#GCC and #MiddleEast Finance News: 8 Aug 2012

Wednesday, 8 August 2012

StanChart seeks advice over countersuit - FT.com

Standard Chartered has sought advice about whether it can pursue a legal action against the US regulator that on Monday accused the British bank of being a rogue institution which had funded $250bn of Iranian sanctions breaches.
The bank’s legal advisers believe “there is a case” for claiming reputational damage, according to two people close to the situation, although StanChart is conscious of the delicacy of taking an aggressive stance towards its regulators.

Profit falls at OMV but oil and gas production rises helped by Libya - The National

Net profit at OMV, an Austrian oil and gas firm owned in part by Abu Dhabi, declined in the second quarter despite strong sales and resurgent production in Libya.

The company, which in June signed a deal to appraise a gasfield in Abu Dhabi, posted a net quarterly profit of €360 million (Dh1.63 billion), a6 per cent decline compared with the same quarter last year. Revenue rose 25 per cent to €9.99bn.

A decline in the price of Brent crude was offset by a weak euro and increased production in Libya, where OMV is pumping at 90 per cent of pre civil war levels.

Standard Chartered's woes linked to India unit - The National

Standard Chartered’s compliance unit had been outsourced to India in an effort to reduce costs, leaving the bank’s New York operations in the dark about whether its transactions breached US sanctions, regulators say.

On Monday, the New York department of financial services published a report accusing Standard Chartered of having concealed US$250 billion (Dh918.27bn) in transactions that violated US sanctions against Iran.

Standard Chartered, which strongly rejected the department’s report, is due to go before the New York superintendent of financial services on Wednesday to explain itself, with analysts fearing it could lose its US banking licence.

Rosy retail vision spurs Jashanmal to grow - The National

Jashanmal Group has embarked on a multimillion-dirham retail push across the Arabian Gulf, including the launch of four branded department stores.

The company, one of the oldest retailers in the Middle East, plans to open 10 new stores by the end of this year and says it is focusing on the UAE, Kuwait and possibly Qatar.

Tony Jashanmal, the executive director, said the retailer was making a "substantial multimillion-dirham investment".

Saudi Arabia reverses ban on selling properties to Shiites | GulfNews.com

Saudi religious authorities have announced the withdrawing of a religious fatwa issued by a senior scholar preventing the selling of real estate to Shiites, the Saudi press reported yesterday.
A circular issued by the Ministry of Islamic Affairs branch in the Eastern province asked the imams of mosques in the region to “ban putting on the advertisement board the fatwa of the late Shaikh Abdullah Bin Jibrin, from the committee of senior religious scholars, which prohibited the sale of real estate to Shiites”.
The circular warns those who put up the fatwa and asks others to report them.

Aldar’s Q2 net profit jumps 228% to Dh417.9m | GulfNews.com

Aldar Properties, Abu Dhabi’s largest real estate company by market capitalisation yesterday reported a whopping 228 per cent year-on-year jump in fiscal second quarter net profit to Dh417.9 million while its total revenue quarter-on-quarter rose 497 per cent to Dh4,631.2 million.
In a statement, Aldar said its fiscal first-half net profit rose to Dh896.1 million from Dh316.4 million in the corresponding period a year ago, while revenue for the same period rose 427 per cent on the year to Dh8220.3 million.
Aldar said its gross debt declined at the end of June to Dh14,358 million from Dh18,295 million at the end of December 2011.

Shaikh Mohammad reviews megaprojects | GulfNews.com

The progress made at the megaproject Khalifa Port and Khalifa Industrial Zone Abu Dhabi (Kizad) at Taweelah was recently reviewed by General Shaikh Mohammad Bin Zayed Al Nahyan, Abu Dhabi Crown Prince and Deputy Supreme Commander of the UAE Armed Forces.
The news followed an in-depth presentation made at Shaikh Mohammad’s majlis by Dr Sultan Al Jaber, Abu Dhabi Ports Company (ADPC) Chairman, Tony Douglas, CEO; Captain Mohammad Al Shamsi, Executive Vice-President Ports’ Unit and Khalid Salmeen, Executive Vice-President, Industrial Zones’ Unit. The presentation centred on the company’s progress in delivering this megaproject on time and within budget.
The infrastructure for the first phase of the megaproject is expected to be officially completed, and formally handed over at 7am on September 1.

