IslamicFinance.de

Arcapita Bank is suing two Arab banks to recover a total of $45.3 million the investment firm transferred to them just before its 2012 bankruptcy filing. The suits, filed by the Bahrain-based bank against Saudi Arabia's Al Baraka Banking Group BSC and Bahrain-based Alubaf Arab International Bank BSC, are the biggest of 59 lawsuits Arcapita filed on Monday seeking money it shelled out within 90 days before its March 2012 bankruptcy filing. Arcapita is suing two units of Al Baraka for a total of $35.3 million and is going after Alubaf for $10 million in a separate suit.

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.

Bahrain-based Gulf Finance House will seek shareholder approval later this month for a potential reduction in share capital and to issue a convertible sukuk of up to $500 million to restructure debt and fund new projects. Under the proposal, GFH will reduce the nominal value of its shares by 13.8 percent to $0.265 per share from $0.3075, according to a notice on GFH's website. As a result, paid-up capital will be cut to $837 million from $972 million. GFH also aims to issue convertible sukuk worth up to $500 million to restructure current liabilities, develop projects and fund possible future acquisitions, subject to shareholder and regulatory approval. No timeframe was indicated for the potential offering. The proposals will be discussed during its annual general meeting on March 31.

Bahrain's Gulf Finance House (GFH) will start building a $3bn financial park and real estate development north of Tunisia's capital, a project that had been suspended for five years. The project will be one of the largest private foreign investments in the North African state. GFH's project was scheduled to begin in 2009, but financial difficulties at the Islamic bank and Tunisia's 2011 uprising froze several large-scale projects. The $3bn project will start on 15 March, and an agreement has been signed with the Tunisian contracting companies to start practical implementation of the project in a few days, according to Lotfi Zar, the executive director of the project.

Bahrain's central bank governor Rasheed al-Maraj has said he expected further bank consolidation this year after a spree of tie-ups in 2013. The central bank has been encouraging smaller lenders to merge to bolster institutions weakened by a local real estate crash and fall-out from the island kingdom's political unrest in 2011, which has continued sporadically since then. In 2013, there were four separate examples of consolidation in the Bahraini banking sector, further tie-ups are expected to be announced by the end of the year. Moreover, the regulator is encouraging Islamic banks in the kingdom to get credit ratings to improve transparency. Maraj added he expected all banks would have a rating in the next two years.

Bahrain’s Al Salam Bank has launched a listed sharia-compliant real estate investment trust (REIT) that will invest in a portfolio of Asian properties. The REIT will invest in between 15 and 35 properties and be managed by Swiss-based B&I Capital AG, with Al Salam providing seed capital for the fund. The Islamic lender did not reveal the expected size of the fund. Al Salam was an anchor investor in the Sabana Industrial REIT, which was listed on the Singapore exchange in 2010 and was one of the world’s first REITs to adopt Islamic principles. A handful of Islamic REITs have been launched, including Dubai Islamic Bank’s Emirates REIT in 2010. Malaysia now has three listed Islamic REITs.

Since sharia boards tend to be paid by the institutions whose activities they oversee, the scholars can be open to accusations of conflicts of interest. That's why Bahrain’s Waqf Fund has proposed mandatory external sharia audits for Islamic financial institutions. While the proposal is for Bahrain, it may have an impact on Islamic finance globally because of Bahrain’s central role in the industry. The proposal also ties in with growing pressure for reforms to the sharia oversight system in other countries, like Kuwait. The Waqf Fund will develop a framework for external sharia audits with a team of audit firms, scholars and the Bahrain-based Accounting and Auditing Organisation for Islamic Financial Institutions (AAOIFI).

Bahrain-based Ithmaar Bank reported a net loss of BHD 29.9 million in 2013, compared to a net loss of BHD 10.1 million in 2012. One of the major factors impacting the performance of the Group for this year is the reduction in benchmark profit rates in Pakistan, coupled with increased minimum profit rate on certain liability products resulting in significant margin compression in FBL. The bank has therefore taken some key decisions including cost rationalization measures across the Group. Moreover, the remaining conventional operations of its subsidiary Faysal Bank Limited Pakistan’s (FBL) will be conversed to Islamic banking, subject to approval from FBL shareholders and the regulators.

Growing demand for more sophisticated financial products and services helped drive growth in Bahrain's financial sector during last year, according to the Economic Development Board (EDB) and Central Bank of Bahrain (CBB). Bahrain attracted a number of businesses, with the number of registered financial services firms swelling to 415 by the end of the year. Alongside strong growth last year, the kingdom also developed a number of reforms to ensure that the regulatory framework of the Islamic banking sector continues to meet the needs and encourage long-term growth. Moreover, the CBB also recently implemented new rules set to boost the takaful sector by addressing some issues around solvency. Bahrain also had one of the most developed Islamic finance knowledge landscape, and performed well in terms of governance.

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.

