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Middle East Banking Newsletter
Bahrain
Banking system consolidated Balance Sheet rises to $133.3
billion
Newly established Venture Capital Bank announces management
appointments
Kuwait’s Investor’s Group to establish Tourism Bank
Egypt
Lebanese bank gets due diligence nod for Cairo Far East Bank
takeover
Arab companies keen to open insurance business in Egypt
Government to
sell $236m CIB stake
Clayton, HSBC
weigh bids for Egypt's Egyptian American Bank
Pireaus Bank's Egyptian unit eyes local expansion
Iraq
HSBC completed the acquisition of Dar Es Salaam Investment
Bank
Bahrain's UGB plans Bank of
Baghdad takeover
Jordan
Arab
Bank aims to double capital to $502 mln
Kuwait
National Bank of Kuwait opens branch in Salmiya Area
HSBC launches sub-custody services in Kuwait
CBK aims for BBK takeover
Lebanon
Lebanon's Fransabank buys 37 percent stake in BBAC
BLOM to list on Dubai
International Exchange
Credit to
private sector registers decline
Bank of
Beirut registers rise in customer credit
BLC Bank
sale attracts 12 potential buyers
Oman
Bank
Muscat to expand across GCC region
Saudi Arabia
Saudi banks combined net profit soars to $4.24 billion during
Jan-Sept 2005
Central bank
denies WTO role in granting recent bank license
NCB bolsters marketing
team
United Arab Emirates
Dubai Islamic Bank launches new corporate identity
Dubai rental costs up 40%
Abu Dhabi Islamic Bank Plans Capital Hike to $816.8 Mln
NBAD set to double its capital to Dh2b
Emirates Islamic Bank Approves Capital Hike to $177 Mln
Turkey
Consumer credits rises by 96 Pct during 10 months of 2005
National Bank of Fujairah lists shares on the Abu Dhabi
securities market
Bahrain
Banking System Consolidated Balance Sheet Rises to $133.3
billion
The consolidated balance sheet of Bahrain's banking system
reached $133.3 billion at end-September 2005, compared to $122.1
billion at end-June 2005. At end-September 2005, the offshore
banking units accounted for 83.1 pct of the banking system's
consolidated balance sheet, the Kingdom's commercial banks
accounted for 11.7 pct and the investment banks in Bahrain
captured 5.2 pct. Total domestic assets of the Bahraini banking
system rose to $19.8 bln from $19.4 bln, while total foreign
assets jumped to $113.5 bln from $102.7 bln. Total domestic
liabilities of the Bahraini banking system reached $25 bln,
compared to $24.2 bln, while total foreign liabilities reached
$108.3 from $97.9 bln.
Newly established Venture Capital Bank announces management
appointments
Venture Capital Bank (VCBank), the first dedicated Islamic
venture capital investment bank announced, that it has appointed
Chief Executive Officer (CEO) in addition to an executive
management team, consisting of four seasoned professionals with
broad-based industry experience and outstanding track records
with top-tier regional and international financial institutions.
Abdul-Latif Janahi has been named as VCBank's CEO. Mr. Janahi,
who is also a founding member of the Bank, a member of its Board
and the Executive Director of its Incorporating Committee,
brings to VCBank 24 years of experience building successful
businesses including those involved in the financial services
industry, real estate investment and the Islamic banking sector.
Kuwait’s Investor’s Group to establish Tourism Bank
The International Investors Group (the Group) of Kuwait is in
the process of setting up Tourism Bank in Bahrain to assist in
the development of the industry-related property sector, not
only in West Asia, but in Southeast Asian region too. Its chief
executive officer, Mohamed BuQais said the bank would not only
help to build hotels, but also tourism-related places and
infrastructure that would bring additional benefits to the
industry.
