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Thursday, 21 May 2009

Briton held in Thailand for alleged £95m fraud

Thai police arrested a Briton in Bangkok's red light district after he spent eight months on the run for allegedly embezzling 150 million dollars (95.14 million pounds) from a company in Dubai, police said Thursday.

Michael Bryan Smith, 43, was caught in the capital's notorious Nana area on Wednesday night after authorities in the United Arab Emirates sought Thailand's assistance, police told a press conference.

Smith allegedly siphoned off other workers' salaries into his own bank account while working as a personnel manager at a Dubai property company, Thai police said, citing the warrant from the UAE.
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Emirates yearly earnings drop 72 percent amid downturn, but airline maintains profit streak

Emirates, the Middle East's biggest airline, says its profit tumbled 72 percent in the last fiscal year as it struggled with soaring fuel prices and a slumping global economy that hurt demand for air travel.

The carrier and its affiliated businesses posted a profit of 1.49 billion dirhams ($406 million) for the year ended March 31, down from a record profit of 5.3 billion dirhams in the previous fiscal year.

The figures include profit for the passenger airline as well as cargo services, tour operations and other related travel businesses.

Emirates says it is the group's 21st straight profitable year.

Revenue over the fiscal year rose to 46.3 billion dirhams, from 41.9 billion dirhams a year earlier.

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UAE's Aldar says to guarantee 5 yr, $1.25 bln bond

Abu Dhabi's Aldar Properties ALDR.AD will guarantee a $1.25 billion 5 year bond by a special purpose vehicle to be listed on the London Stock Exchange, it said in a statement on Thursday.

Abu Dhabi's largest real estate developer had said on Tuesday it would guarantee a possible dollar-denominated bond issued by a special purpose vehicle.

Ratings agency Standard & Poor's said it assigned the Aldar benchmark bond, which would be issued by a special purpose vehicle called Atlantic Finance Ltd., an A- rating, while Moody's assigned the notes of A3. [ID:nLJ959642]END

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Panmure Gordon welcomes QInvest as significant new shareholder

Highlights:

Strategic investment in Panmure Gordon by QInvest
* QInvest is Qatar's largest investment bank with US$1 billion of authorised
capital and investments i n the Middle East, UK, continental Europe and the
US.
* Shahzad Shahbaz, CEO of QInvest, spent 25 years with Bank of America where
he was, until 2006, based in London as head of regional investment banking
for Europe, Middle East, and Africa. Subsequent to this, he was CEO of the
Emirates NBD Investment Bank in Dubai.

Placing will significantly enhance Panmure Gordon's balance sheet
* On a pro-forma basis, the Group will have regulatory assets of
approximately £45 million, representing over 3.5 times the regulator's
required minimum.
* The enhanced balance sheet strength will furthe r enable the Group to
execute client transactions and to be a counterparty of choice for
institutional investors.

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Franklin Templeton eyes AIG unit

Image representing Franklin Templeton Investme...Image via CrunchBase

Franklin Templeton Investments has emerged as the leading bidder for AIG’s asset-management business, a deal that also has drawn interest from Australia’s Macquarie Group and Religare Enterprises of India, reports the WSJ. The AIG Investments unit, which manages about $85bn in assets, is expected to fetch about $500m, well below the $800m some suitors proposed paying just two months ago. A deal could be completed by the end of June.

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UAE deal raises proliferation fears

Barack Obama's administration yesterday took on congressional critics in two disputes over nuclear proliferation in the Middle East when it decided to back a deal with the United Arab Emirates and warned legislators against imposing unilateral sanctions on Iran.

The moves follow the US president's meeting this week with Benjamin Netanyahu, Israel's prime minister, when the Mr Obama announced he would give the US's diplomatic reaching out to Iran at least until the end of this year to succeed.

Yesterday, Mr Obama said he would proceed with a civil nuclear deal with the UAE agreed at the end of George W. Bush's presidency. Supporters of the deal say it diminishes the risk of nuclear proliferation in the Middle East - and allows the US to enter into lucrative industrial deals - but detractors feel the UAE represents a proliferation risk.