ABC Islamic Bank has announced that its net profit for the year ending 2013 was $12.2 million, 48 per cent higher than the previous year of $8.3 million net profit. Net profit for the fourth quarter of 2013 was $3 million, 112 per cent higher than the same period of 2012. Total operating income grew 12.8 per cent to $18.1 million compared to $16 million in the previous year while operating expenses decreased by more than 20 per cent to $5.5 million. The Bank’s capital base remains very strong with a capital adequacy ratio of 27.6 per cent, predominantly Tier 1, which totalled 26.2 per cent. ABC Islamic Bank’s total assets stood at $1.002 billion.

Bahrain-based Gulf Finance House has announced its fourth-quarter net profit has more than doubled due to revenue derived from investments. The investment firm made a net profit of $5.2 million in the three months to Dec. 31, up from $2.5 million in the prior-year period. However, for the 2013 full year, GFH's net profit fell 37.2 percent to $6.3 million. This decline came despite a 20 percent reduction in operating costs, as the firm continued to aggressively cut expenses in the wake of a number of debt restructurings in recent years. GFH, through its Dubai-based subsidiary GFH Capital, agreed to sell 75 percent of Leeds United to Italian Massimo Cellino earlier this month.

Bahrain-based Islamic lender Al Baraka expects at least 15 percent growth in net profit this year as its business recovers across a region hit by the Arab Spring unrest. The growth will also be fuelled by the company's entry into the Moroccan and Libyan markets and expansion in Tunisia. In Syria, where the bank has 10 branches, it has not been able to expand operations since the 2011 start of the civil war. The bank's fast growing 30-branch Algerian subsidiary has now captured nearly 5 percent of the country's foreign trade business and plans are under way for further expansion. The lender hopes to expand its global branch network from a current 480 to around 560 branches by end of 2014, with half of the 84 new branches opened in Turkey and Pakistan. The focus of expansion remains fast growth areas in the Middle East and Asia such as Pakistan and Indonesia because the Gulf is overbanked.

The global financial crisis as well as the political unease over the last few years have led to weaker performances in Bahrain's banking sector, particularly wholesale banks. Along with banks in other markets, Bahrain-based banks have de-risked their balance sheets, concentrating on more stable sources of funding and reducing their exposure to riskier sectors. Besides, there have been a number of bank mergers in Bahrain recently. However, Bahrain has a more limited shock- absorption capacity compared to other GCC countries, like a budget highly sensitive to oil prices, a weak non-oil revenue base and modest fiscal reserves. Moreover, the political situation remains uneasy. As with other GCC institutions, the stronger Bahrain-based banks are widening their reach in other markets.

Bahrain's central bank will release a new regulatory framework for takaful this quarter. Bahrain already has takaful-specific rules but the regulatory refom could help it grab a larger chunk of the sector. The new rules, developed after two years of consultations with the industry, cover the operations and solvency of takaful firms. They are expected to increase takaful firms' ability to distribute surpluses to policy holders and dividends to shareholders. In addition, the new rules require financial reporting by takaful firms annually rather than once every three years, restrict the use of performance fees, and introduce the concept of earmarked assets. In December, the central bank formally combined existing rules for issuing and listing financial securities, including sukuk, in an effort to make the process more efficient.

Bahrain-based investment firm Gulf Finance House (GFH) has agreed a partial sale of its stake in English football club Leeds United. GFH said the sale was agreed with British investors, whose details the firm did not specify. The investment firm did not provide details on the stake value or the size of the stake sold. GFH bought Leeds United in December 2012 through its Dubai-based subsidiary, GFH Capital, but its financial statements showed that the firm disposed off more than half of its holding less than six months later.

Moody's Investors Service has confirmed Bahrain Islamic Bank's (BIsB) supported issuer ratings at Ba3, with a negative outlook, and affirmed its short term ratings at Not Prime. At the same time, Moody's downgraded BIsB's standalone bank financial strength rating (BFSR) by one notch to E from E+, equivalent to a baseline credit assessment (BCA) of caa1 from b3 previously. Moody's downgrade of the standalone credit profile reflects BIsB's still thin and vulnerable capital base, given the continued lack of clarity surrounding the timing, nature and amount of the anticipated capital injection. These weaknesses are partially moderated by BIsB's solid funding and liquidity position.The negative outlook on the supported issuer rating is aligned with negative outlook on the ratings of the Government of Bahrain, the ultimate provider of systemic support to the bank.

Bahraini First Energy Bank (FEB) has signed a 25-million-euro ($34 million) Murabaha facility with the Netherlands-based Kore Coal Finance, a subsidiary of Sapinda Holding. The financing will assist Sapinda in enhancing its investments in an internationally operating resource company which owns coal mining assets in South Africa. This Islamic facility supplements the recently concluded conventional profit participation note of 55m euros raised by Kore Coal Finance with a similar objective. The Murabaha facility has been structured on the basis of an attractive return and will be repaid by October 2016. FEB is acting as the investment and security agent under this Murabaha financing. The bank has an authorised share capital of $2 billion and a paid-up capital of $1 billion.

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.