Wednesday, 16 June 2010
Abu Dhabi Commercial Bank has finalised a deal to buy Royal Bank of Scotland's UAE retail arm for around $100 million, ADCB said on Wednesday, expanding its domestic footprint.
As part of the deal, ADCB acquires three branches along with 250,000 customers, Abu Dhabi's third-largest bank by market value said in a statement.
The $100 million deal, which is expected to close within four months, will be financed from internal cash resources, the lender said.
Saudi Arabian and Qatari shares advanced as oil traded above $76 a barrel and global stocks gained on optimism in U.S. economic recovery.
Saudi Basic Industries Corp., the world’s largest petrochemical maker, rose to the highest intraday level in almost a month after signing a 3.75 billion-riyal ($1 billion) agreement. Qatar Islamic Bank gained 1.5 percent. Saudi Arabia’s Tadawul All Share Index increased 0.9 percent to 6,379.9, the highest since May 22, as of 12:12 p.m. in Riyadh. Qatar’s QE Index advanced 0.7 percent to 7,029.68, rising a third time this week. The Bloomberg GCC 200 Index climbed 0.8 percent.
“The rise in European and U.S. markets has boosted Gulf stocks,” said Shadi Ramadan, trading manager at Al Dhafra Financial Brokerage LLC in Abu Dhabi.
Ras Al Khaimah wants to avoid the financial problems of fellow sheikdom Dubai and reduce its 5 billion U.A.E. dirhams ($1.36 billion) of debt after funding a development splurge with Islamic bonds, a senior official said.
"We'd like to reduce this structural debt and then bring in partners," Jim Stewart, chief executive of the Ras Al Khaimah government's Investment and Development Office told Zawya Dow Jones in an interview.
Investors will share equity in some of the emirate's 16 government-related companies--which could also sell shares to the public in a few years--or help develop its major projects, said Stewart, from his office this week.
Ras Al Khaimah, the fourth-largest member of the U.A.E. and the last sheikdom to join the federation, wants to reduce its modest debts after watching Dubai allow borrowing to get out of control.
Dubai was forced to call on the financial support of its oil-rich neighbor Abu Dhabi and the federal government after it emerged that one of its largest state-owned companies needed to restructure $26 billion of debt.
"We take no money from Abu Dhabi," he said. "As we go forward, we find that on a macro level, our debt needs are lower in terms of supporting our companies."
The emirate has about AED3.6 billion of sukuk listed on the London Stock Exchange and doesn't have plans for more borrowing.
According to Zawya.com, the government has an ongoing $2 billion sukuk program and sold $400 million of bonds in July last year in the first U.S. dollar sukuk issue by an emirate in the U.A.E. It sold AED1 billion of sukuk in May 2008. Ras Al Khaimah Investment Authority, or Rakia, sold a $325 million sukuk in 2007.
The government is rated 'A/A' by Fitch and Standards & Poor's ratings agencies.
Ras Al Khaimah, which has struggled to attract investment on the same scale as bigger emirates like Dubai and Abu Dhabi, has built up raw materials and mining industries. It's also making a foray into real estate and tourism by building resorts and an amusement park along its Persian Gulf coastline.
"We built up this emirate on a needs-basis," he added. "We haven't just gone out and built things. Most of the work we're doing is an expansion of our assets."
Those assets include a maritime free-zone business park and Ras Al Khaimah International Airport.
The emirate is also home to the world's largest tile maker, Rak Ceramics, and is building up its ports to boost trade, while developing docks overseas in Georgia and India. The Investment and Development Office run by Stewart manages the government's investments and acts as a centralized debt management agency.
"In three to five years, we'd look to have key players join us in some of these key assets. Having gone through a rapid period of growth, it's actually very unusual you would own 100% of your airport and ports," said Stewart.
With the airport expected to break-even next year, and real estate projects reaching completion, Ras Al Khaimah will look for "more flexible funding for projects," and expects that its companies will borrow on their own books rather than rely on the government issuing sovereign debt.
It will also look to neighboring emirates for partnerships. "We're well-positioned now to do more, with Dubai, with Abu Dhabi," Stewart said. "Some of our assets fit in well with what they do."
Jadwa Investment, a company part-owned by the Saudi royal family, and CIT, a European property investor, have acquired the King’s Reach Tower on London’s south bank for £60m ($89m) and plan to invest a further £500m in the UK real estate market.
Jadwa has invested £140m in UK property – including Hull’s largest shopping centre in March – and King’s Reach Tower is the fourth joint Jadwa-CIT acquisition.
The price paid for King’s Reach was almost a quarter below the price paid the last time it was sold in 2006, said Jadwa. The purchase of the tower and adjacent podium building includes a planning consent for redevelopment and Jadwa and CIT plan to invest a further £200m in the property.