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Mena debt market can grow to $1.6trn

The debt market in the Middle East and North Africa (Mena) has the potential to grow to $1.6 trillion (Dh5.8trn) per annum but currently remains in its nascent stage, according to economic experts speaking at an event organised by the Dubai International Financial Centre (DIFC) yesterday.

The event – Issuing and Structuring Bonds and Sukuk – saw discussions on the IMF Global Financial Stability Report (April 2009), which said debt securities form just three per cent of the Mena capital markets.

This compares poorly with the average 42 per cent that debt securities contribute to global capital markets.

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NBAD to manage three IPOs

The National Bank of Abu Dhabi has agreed to manage three initial public offerings (IPOs) later this year, a senior executive said.

"The bank has asked the Securities and Commodities Authority (SCA) to approve three IPOs in the last quarter," Securities Services Department Director Majdi Al Maaitah told Emirates Business.

He said the floats would be launched by businesses in the health and industrial sectors. The companies had decided not to issue shares at the moment and were waiting until market conditions improved.

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Expatriate salary levels in property fall 30%

Salary levels for expatriates working in the property and construction sectors have fallen by up to 30 per cent in the past eight months across the GCC, according to data from APG Global, a recruitment agency based in Australia.

The decline comes after a four-year hiring boom when above-market rates were paid by firms urgently needing to fill positions for construction projects.

Employers are making the most of the pool of applicants for fewer positions after staff numbers were trimmed in the two sectors. A development director who could once negotiate Dh70,000 (US$19,058) a month would today be offered between Dh50,000 and Dh55,000.

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Gold demand falls in Middle East

Thrifty consumers in the Middle East turned away from gold in the first quarter of this year, contributing to a 26 per cent drop in demand and defying a 38 per cent surge in volumes worldwide, according to the latest report by the World Gold Council (WGC).
In the first three months of this year, gold bought as an investment in the region dropped 28 per cent compared with the same period last year.

Worldwide, however, investors continued to turn to the metal as a safe investment, pushing up the total volume by 248 per cent to 595.9 tonnes. In the UAE, the fall in jewellery sales was more pronounced, with the total tonnage of gold sold falling 31 per cent to 16.6 tonnes in the first quarter compared with the previous corresponding period.

Gold as an investment in the UAE recorded a 15 per cent decline, from 2.3 tonnes to 2 tonnes, the WGC report said.

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Fannie Mae-style agency to help banks free up cash

Don’t you love it when you go out of town and come back to find the policy you recommended is already on the table?

Uma Thurman said something along these lines in Pulp Fiction, only it was about going to the bathroom and returning to find the waiter has already delivered your burger.

But the same thing can and does happen with government economic policy. Regular readers of this column will recall that amid the usual rants that, with all but a few disruptions, regularly occupy this space, this columnist has been calling for some kind of agency that would buy loans from local banks to help them free up cash that they can start lending out again.

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DIB to buy back $50.6m of sukuk

Dubai Islamic Bank (DIB) will buy back $50.6 million (Dh185.7 million) of its sukuk maturing in 2012.

The buy-back price will be 88 per cent of the bonds' face value, the bank said in a statement to Nasdaq Dubai on Wednesday.

The settlement date for the purchase is May 21. Dubai Islamic has $750 million of sukuk due 2012. The bank on May 6 had offered to buy back as much as $200 million of sukuk.

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Court to prosecute former minister in Deyaar case

A court is scheduled to prosecute on Sunday a former minister for reportedly abusing his powers as Deyaar's board director and misappropriating Dh56.6 million, Gulf News has learnt.

The 52-year-old ex-state minister, M.K., has been charged with causing damage to Dubai Islamic Bank (DIB) and Deyaar worth Dh56.6 million and will be tried before the Dubai Court of First Instance.

The Dubai Government holds a 30 per cent stake in DIB; and the bank holds a 45 per cent stake in Deyaar.

