Monday, 31 May 2010
During the boom credit growth in the Gulf soared to unprecedented levels and there was much talk of banks having to adapt their lending practices. Financial institutions, analysts said, needed to focus more on risk management and shift away from “name lending”, which saw money flow into family businesses and government-affiliated entities with too little oversight. In many people’s eyes, the banks were partly culpable for the excesses that have made the Gulf’s downturn more painful.
Now as regional officials talk up prospects of recovery, it is a lack of lending that is acting as a constraint on the pace of growth, economists say.
“I’m concerned that at the moment many corporates I talk to, even rock solid ones, are saying ‘I still can’t get any working capital,’ ” says an analyst at an international bank. “It [the credit squeeze] has already lasted longer than I anticipated.”
In the summer of 2006, oil prices were shooting through the roof and global banks rushed to set up offices in the Dubai International Financial Centre to win petrodollar business.
As the investment banks descended on the DIFC, established financial institutions would find entire Mideast teams poached by rivals. Recruiters offered multi-year guaranteed bonuses to lure stars from Asia and Europe.
Four years on and almost two years since the onset of the global financial crisis, banks are at a turning point. Some high-flyers are moving onto other, more enticing prospects and teams are being shuffled.
Kuwait Investment Authority, the country’s sovereign wealth fund, is assessing the value of Zain shares for a possible sale of its stake in the company, Al-Qabas reported, citing unidentified sources.
The wealth fund selling its 24.6 percent in Kuwait’s biggest mobile-phone company to an investor or a strategic shareholder is not ruled out, the newspaper said. Kuwait Investment Authority would auction its stake once it decides to sell, Al-Qabas reported.
Standard & Poor’s raised the credit ratings of Saudi Arabia’s two largest publically traded lenders Al Rajhi Bank and Samba Financial Group one grade to A+, citing strong liquidity and capitalization.
Al Rajhi’s upgrade was due to “its unique market position in the Saudi retail market, increasingly diversified loan book, strong and resilient profitability, and growth strategy with solid capital ratios,” S&P credit analyst Nicolas Hardy said in an e-mailed report.
“Samba’s financial profile has continued to strengthen on support from a resilient financial performance, solid capitalization, and strong funding and liquidity indicators,” hardy wrote in the report.
Kuwait shares fell for the first time in four days, leading Gulf markets lower, on concern tensions may escalate in the region after the Israeli army clashed with pro-Palestinian activists on ships carrying humanitarian aid.
Kuwait Portland Cement Co., the importer and exporter of cement, declined to the lowest in two months. Emaar Properties PJSC, developer of the world’s tallest skyscraper, fell and Aramex PJSC had the biggest loss since April 18. The Kuwait Stock Exchange Index fell 1.7 percent to 6,699.7, the lowest since Dec. 7. The gauge lost 8.2 percent this month. The Bloomberg GCC 200 Index, which tracks 200 equities, slipped 0.4 percent. The DFM General Index slid 1.4 percent.
More than 10 people were killed after Israeli commandos intercepted a flotilla of ships carrying aid supplies to the Gaza Strip, the Israeli army said. Turkey’s Foreign Ministry called the raid “inhuman” and said it “may cause damage to our relations that will be impossible to repair.” Turkey’s ISE National 100 Index lost 1.6 percent at 5:15 p.m. in Dubai and Israel’s benchmark index fell 1.3 percent.
This week I made the trip between Abu Dhabi and Dubai four times in as many days, shuttling between our regional hub in Abu Dhabi and hotels, conferences and interviews in Dubai.
On one occasion, I hitched a ride with a colleague, who goes back and forth every day, who bore witness to the challenges of Emirati high-speed travel. Drivers frequently flash their high-beam headlights to intimidate those not going “fast enough” in the fast lane and sometimes use the inside shoulder of the motorway to leave them behind.
The traffic between the two emirates is intense during morning and early evening rush hours, with the draw of the capital’s wealth creating more jobs in tourism, exhibitions, construction and development. But, it is not the road traffic that is most striking, but instead the shuttle diplomacy. The $3 billion Emirates Palace –- as seen in the new "Sex in the City" movie or earlier in action film "The Kingdom" - serves as a hotel, a meeting venue for the Abu Dhabi government and, lately, as a hub for world leaders.
Gulf Finance House GFHB.BH (GFHK.KW) will sell its 50 percent stake in Bahrain Financial Harbour Holding to Emar Bahrain, GFH said in a statement on Monday.
The sale, which is part of the cash-strapped firm's strategy of divesting non-core assets, come as Gulf Finance House raises funds to repay the remaining $100 million of a $300 million loan.
Analysts have valued GFH's stake in Bahrain Financial Harbour at about $175 million.
Industrial and Commercial Bank of China Ltd. will provide financing, export credit and advisory services to a railway project in the United Arab Emirates, said Yi Huiman, a bank executive vice president.
The world’s largest lender by market value will join China’s Ministry of Railways to provide “railroads plus finance” globally, Yu said at the Abu Dhabi and China Economic Forum in Shanghai today.
Abu Dhabi, capital of the U.A.E., and its companies borrowed about $14 billion last year for acquisitions and infrastructure development, Bloomberg data shows. The Union Railway, an Abu Dhabi initiative, is being expanded to cover all seven U.A.E. sheikhdoms, including Dubai, Chief Executive Officer Richard Bowker said May 11.
During the boom years, Dubai International Capital (DIC) was the standard bearer for the emirate’s global investment ambitions, buying billions of dollars worth of businesses and investments in a four-year burst of expansion.
As perhaps the highest profile part of Dubai Holding, it acquired interests in some of the world’s best-known brands, such as HSBC, Sony and EADS, the manufacturer of Airbus. At one stage, under its founder and chief executive Sameer al Ansari, it almost bought Liverpool FC, the famous English football club, with a suggested price tag of more than £300 million (Dh1.59 billion).
Last week, it emerged that most of its high-profile global acquisitions had been quietly sold since the boom turned bad in late 2008. How much DIC received has not been made public, but, given the fall in global asset prices, it is unlikely to have turned a profit on these deals.
The former heads of Tamweel and Dubai Islamic Bank (DIB) and the chief executive of the property developer Bonyan have been jailed and ordered to pay Dh51.7 million (US$14m) in fines and repayments after being convicted of bribery and embezzlement.
AS, 38, the former chief executive of Tamweel, the UAE’s largest mortgage lender, and his deputy AN, 44, were each sentenced to three years in prison by the Dubai Criminal Court of First Instance.
The former DIB chief executive and Tamweel executive manager, SA, 40, was sentenced to a year in jail along with Bonyan boss AA and FA, 28, a Jordanian who was a senior Tamweel executive and its chief investment officer.
Brazilian mining giant Vale on Saturday said it has agreed to sell a 30 percent stake in an iron pellet plant in Oman with 9 million tonne annual output to the Oman Oil Company (OOC) for $125 million.
Vale (VALE.N)(VALE5.SA), the world's largest iron ore miner, said the Vale Oman Pelletizing Company is slated to begin production in the second half of 2010.
The plant is part of an industrial logistics center located in the Sohar Industrial Port Complex in Oman, Vale said.