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Monday, 29 June 2009

U.A.E. Says Algosaibi Problems Are Gulf Unity ‘Test’

The way Gulf states manage the fallout from the Algosaibi group, which owes 34.6 billion Saudi riyals ($9.2 billion) to banks, is a test of the cooperation needed to build a unified currency, the U.A.E. central bank governor said.

“If we have a common market, we should know how to deal with such cases,” Sultan Bin Nasser al-Suwaidi said in an interview in Basel, Switzerland today. “We should meet as regulators and we should discuss the issue and discuss a solution. All these things have not happened.”

The U.A.E. on May 20 became the second country in the six- member Gulf Cooperation Council to pull out of a planned monetary union, after Oman withdrew two years ago. The exit of the U.A.E., the second largest Arab economy, was a blow to the project and came after Riyadh, the Saudi Arabian capital, was chosen as the spot for a future Gulf central bank.

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UAE – Federal guarantee of bank obligations (PDF)

•A federal guarantee of UAE bank obligations would help shore confidence in the UAE banking system by demonstrating continued sovereign support to the sector

•A federal guarantee would also help the banks meet their refinancing needs in 2009 and 2010

•However, the devil will be in the detail

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Omar El-Quqa’s Resignation Sets a Precedent of Accountable Leadership (Re-post)

The Kuwaiti financial society will remember yesterday June 28th as the day Mr. Omar M. El Quqa, Advisor and former EVP of Global Investment House (GIH), resigned. Ironically, this day coincided with his and Global’s 11-year anniversary.

Mr. El-Quqa sent his resignation in the form of a letter to his co-workers. He began the emotional letter by stating that although he doesn’t approve of the new restructuring plans and believes that he is critically needed as an executive rather than a mere advisor; he agreed to the new position to alleviate the external pressures on Mrs. Maha Al Ghunaim. He further stated that Global promised him of a strategic role in the decision making process. However, Global broke their promises by excluding him from all committees and the decision making process.

Continuing on, Mr. El-Quqa shared his disappointment with Global for neglecting his efforts during the past 11 years and the fact that he significantly contributed to the transformation of Global into the best investment house in the MENA region. Nevertheless, Mr. El-Quqa praised Global and cherished his experience in it by stating that Global is not just a company but a vital part of who he is.

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UAE may have seen 'bottom of downturn,' says Morgan Stanley

The UAE's economy, the second-biggest in the Gulf, may have reached the 'bottom of this downturn' and should see a 'mild recovery' in 2010, Morgan Stanley said.

The recent improvement in global economic momentum, the rise in oil prices, and the stabilization in domestic markets are helping the country’s economy to recover from a slump led by the collapse in real-estate and energy prices, Morgan Stanley’s Dubai-based analyst Mohamed Jaber wrote in a note today.

“The strength of the recovery will depend on the momentum for global growth and the timely resolution of imbalances in its domestic real-estate and credit markets,” Jaber wrote.

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Anglo seeks Dubai cash to develop Brazilian ore project

Anglo American, the mining conglomerate that is being stalked by Xstrata, its Swiss-based rival, is in talks with Dubai Natural Resources World to co-develop iron ore assets in Brazil.

The discussions with the Gulf company, owned by the Emirate of Dubai, come after separate talks with other potential investors, including Chinalco, the Chinese state-owned metals group, although these are not expected to result in a deal.

Anglo needs cash to bring its Brazilian iron ore reserves into production and an injection of capital from an outside investor might help it to fend off Xstrata’s unwelcome merger proposal. Anglo believes that it needs $3.6 billion (£2.1 billion) to develop the Brazilian iron ore. It spent $5.5 billion buying MMX-Minas Rio assets 18 months ago and a sale of part of its stake in MMX is being considered to raise the money needed to begin production.

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Porsche rekindles dispute with VW

The power struggle over Porsche was reignited on Sunday when the chairman of the German sportscar maker accused Volkswagen of attempting to blackmail it into accepting a reworked merger plan. Wolfgang Porsche, Porsche’s chairman and largest shareholder, strongly rejected a Monday deadline that he claimed VW had imposed for Porsche to accept its plan to buy half of Porsche’s sportscar business as a first step towards a full integration of the two companies. VW denied it had issued an ultimatum.

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MENA's first Islamic REIT could list by Sept - CEO

Bahraini asset manager Inovest could list the first Islamic REIT in the MENA region as early as September, the company’s CEO has said.

Inovest is currently raising funds to buy at least $79.5m (BD30m) of property.

Speaking to Arabian Business, Inovest CEO Khalid Abdulla said: “It will be listed soon after we complete raising the funds and allocating the funds. We hope sometime around September.”