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Another Blow To The GCC Monetary Union: the UAE Pulls Out (Complete article below)

Less than 24 hours after Dubai’s finance chief was demoted, the UAE announced its decision to withdraw from the GCC Monetary Union, putting the broader union at risk. This decision comes two weeks after a major milestone; selection of the location of the GCC Central Bank. UAE officials did not conceal their reservations about the choice of Saudi Arabia to host the institution. UAE newspapers heavily criticized the Saudis in what may have developed into a political rift.

For starters, the GCC Secretariat is already located in Saudi Arabia and other institutions in other GCC countries, and with plans to diversify the government institutions, they believed that the GCC Central Bank should be located in the UAE, given its development as one of the region’s financial hub, possibly with a presiding Saudi National.

Despite the political headlines,the GCC monetary union was already facing many hurdles and the 2010 deadline had already been abandoned, particularly as economic policies have diverged in the wake of the global and local economic crisis. Changes in the GCC policy agenda- now focusing on policy responses that would shield the GCC countries and boost growth and liquidity – took precedence over convergence and made delay more likely. Furthermore other aspects of the customs union may face delays. This decision should not come as a big surprise. Oman announced its decision not to participate several years ago. Kuwait de-pegged from the dollar in 2007 (and pegged to a dollar-dominated basket) although it vowed to join the union. The UAE’s decision to pull out, despite the fact that it was the first country to apply to host the union in 2004, versus Saudi Arabia who applied in 2008, might be a fatal blow. With only four out of six members willing to join, any potential union seems ripe for significant delays.

Even deciding upon the location of the GCC central bank was not a piece of cake, coming only after long deliberations and postponements.

Implications

The most important question is whether the monetary union will proceed or not. With the second largest GCC member pulling out, the union is left with only four members. If this adds to the hurdles the union is already witnessing, then a further delay (beyond the current open-ended timeline) is the best option that these countries would hope for instead of a formal cancellation of the union. Moreover, with the UAE pulling out any new union would be even more Saudi-dominated.

So far, markets have not responded to the UAE’s decision to withdrawal, partly because of prior sluggish progress of the union. For them, given that the union was by no means imminent, this delay is but one other form of such sluggish progress, so any market impact should be negligible. Moreover, despite the fact that the UAE has pulled out, one should not rule out a rejoining at a later date, if conditions seem to meet UAE interests more than at present.

2009 has not been a good year for currency unions. The holdup of the GCC single currency occurs at a time when the European Monetary Union is under pressure in a severe test to its cohesion. At a time of economic crisis, the EU appears to be short of the proper tools to boost economic flexibility. Within this context, GCC governments may be reluctant to give up their what sovereign flexibility they have in conducting their monetary policy. As dollar-peggers, their monetary autonomy is of course limited but, the union could limit the use of some monetary and fiscal measures over time. However, such restraints would come very far into the future, so seem unlikely to be an explanation of current moves

Meeting the convergence criteria -which include lining up budget deficits –is also doubtful as a result of the different policy responses implemented by each government, with several countries slipping into budget deficits especially in 2009. 2009 will also witness more deviation in terms of GDP figures in the GCC, doing nothing to help a smooth transition towards convergence. In 2010, the shape of recovery might differ across countries making it even more difficult to attain the convergence criteria.

However, the monetary council, the heart of the GCC Central bank should be established by the end of 2009 as if proceeding with the monetary union is still on the table. In fact there remain several significant preconditions for the union including coordination of payment systems, improvement in data gathering, sharing and monitoring among others.

An important final question; could the political differences escalate to a crisis between those two countries? That will be something to monitor in the coming months up to the GCC Summit in 2009. What is also left to monitor is the response of the other four GCC countries. Although it is highly doubtful that any of them will follow suit and pull out of the union, other political and economic dynamics may be unveiled as a result of the void that will be created by the UAE’s pullout. As noted above, the UAE’s withdrawal implies an even more Saudi-dominated union, with Bahrain already under the Saudi wing.


