack, which has its debt rated BB+ by Fitch Ratings, also said it planned to raise its capital by five million dinars ($3.1m) to 25m dinars, regardless of whether it received approval to operate as an Islamic bank. Currently, Sharia-compliant business accounts for just 2.5 per cent of the Tunisian financial sector with only two fully operational Islamic banks, Zitouna Bank and the Tunisian arm of Bahrain's Al Baraka Banking Group. Last month, parliament approved a law that will allow the state to issue sukuk. The Jeddah-based Islamic Development Bank has offered Tunisia a financial guarantee to issue a sukuk worth $600m, though the issue could be delayed to 2014 because of political instability and approaching elections.

Operating income continues to be stable at Ithmaar Bank at BD36.8 million, despite a significant compression of margins in overseas subsidiary due to a 300 basis points cut in benchmark profit rates. However, a net loss of BD2.8m was announced for the first six months of the year, compared with a profit of BD583,000 in the same period last year. According to Bank chairman Prince Amr Al Faisal, the bank continues to focus on cost control after total expenses were reduced by about 4.5 per cent in the first 6 months of the year. Murabaha and other financings increased by 1.6pc to BD1.19 billion in the first half as compared to BD1.17bn a year ago. Liquid assets, comprising cash, balances and commodity placements with banks, financial and other institutions, now represent about 13pc of the balance sheet. The bank continues on its board-approved retail business focus with the objective of becoming the region's premier Islamic retail bank.

Bahrain-based Seera Investment Bank has reported a net income of $5.1 million for the first half of this year compared with a net income of $1.7m for the same period last year. Total income was $8.5m compared with $4.6m last time. The increase in income was attributed to an increase in management fees on assets under management and the early settlement of financing relating to the bank's aviation portfolio. Total assets of the bank were $349m. Seera's balance sheet remains strong with a capital adequacy ratio of 23 per cent and liquid assets of $33m. Profit for the second quarter was $5.5m compared with a profit of $830,000 for the same period last year. Seera has investments in the industrial manufacturing and transportation sectors in addition to smaller investments in the utilities and real estate sectors.

The Al Baraka 34th Symposium on Islamic Economics is scheduled to be held in Jeddah on July 17 and 18. The symposium will discuss methods of calculating zakat of equity and debt financing. It will cover fiqh and Islamic doctrinal researches submitted by scholars specialised in Islamic banking and finance, who will discuss issues related to investment including sukuk and fiqh, debt and participation contract. A number of scholars and economists will comment on these researches in open sessions - which will be attended by about a 1,000 interested people from various Islamic countries.