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ACI Group denies CEO has been jailed, fled UAE

UAE-based real estate broker ACI Group has denied stories in German business media that the company’s CEO Robin Lohmann has been jailed.

Trade title Financial Intelligence Service last week reported that Lohmann has been under investigation by the Dubai police.

The paper stated that four independent sources had confirmed Lohmann had been taken into custody for one night, had surrendered his passport to the authorities, and was not allowed to leave the country before the debts of ACI Dubai were settled.

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Anonymous Iran Green Brief #12 (June 28) (Re-post)

These are the important happenings that I can positively confirm from Sunday, June 28 in Iran.

1. URGENT: Rumors of Mousavi’s arrest are being spread around the blogosphere and twitter. So far, no reliable source has confirmed this. At the time of the writing of this brief – 9:27 PM ET – he is still free. His facebook account denies the claim:

2. Thousands of people gathered in Tehran's Ghoba Mosque today at a rally planned to coincide with the 7 Tir bombing that killed Ayatollah Beheshti and 70 other prominent clerics in 1981. The mosque was filled and the streets and alleys leading up to the mosque were completely crowded by protesters chanting "Where's our vote?" Reports indicate that the number was somewhere between 3 and 10 thousand. Beheshti's son addressed the crowd and said that the current regime was pushing people backwards and was not in touch with current realities of the world. He said that the Sea of Green could stand this and were protesting.

3. Mahdi Karoubi was able to join the protests spoke to protesters. Mousavi wasn't able to make it to the center of the crowd and was forced to deliver his message by calling a cell phone as the receiving phone was put on a loudspeaker. Other prominent members of the reform movement were also present, including the wife and daughter of Rafsanjani. Mousavi urged people to continue fighting for their legitimate demands and announced that he would not stop pursuing their collective goals. Rezaei also issued an open letter to the GC today asking them to investigate the whole election & all protests & complaints.

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Qatar Economy May Get More Support, Al-Thani Says

Qatar, which has said it will buy bank real estate portfolios, may introduce new measures to support its financial markets, central bank Governor Abdullah Bin Saud Al-Thani said.

“I think there is more in our plan to stabilize and to make the financial market and industry more stable and sound,” al-Thani said in an interview today at a central bank governors meeting in Basel, Switzerland. He did not specify which measures would be taken.

Qatar’s government said on May 28 that it would buy real- estate investments worth as much as 15 billion riyals ($4.1 billion) from local banks. Al-Thani said last month that the Persian Gulf state was prepared to extend a bailout of investment-bank funds to other industries after saying in March that it would buy $1.8 billion in investments from seven local banks.

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SECO Sukuk Orders Exceed $1.87 Billion, Banker Says

Saudi Electricity Co., the state- controlled power producer, received more than 7 billion riyals ($1.87 billion) in orders for this year’s largest Islamic bond sale, a banker familiar with the transaction said.

The five-year Islamic bonds, known as sukuk, may be priced to yield 160 basis points over the Saudi interbank rate, said the banker, who declined to be identified before the sale is completed. The utility paid 45 basis points over the Saudi benchmark in 2007 when it raised 5 billion riyals in its first sukuk sale, Bloomberg data show. A basis point is 0.01 percentage point.

Companies in the Arab world’s largest economy are seeking other ways to finance projects as the global crisis prompts banks to tighten lending. Saudi Arabia, which has the largest bourse by market value in the Middle East, started an electronic market for bond trading this month as part of its efforts to broaden sources of financing.

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We aim to double regional volumes in five years

The secret of the success of the Swiss banking industry lies in offering good products and taking a long-term view, according to a senior official at one of the world's oldest financial groups. Lombard Odier, a Swiss institution owned by eight families, has offered banking services since 1796 and claims to have weathered 40 financial crises in the intervening years. Anne-Marie de Weck, Managing Partner and one of the eight family heirs, says the Swiss firm has prospered by offering quality products rather than attracting large numbers of clients. During a visit to Abu Dhabi, she told Emirates Business that the banking sector had something in common that other Swiss speciality, chocolate – both needed a good mix of ingredients.

The Alps, chocolates and banks are what Switzerland is known for. The Alps speak for themselves, but what is the secret behind the success and fame of the chocolate and banks?

We will start with chocolate. Making chocolate is a question of mixing different things that work well together. It is a success when you have the right ingredients, prepare them well and present or serve the result in an appealing and impressive way.

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Submarine fraudster gets five-year term, goes under the radar

The former head of Dubai World's submarine unit was sentenced to five years in jail and fined Dh14 million for embezzlement in his absence yesterday.

