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Monday, 22 June 2009

Emirates NBD sees pressure on earnings

Emirates NBD, the Gulf region's biggest bank by assets, sees earnings under pressure from non-performing loans during the economic crisis, the group's chief financial officer said on Monday.

"As we go through the year, we will see the materialisation of non-performing loans," chief financial officer Sanjay Uppal told the news agency Reuters.

"As that happens, there will be some impact on the sustainability of the earnings level, we will see a certain amount of pressure," Uppal said in an interview with Reuters Financial TV.

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Middle East economic growth will slow to 1.6% in 2009, says World Bank

Economic growth in the Middle East and North Africa will remain below its average rate of 4.5% until 2011 as lower oil prices and weaker European export markets hurt growth, the World Bank said.

Economic expansion in the region will slow to 1.6% this year from 5.6% last year, the World Bank said in its regional outlook released today.

Gross domestic product for the developing countries of the region is expected to halve to 3.1% this year from 6% last year, the World Bank said.

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Indian Billionaire Modi Plans $1 Billion IPO, Scraps Dubai Plan

Indian billionaire Bhupendra Kumar Modi, who has interests spanning telecommunications to financial services, said his holding company plans to raise about $1 billion in an initial public offering after scrapping a share sale in Dubai.

Singapore-based Spice Global aims to raise the money on another exchange in 2011, Modi, 60, said in an interview in the city-state. Spice Global dropped its planned $500 million Dubai IPO after the Dubai Financial Market General Index slumped 65 percent in the past year, compared with a 32 percent decline in the MSCI World Index.

The company has yet to decide on where it will hold the IPO, preferring an exchange that would allow shareholders to trade shares using mobile phones, said Modi, chairman of Spice Global, in the interview June 20 at his S$15.5 million ($10.6 million) penthouse that overlooks the construction of the Marina Bay Sands casino-resort in Singapore.

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We see the lines of waiting taxis grow on a daily basis, read below to see what is the state of USA postal service.

I work at the Post Office throwing parcels and have never seen mail volume so low. The situation is getting worse, not better.

Parcel volumes are down at least 30% and even the bulk mail is declining. I used to struggle to complete my job in 8 hours; now I easily finish my job and then go on to help my colleagues. Employees who leave are not replaced. No one is assigned to jobs in the event of illness or vacation. People just pick up the slack. Some large distribution centers are being closed and people transferred as far away as 100 miles.

There will be serious problems for all of the delivery companies if the low volumes persist and gas prices continue to escalate.

There seems to be no recovery in sight; mail volumes and work hours are plummeting. Bulk mailers seem to have figured out a way to target their desired audience. For us at the Post Office, that means that the circulars that used to go each address now only go to those with the greatest potential to buy. Even a few months ago, one of our weekly bulk circulars would arrive on three, very-highly stacked pallets. Now they arrive on two, wimpy pallets. Circulars that continue to be delivered to every house are now very thin, with not many advertising inserts. Upscale department stores have significantly cut back on their advertising.
We have totally eliminated our Sunday work force. As a result, for awhile, there was a huge backlog on Monday from Sunday’s mail that sat in the distribution center. Each truck came in 100% full, and some first class parcels were left behind for the last truck. Now, even after eliminating one of the trucks, the mail easily fits in the trucks; it is rare to have a truck loaded 100%.
Previously unaffected areas of our work have also been affected. Several months ago, the window service and the box section were relatively unaffected by the dwindling mail volumes. Individual customers still came into the Post Office to mail their parcels, and businesses and individuals still rented P.O. boxes. Now, the long lines at the customer windows have shriveled, and there are many, many closed P.O. boxes, especially long-standing business boxes.

The postal management is taking drastic steps to reduce costs and increase revenue. Unlike UPS or Fed Ex, they don’t seem to be forecasting any upturn. Perhaps they are parroting the feel-good “green sprouts” words at the Postmaster General level, but our state level management is not mouthing such clich├ęs. Our district policy seems to be “prepare for the worst” and “wait-and-see”. At least, that’s what I am hearing through the unofficial grapevine. Upper management appears very nervous.

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Qatar may acquire bigger than expected Porsche stake

The Qatar Investment Authority could acquire more shares in ailing German sports car maker Porsche than previously thought, German magazine Focus said.

In an advance copy of an article due to be published on 22 June, the magazine referred to details of a paper outlining the future ownership structure that it said Porsche CEO Wendelin Wiedeking had presented to the Porsche and Piech families.

It said there had been a provision for an external investor to hold 29.9%, when so far only a 25% share had been mentioned. However, there was no direct mention of Qatar.