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DIFC seminar series explores bonds and Sukuks

The Dubai International Financial Centre (DIFC) today hosted a seminar to highlight the infrastructure and support it provides organisations seeking to attract investment through bonds and Sukuks (Shari’a-compliant bonds).

Titled ‘Structuring and Issuing Bonds and Sukuks, the seminar was the fourth event that formed part of the DIFC Knowledge Series, a regular series of seminars organised by DIFC to raise awareness about its infrastructure, regulations and business support services. Senior officials from DIFC Authority, and the Dubai Financial Services Authority spoke at the event.

Abdulla Al Awar, Managing Director of DIFC Authority said: “Bonds and Sukuks have become a vital financing tool for companies and governments in emerging markets. Well-functioning local bond and Sukuk markets reduce exclusive reliance on bank loans. They also widen the set of financial instruments available for savers and investors and broaden investment opportunities.

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Obama Approves Nuclear Energy Program for UAE

The White House said today that President Obama has approved an agreement to help build a nuclear-energy program in the United Arab Emirates, setting up a congressional review of the controversial accord.

The agreement was reached at the end of the administration of President George W. Bush, and left for Obama to shepherd through Congress. The new president's team sees it as a way to prevent Middle Eastern countries from building nuclear weapons under the guise of energy programs.

Under the accord, the UAE agrees not to enrich uranium to run its nuclear plants, or reprocess spent fuel. Those steps could be used to create weapons-grade fuel. In exchange, the UAE can buy fuel and other materials for its nuclear-energy plants from U.S. businesses.

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Derivatives forecast to make gradual return

Derivatives have become a bit of a bugbear for some regulators. They blame certain unregulated, over-the-counter instruments for exacerbating the financial crisis but sometimes lump them together with more common, listed derivatives.

The Gulf is no exception. As regulators across the world study the entrails of the financial crisis for lessons, there will be a natural slowdown in their introduction in the Gulf as well, bankers say. But most expect it only to be a matter of time before their use is more widely sanctioned.

Even in the relatively unsophisticated Gulf, many banks dabble in derivatives, but occasionally to disastrous effect.

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Piracy puts wind in supplier’s sails

While many Middle East companies were retrenching last year, Bahrain Maritime & Mercantile International marked its 125th anniversary by setting up a subsidiary in Africa.

The timing proved fortunate. As the main contractor providing food and drink to the US and other military forces in the region, BMMI has seen a surge of new business through its Djibouti office.

“The level of military activity off east Africa has increased considerably due to the Somali pirate attacks, and all these ships need feeding,” says Gordon Boyle, chief executive of the supply and logistics company. “In a way, we’re one of the few beneficiaries of piracy.”

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Kuwaiti PM re-appointed

Kuwait’s ruler re-appointed his nephew Sheikh Nasser al-Mohammad al-Sabah as prime minister on Wednesday following last weekend’s elections, in a move that may trigger further political turmoil for the oil-rich state.

Disputes between the Gulf nation’s parliament and the government have forced the cabinet to resign five times in the last three years since Sheikh Nasser was first appointed, hindering development efforts and the government’s ability to tackle the effects of the global financial crisis. Each time he has been reappointed the political bickering has seemed to intensify.

The cabinet last resigned in March after MPs sought to question Sheikh Nasser, accusing him of incompetence and mismanagement. The resignation led to the country’s second elections in a year.

Battle to roll out broadband hots up

With mobile subscriptions often exceeding the number of inhabitants in some Gulf countries, cash-rich, former monopolistic telecommunications operators are looking for a new revenue stream with growth potential.

Increasingly, their eyes are alighting on providing high-speed internet access – or broadband.

High-speed internet remains rare in the Gulf outside certain population pockets. A main problem for Arab households has been the cost: broadband and good-quality computers cost more in the Gulf than in many other markets, says Fouad Alaeddin, managing partner at Ernst & Young Middle East.

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