The government will soon issue several economic laws to regulate the UAE's financial sector and control the flow of hot money in the national economy, Minister of State for Financial Affairs Obaid Al Tayer said yesterday.
Speaking at a session of the Federal National Council in Abu Dhabi, Al Tayer said the new laws, which were compiled by the Ministry of Finance in co-operation with the Securities and Commodities Authority (SCA), the Central Bank and the Insurance Authority, also deal with bankruptcy and credit, and were necessitated by the fallout of the global financial crisis. They will be referred to the Cabinet soon.
"We benefited from the many lessons of the global financial crisis, and the ministerial committee tasked with following up the impact of the crisis on the UAE economy is still engaged in monitoring the local and international situations," he said.
We are approaching endgame in the negotiations between financial creditors, who are owed US$14.4 billion (Dh52.89bn), and Dubai World.
But there is many a slip twixt cup and lip and this saga, which has been running since last November when Dubai World first called in the restructurers, still has the capacity to surprise.
So far, after the confusion of the initial restructuring announcement, it has gone pretty smoothly. Other restructurings in the region have been far more time-consuming and confrontational. The Investment Dar in Kuwait is still locked in legal wranglings with a rump of dissident creditors; Global Investment House also had a tough time persuading creditors to accept reduced terms.
A Bahraini tribunal has ruled key documents in the Middle East’s most serious corporate scandal of recent years were not forged, as has been alleged.
Lawyers working for Ahmad Hamad Al Gosaibi and Brothers, the Saudi Arabian conglomerate, have alleged that Maan al Sanea, a Saudi billionaire, forged signatures on financial documents to commit a US$10 billion (Dh36.72bn) fraud against the group.
Al Gosaibi claimed the signatures on three financial documents – two credit facility letters and one guarantee agreement – were not signed by Suleiman Hamad al Gosaibi, the late chairman of the family conglomerate, but were forgeries. The documents were all dated June 29 2008.
Designer goods discount retailer Loehmann's Inc, whose parent is an investment arm of Dubai World, has hired three firms to advise it on a turnaround, Bloomberg News reported on Tuesday.
The report, citing unidentified people with knowledge of the situation, said the three firms were AlixPartners LLP, Perella Weinberg Partners and Clear Thinking Group LLC.
A representative of Loehmann's could not immediately be reached to comment.
Doha Bank (DHBK.DO), Qatar's fifth-largest lender by market value, will sell up to $1 billion of bonds by the end of the year if the global recovery is sustained, the bank's chief executive officer said Monday.
"If global financial stability comes in before the year-end we should go for it," Raghavan Seetharaman told Zawya Dow Jones in an interview. "It has to be cost effective."
Seetharaman added that the bank would look to raise debt to strengthen long-term liabilities and hedge against a possible increase in the cost of funding due to interest rate rises in U.S. as the world's largest economy recovers from the worst recession since the Great Depression.
Qatar's currency, like other Gulf Cooperation Council, or GCC, states is pegged against the U.S. dollar.
Shares in Doha Bank closed up Monday 1.4% at 44.90 Qatari riyals ($12).
Rival, Qatar Islamic Bank (QIBK.DO), or QIB, the country's second-largest lender by market value, is said to have delayed in April selling $500 million of Islamic bonds due to uncertainty in regional capital markets. The bank now plans to issue bonds in the second half.
Doha Bank, which reported first-quarter net profit of QAR315 million, cancelled plans to issue $1 billion of Islamic bonds, or sukuks, in early 2008.
Seetharaman, chief executive since 2002, said that economies dependent on the financial services industry will suffer "a double dip recession", while Qatar's hydrocarbon revenues will protect it from another downturn.
"The world is not yet out of the woods and I foresee a double dip recession," he said.
Doha Bank will have non-performing loans of around 3% of its balance sheet at year end, he said.
In 2010, Seetharaman said the bank's focus will be on growing its Islamic finance arm and small to medium size enterprise funding, and that both divisions could expand by 20% over the next year.
Energy subsidies are the bane of Egyptian budgets, soaking up as much public funds as health and education put together - which is why the government is looking to cut back on energy subsidies in the near future, as Egypt’s finance minister told beyondbrics in an interview.
But you wouldn’t be able to tell by looking at the government’s budget, just adopted for the fiscal year to start in July, which outlines some $12bn still to be spent on supporting the prices of a range of fuels from natural gas for industrial and domestic consumption to the unleaded petrol guzzled up by the swanky SUVs now fashionable among the rich.
“We have a vision [for reducing subsidies] but we don’t publicise it,” said Youssef Boutros Ghali, Egypt’s finance minister, in an interview with the FT . “In the coming months you will see.”