HJP, from France, is on the run outside the UAE. He was convicted at Dubai Criminal Court of exploiting his position as manager of the Exomos division to embezzle Dh14m.

The court heard that HJP had told a Dubai World official that his company, Seahorse Submarines, could manufacture undersea craft for the group.

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Algosaibi a test for Gulf unity - UAE

The way Gulf states manage the fallout from the Algosaibi group, which owes 34.6 billion Saudi riyals (Dh33.71 billion) to banks, is a test for the cooperation needed to build a unified currency, the UAE Central Bank governor said.

"If we have a common market, we should know how to deal with such cases," Sultan Bin Nasser Al Suwaidi said in an interview in Basel, Switzerland, on Sunday. "We should meet as regulators and we should discuss the issue and discuss a solution. All these things have not happened."

The UAE on May 20 became the second country in the six-member Gulf Cooperation Council to pull out of a planned monetary union, after Oman withdrew two years ago. The exit of the UAE, the second largest Arab economy, was deemed a major blow to the project and came after Riyadh, the Saudi Arabian capital, was chosen as the spot for a future Gulf central bank.

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Shuaa soars on dispute resolution

Shares of Shuaa Capital, the UAE’s biggest investment bank rose by the most permitted in a single session following the resolution of its dispute with Dubai Banking Group on a Dh1.5 billion (US$408 million) bond conversion.

Shuaa shares advanced 14.97 per cent to Dh1.69 during early trade after rising by a similar measure on Thursday.

“There is a lot of volatility in the market but Shuaa is at the positive end. Resolution of its dispute with Dubai Banking Group has certainly helped in restoring investor confidence,” Aymen el Saheb, the head of operations at Drahem Financial Brokerage in Dubai said.

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ADCB stumbles on Saudi worries

Abu Dhabi Commercial Bank shares fell Sunday taking the weekly loss to more than 18 per cent as investors awaited more information on the institution’s exposure to Saudi Arabia’s Saad and Gosaibi groups. Banks across the region have been forced to disclose loan exposure to the two familiy conglomerates, which are in the throes of debt restructuring.

“The fact that investors need to have more information is one of the key issues on the table, the main reason why the stock has been losing so many points so fast,” said Ayman el Saheb, the director of operations at Darahem Financial Brokerage. [CK] “We still don’t know what the exact numbers are to gauge exposure to the Saad-Gosaibi groups.”

The turmoil at the Al Gosaibi and Saad groups, two of the region’s largest family-run conglomerates, has spread throughout the Gulf as banks have moved to limit exposure to both companies after their accounts were frozen in Saudi Arabia last month. Local lenders including Mashreqbank, National Bank of Abu Dhabi and First Gulf Bank have admitted lending exposure without detailing value of their loans.

Guarantee on bond sales to stimulate lending

A planned federal law that will guarantee the bond sales of local banks will trigger a new wave of lending and allow financial institutions to tap cheaper funds, senior bankers say.

The Federal Government is close to introducing legislation that will guarantee bond sales, aimed at shoring up investor confidence in new issuances as regional capital markets struggle to recover from the global recession.

“In my view, formalising a government guarantee on deposits and bank borrowings will certainly act as a catalyst for foreign investors to lend to UAE borrowers,” said Mohammad Wajid, the global head of the financial institutions division at Emirates NBD. “The true recovery will start only once banks themselves feel comfortable to lend actively again.”

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Five found guilty of embezzling Dh423m from finance company

Two former chairmen and three board members of an Islamic finance company were sentenced to between one and three years in jail yesterday for embezzling Dh423 million (US$120m).

Ali Hamel al Qubaisi, a former chairman, was sentenced to three years by the Court of First Instance after he was found to have transferred money from the company’s accounts to another one in which he was the majority shareholder.

The second chairman, Abdullah al Qubaisi, was sentenced to two years while the three board members, Alwaleed al Mubarak, Eissa al Shamlan and Ghaith al Qubaisi, each received a one-year sentence.

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QE2 refurbishment stalled in Dubai

The RMS Queen Elizabeth 2 during a port visit ...Image via Wikipedia

The QE2 cruise ship seemed to have a bright and brash future when it hove into port in Dubai last year after 40 years as Britain's favourite cruise ship.

It was to be the emirate's second so-called "seven-star hotel" - the funnel sliced off in favour of a glass penthouse; the interior reworked into spas, restaurants and a three-storey ballroom.

But the refurbishment has not started and the ship is crewed not by builders, plumbers and fitters but by engineers and maintenance men with a mission to keep the woodwork polished and the fabric from decaying.

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