UPDATE 1-Aldar Properties net profit beats forecast - Yahoo! News Maktoob

Struggling Abu Dhabi property developer Aldar Properties reported a three-fold increase in net profit, buoyed by delivery of 1,058 high-end residential beach units, beating analyst forecasts.
Aldar, currently in merger talks with rival Sorouh Real Estate, made a second quarter net profit of 417.9 million dirhams ($113.8 million) compared with 127.3 million dirhams last year.
The results beat analyst average estimates of 40.35 million dirhams.

MIDEAST STOCKS-Saudi hits 5-wk intraday high; Arabtec weighs on Dubai - Yahoo! News Maktoob

Saudi Arabia's index closed lower on Wednesday after touching a five-week high in the session, weighed down by large caps, while Dubai's market was pulled lower by builder Arabtec which posted a surprise quarterly loss.
Heavyweight Saudi Basic Industries dipped 0.6 percent and Etihad Etisalat slipped 0.4 percent. Banks were mixed, with Al Rajhi Bank gaining 0.3 percent, SABB up 0.9 percent and Banque Saudi Fransi rising 1.2 percent. However, Arab National Bank dropped 2 percent, with Riyad Bank down 0.2 percent.
Volumes have held up well in Saudi Arabia, despite the traditionally quiet holy fasting month of Ramadan which began in mid-July.

Saudi Binladin Group sells $267 mln short-term sukuk - Yahoo! News Maktoob

Saudi Binladin Group, one of the largest construction firms in the kingdom, has completed issuing a 1 billion riyal ($267 million) short-term Islamic bond, or sukuk, a statement from the arranging bank's legal advisor said on Wednesday.
The sukuk, which has a 364-day tenor and was sold through the SBG Sukuk Ltd special purpose vehicle, pays a profit rate of 2.5 percent and is the third such issue from the company, the statement from Clifford Chance said.
HSBC's Saudi Arabian unit was the sole bookrunner for the transaction, the statement added.

FT Alphaville » What’s StanChart’s plan B?

With the 17 per cent drop in share price on Tuesday, the market was effectively pricing the possibility that Standard Chartered could lose its New York banking license, and with it its ability to clear dollar transactions.

But the stock is up 7.5 per cent at pixel time on Wednesday. Some re-thinking is clearly underway.

Resilience underpins Lebanese debt - FT.com

In spite of an escalating civil war on its doorstep, Lebanon’s sovereign debt is still seen by financial markets as a less risky investment than the debt of Spain, according to the pricing of credit default swaps.
The cost of insuring against a default in Lebanon is trading at 498 basis points, cheaper than the equivalent insurance for the debt of Spain, which traded at 523bp on Wednesday, according to Markit, the data provider. Lebanon’s credit default swaps are also slightly cheaper than those of Ireland and Italy but priced higher than that of Portugal.

NYS Order on Standard Chartered’s Iran Transfers Opens Up US, UK Regulatory Pig Fight « naked capitalism

I hope Benjamin Lawsky, the New York Superintendent of Financial Services, has balls of steel. He will need them.

In case you missed it, a major news story yesterday is the bombshell that Lawsky dropped on the British bank, Standard Chartered, in the form of an order (a regulatory determination) that set out in considerable detail how the bank, with deep involvement of senior in house counsel and compliance staff, had doctored (“repaired”) wire transfers so as to disguise the fact that the customers were major Iranian banks, including its central bank. Both SCB’s outside US counsel (in 2003) and the head of the US operations (in 2006) raised big red flags that the way the banks was operating was out of line with the regs. The US chief was begging to exit the Iran business. From the order:

Firstly,” he wrote, “we believe [the Iranian business] needs urgent reviewing at the Group level to evaluate if its returns and strategic benefits are . . . still commensurate with the potential to cause very serious or even catastrophic reputational damage to the Group.” His plea to the home office continued: “[s]econdly, there is equally importantly potential of risk of subjecting management in US and London (e.g. you and I) and elsewhere to personal reputational damages and/or serious criminal liability.