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Board directorship limited to one bank

The UAE Central Bank has come out against directors sitting on the boards of more than one bank.

As part of a new draft law and guidelines for corporate governance released last week for UAE banks, the apex bank said: "There are limits on the number of external appointments you can accept and you should not accept an appointment to be a director of more than one bank. You should always consider the calls before accepting an appointment."

It also said directors should attend all board meetings for which they are required. The guidelines also stressed the need for directors to disclose any other board or external appointments.

Deyaar auditor found a number of 'irregularities'

The auditing manager of Deyaar's financial department uncovered a number of violations when he reviewed the real estate company's accounts, a court has been told.

Mohammed Mustafa Hussein's evidence was heard at the trial of Saad Abdul Razzak, an ex-CEO and board member of Dubai Islamic Bank, and businessman Ismael Akeel Janahi. Dubai Public Prosecution has charged Razzak with bribing Janahi but they have denied charges.

The case at the Dubai Misdemeanour Court was yesterday adjourned until July 7, when witnesses for the defence will produce evidence in their favour.

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Top Russian investment bank begins Dubai operations

Dubai International Finance Center.Image via Wikipedia

Russian corporates looking to gain a foothold in the Gulf market and access to capital, and Gulf investors looking to tap opportunities in key econ-omic sectors in Russia will now be able to draw upon the presence of Russia's second largest bank in Dubai.

VTB Capital is the investment bank linked to VTB Group, Russia's second largest bank, and officially began operating from the Dubai International Financial Centre (DIFC) yesterday.

According to Yuri Soloviev, president and global chief executive officer of VTB Capital, the opportunities for cooperation in utilities, energy and power generation, as well as more diverse sectors such as hospitality, real estate, infrastructure and logistics, can be mutually beneficial.

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Banking spat reveals boom-time excess (Analysis)

The public feud between Shuaa Capital, the investment bank, and its creditor, the Dubai Banking Group (DBG), over a Dh1.5 billion (US$408.6 million) convertible bond has all the ingredients of a financial soap opera, sending Shuaa’s shares up, then down, and finally forcing the market regulator to intervene in the dispute last week.
The saga also focused investors’ attention on the legacy of short-term convertible bonds and other debts that were sold in the boom and are approaching maturity at a time of reduced liquidity and weaker economic confidence.

“Last year, it made sense for everyone here to borrow as much as they possibly could,” Youssef Nasr, the chief executive of HSBC Middle East, told a recent Moody’s credit conference in Dubai. “It was basically a play against very negative interest rates.”

But a funding strategy that once made sense amid rampant economic expansion – taking out one short-term loan after the next, when rates were cheap and offerings abundant – is now causing chief financial officers sleepless nights across the region.

The struggle between Shuaa and the DBG highlights the vulnerability of companies who raised short-term funds using debt that now need to be redeemed or rolled over. Should the DBG, part of Dubai Holding, get its way, Shuaa will be forced to pay back the Dh1.5bn it borrowed so easily in 2007 when oil-fuelled confidence in local markets was at a peak. If Shuaa has its way, the DBG will have to accept the terms of the original deal and convert the bonds into Shuaa shares instead.

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NBO reveals loans to Saad and Al Gosaibi

The National Bank of Oman (NBO), the country’s second-largest lender by assets, Sunday became the latest regional bank to reveal its lending exposure to the Saudi family trading groups at the centre of an international credit default crisis.

The bank’s admission comes after similar disclosures from Bank Muscat in Oman and Mashreqbank in the UAE.

“NBO has a limited inter-bank exposure totalling approximately 6.5 million Omani rials (Dh62.6m) to The International Banking Corporation (Bahrain) and Awal Bank (Bahrain) only,” the bank said in a statement to the Muscat stock exchange yesterday. It stressed that it did not have outstanding loans to other related companies.

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Waha Capital buys into aircraft finance firm

Waha Capital has agreed to buy a 50 per cent stake in a Dutch aircraft finance company with assets worth US$2.4 billion (Dh8.8bn), in an undisclosed cash transaction.

The holding company, backed by the Abu Dhabi Government, will take the stake in AerVenture from the parent company AerCap, a firm based in Amsterdam and listed on the New York Stock Exchange.

AerVenture has a fleet of Airbus A320-family narrow-bodied aircraft, including 22 in service with airlines such as Air Arabia and Royal Jordanian. It has another 32 on order from Airbus.

