Saturday, January 9, 2010

Bahrain's GFH takes $300m Dubai project provision

By Gavin Davids

Gulf Finance House, the Middle East Islamic investment bank, said on Wednesday it had taken a provision of $300 million over its exposure to a Dubai development project.

The $300 million noncash charge against its propriety Dubailand position comes in the wake of the fallout from the global financial crisis and the recent upheavals in the Dubai markets. The bank said that the move would reduce the liabilities on its balance sheet by $290 million, with no implications for its clients.

GFH added that it had no remaining material exposure to Dubai.
Esam Janahi, chairman, GFH, said: “Market conditions over the last year have been extremely difficult and recent developments have further highlighted the need for a prudent and transparent approach. As a consequence, the board has decided to take the necessary steps to deal with the situation appropriately.”

The bank has recently begun comprehensive market research to establish investor sentiment following the global economic downturn. Like a number of Bahrain based investment houses, GFH has posted losses since the end of the regional property boom last year.

The results of this research has seen the bank design a new business model based on the products and services demanded by the contemporary investment community in a difficult economic environment.

Ted Petty, acting CEO, GFH added: “All our work over the past few months has been focused on shoring up our balance sheet and revising the business model to more efficiently serve the needs of the investment community and we've been very successful in this.”

He added that not only was the bank confident of meeting its liabilities, it also had the ability to engage in attractive investment opportunities as it renewed its revenue generation for 2010.

The Islamic lender raised $500 million in fresh financing this year through a rights issue and two convertible murabhas, an Islamic financing tool, to repair its balance sheet after posting four consecutive quarterly losses.
Source : Arabian Business

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