The New Paradigm: Volatile Oil Markets | Energy Bulletin

One of the many hypotheses put forward by peak oil theorists is that as the production of conventional oil peaks we will see increasing volatility in oil markets. The basic reason for this is that oil is the fundamental energy resource on which our modern industrial society runs. Economies begin to falter under the pressure of high oil prices as they can no longer sustain growth and so demand for oil falls. As demand falls, so does the price of oil which eventually reaches a level that is conducive to economic growth. Demand increases again followed by the price of oil and the cycle repeats ad infinitum. That is of course until you throw a proverbial spanner in the works in the form of restrictions on the supply side. Historically the most influential spanner has been unrest in the Middle East. However we are increasingly seeing the impact of another much larger and altogether much more catastrophic spanner: the peak production of conventional oil.

Just look at how much more volatile prices have become over the last 30 years:

Figure 1: Monthly change in price for crude oil (US dollars per barrel), simple average of three spot prices; Dated Brent, West Texas Intermediate, and the Dubai Fateh, August 1982-June 2012. Data from http://www.indexmundi.com/commodities/?commodity=crude-oil

UPDATE 1-Kuwait's CBK Q2 profit drops as provisions bite again | Reuters

Commercial Bank of Kuwait (CBK), the country's seventh biggest bank by market value, posted a 5.4-percent drop in quarterly profits on Wednesday as heavy provisioning once again wiped out earnings growth.

The lender had net profit of 122,000 dinars ($433,000) in the three months to June 30, compared with 129,000 dinars in the prior-year period, it said in a bourse filing.

An EFG Hermes analyst polled by Reuters had forecast net profit of 4.4 million dinars.

Dubai Shares Retreat Led by Arabtec After Loss; Qatar Gains - Businessweek

Dubai’s benchmark stock index fell to the lowest in almost a week after Arabtec Holding Co. (ARTC) reported a second-quarter loss that missed analysts’ estimates. Qatari shares advanced after Industries Qatar (IQCD)’s profit rose.

Shares of Arabtec, the biggest construction company in the United Arab Emirates, decreased 4 percent. Emaar Properties PJSC (EMAAR), developer of the world’s tallest skyscraper, declined for a third day. The DFM General Index (DFMGI) fell 0.1 percent to 1,555.65 at the close in the emirate, the lowest since Aug. 2, taking the past three day’s drop to 1.3 percent. Qatar’s QE Index increased 0.4 percent, while the Bloomberg GCC 200 Index (BGCC200) rose 0.1 percent.

Arabtec, which has the third-heaviest weighting on the stock gauge, said today the loss attributable to owners of the parent was 11.6 million dirhams ($3.2 million) after a profit of 29 million dirhams a year earlier. The average estimate of six analysts was for a profit of 73 million dirhams, according to data compiled by Bloomberg. The shares fell the most since May 13 to 2.9 dirhams, trimming this year’s rally to 92 percent.

UPDATE 1-Industries Qatar Q2 profit inches up, meets forecasts | Reuters

Industries Qatar, the Gulf's second-largest petrochemicals firm, posted a slight rise in second quarter profits on Wednesday, falling in line with analyst estimates.

The Qatari firm had net profit of 2.14 billion riyals for the quarter ended June 30, according to Reuters calculations based on financial statements. That compared with profit of 2.08 billion riyals a year earlier.

Analysts forecast average profit of 2.09 billion riyals, in a Reuters poll.

UPDATE 1-Qatar National Bank signs upsized $1.8 bln loan | Reuters

Qatar National Bank (QNB), the Gulf Arab state's largest lender, signed a $1.8 billion, three-year loan which was expanded from its original amount after attracting strong demand from banks during a marketing period, it said on Wednesday.

Originally $1.5 billion but increased after it was oversubscribed during the syndication period, the loan saw 10 banks join the five original bookrunners on the deal, a source with knowledge of the matter said, speaking on condition of anonymity as the information isn't public.

The significant interest in the facility from banks comes despite the loan paying a margin of just 1 percent over the London interbank offered rate (Libor) per annum, a figure which would be below the cost of funding for many banks on the deal.