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Dubai World hires reform consultants

Dubai World, the Government-owned ports and property conglomerate, has hired AlixPartners, a restructuring consultancy based in Detroit that is advising on the General Motors (GM) bankruptcy, according to sources close to the company.

The process at Dubai World is part of a national movement to restructure companies and shake up management for an evolving marketplace.

A team from AlixPartners will assist Dubai World as it deals with billions of dollars of debt due in December, and a business climate less inclined to finance the ambitious projects of Dubai World’s developers, Nakheel and Limitless. “They were brought on in the last several weeks to advise on a range of issues but especially the problems at Nakheel,” a source familiar with the contract said.

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Fears of D1.5bn penalty hits Shuaa shares

Shuaa Capital, the investment bank embroiled in a public row over a Dh1.5 billion (US$408.6m) convertible bond, called on the market regulator Sunday to avoid pre-judging its dispute with the Dubai Banking Group (DBG), as the pair moved closer to a legal confrontation.

The statement sent Shuaa’s shares down by 9.8 per cent in Dubai yesterday.
“I think investors overreacted a bit. But they clearly fear that the bank may have to pay back the Dh1.5bn to DBG. Should Shuaa have to pay, it would really hurt them,” said Shawkat Raslan, the head of sales at Prime Emirates, the brokerage owned by Prime Holding of Egypt.

In a letter addressed to the Emirates Securities and Commodities Authority (ESCA), Shuaa said the questions over the bond “required very careful conside­ration and must ultimately be addressed as matters of law and public policy”. ESCA posted the letter on the website of the Dubai Financial Market Sunday.

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Corruption team makes its case

An independent team investigating alleged corruption in Dubai companies began laying out its findings in court yesterday, having been given unprecedented powers of scrutiny.

The team, led by Mohammed Mustafa Hussain, was appointed by Sheikh Mohammed bin Rashid, the Ruler of Dubai and Vice President of the UAE, to investigate dealings at the developer Deyaar.

Mr Hussain told the Dubai Court of First Instance that an intricate web of land deals and transactions had created a massive fraud. He was giving evidence in the case of SA and IJ, two former Deyaar employees who stand accused of bribery involving the sale of land.

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Kuwait will hold nuclear talks with Areva, says French economy minister

Kuwait will hold nuclear power talks with Areva sometime over the next few days, the French economy minister said on Sunday.

Speaking after a meeting with Kuwait's ruler Emir Sheikh Sabah al-Ahmad al-Sabah, Christine Lagarde said the two sides discussed capital partnerships between French firms and the Kuwaiti government in the field of nuclear energy for civilian use.

"Civil nuclear power ... will be further developed with meetings due to be held in the coming days between Areva and the Kuwaiti authorities," Lagarde told reporters at Kuwait City during a short visit.

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Is monetary union an elusive dream?

On the face of it you would have thought that setting up a single currency in the GCC should have been a pretty easy prospect.

But with the likelihood that there will be no single currency for at least three years it appears that there is some structural problem that has seen the member states fail to agree on very much since they first set off on this monetary union and common market route.

I read somewhere recently that the prospects for the deal took a step forward recently when Oman announced it may join the new currency at some time in the future.

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Mystery surrounds reports of UAE takeover of Premier League club

Premier LeagueImage via Wikipedia

A member of a ruling family in the United Arab Emirates has bought a majority stake in a Premier League club, the official Emirates News Agency has reported. The agency did not name the club but said that Sheikh Ahmed bin Saqr al-Qassimi has bought 60% of it, adding that details would be announced at a press conference this week.

The report was greeted with scepticism among figures with experience of Premier League takeovers. The agency said that Sheikh Ahmed, a member of the family which rules Ras al-Khaimah – one of the UAE's seven emirates – will be the club's ­honorary chairman.

The prospective new owner of Portsmouth, Sulaiman Al Fahim, is from the UAE but sources close him last night strongly denied any involvement.END

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Kuwait, Qatar, UAE: Still Frontier Markets (Re-post)

MSCI has finally concluded less than a week ago that they will not promote Kuwait, Qatar and UAE from an MSCI Frontier Market classification to an MSCI Emerging Markets classification. Qatar and UAE will still be on the list for a possible reclassification, while Kuwait has been dropped out of the list altogether!

Here is part of the MSCI review:

UAE: MSCI will maintain the MSCI UAE Index within Frontier Markets. The MSCI UAE Index will remain under review for a potential reclassification to Emerging Markets as part of the 2010 Annual Market Classification Review.

Market participants have welcomed the improvements implemented by the Emirati regulator that contributed to a further alignment of the country’s operational framework with international standards.

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