Egypt
Lebanese bank gets regulatory approval for Cairo Far East Bank
takeover negotiations
The Central Bank of Egypt has authorised Lebanon's Bank Audi to
do a due diligence study on Cairo Far East Bank, the Cairo-based
bank. Such approvals often lead to the acquisition of small
Egyptian banks which the central bank wants to see merged with
other entities. Bank Audi is part of the Audi-Saradar Group. The
current shareholders in Cairo Far East Bank include five Korean
banks (49 percent), Chark Insurance (20 percent) and Banque du
Caire (19 percent)/ Banque du Caire and Chark Insurance are
owned by the Egyptian state. Egypt's central bank has been
encouraging consolidation in the banking sector to create fewer,
larger institutions.
Arab companies keen to open insurance business in Egypt.
Several Arab investors have approached Egyptian Insurance
Supervisory Authority (EISA) seeking its approval to establish
Islamic insurance companies in Egypt. Egyptian-Kuwaiti Holding
Company was amongst the first to ask approval from the
regulator, for establishing two companies - one for life
insurance and the other for public insurance. Besides several
other banks, companies and institutions have also applied to
EISA.
Egypt to sell $236m CIB
stake
The National Bank of Egypt intends to sell its 18.7% stake in
the Commercial International Bank, the nation's largest private
bank, reported Reuters. The current market value for the stake
is $236m. NBE has set a November 13 deadline for initial offers
with final bids by December 9.
Calyon, HSBC
weigh bids for Egypt's EAB
France's Calyon and Britain's HSBC have completed financial
evaluation of Egyptian American Bank , which has been put up for
sale by its main shareholders. American Express Bank , which
owns about 40 percent of EAB, and state-owned Bank of
Alexandria, with more than 30 percent, are seeking to sell their
stakes. EAB said in September that two international banks had
been invited to start examining its books ahead of a possible
acquisition. American Express and Bank of Alexandria earlier
appointed Credit Suisse First Boston (CSFB) as financial
adviser. Egypt's central bank has been encouraging consolidation
in the sector to create fewer, larger institutions. Ministers
have said Bank of Alexandria, the smallest of Egypt's main four
state banks, would itself be sold by early 2006 as part of the
government's privatisation drive. EAB posted net profit for the
first half of 2005 of 164.77 million Egyptian pounds ($28.6
million), compared with 92.24 million pounds in the first half
of 2004.
Pireaus Bank's Egyptian unit eyes local expansion
The chief executive of Egyptian Commercial Bank, Gamal Maharan,
said that it is eyeing expansion in the local market. Egyptian
Commercial Bank is a unit of Greek Pireaus Bank, which controls
about 90 pct of capital. Pireaus Banks general manager of
international operations, Giannis Kyriakopoulos, said that the
group has made a strategic long-term commitment to the Egyptian
market and not a short term profitable exit.
Iraq
HSBC completed the acquisition of a 70.1% equity interest in Dar
Es Salaam Investment Bank
HSBC confirmed that it was in negotiations to acquire a majority
stake in Dar Es Salaam Investment Bank of Iraq. Having concluded
those negotiations successfully and obtained all necessary
regulatory and other approvals, HSBC has completed the
acquisition of a 70.1 per cent equity interest in Dar Es Salaam
Investment Bank which, at 31 August 2005, had gross assets of
US$91.9 million.
UGB plans bank takeover
Bahrain-based United Gulf Bank (UGB), a subsidiary of Kuwait
Projects Company (Kipco), is understood to have reached an
agreement to acquire the largest stake in and management control
of Bank of Baghdad, Iraq’s biggest private bank. Under Iraqi
government rules, foreign banks are permitted to apply to
acquire stakes of up to 49 per cent in any of the country’s 16
private banks. Three banks have licences to establish
independent operations – HSBC, National Bank of Kuwait (NBK) and
Standard Chartered Bank. However, both NBK and HSBC have opted
to go down the acquisition route: NBK has a controlling stake in
Credit Bank of Iraq; HSBC in mid-2005 confirmed ongoing
negotiations for a share in Dar Es Salaam Investment Bank. UGB’s
move is part of a wider regional expansion, which include plans
to take a stake in a private bank in Syria.
Jordan
Arab Bank
aims to double capital to $502 mln
Arab Bank Group planned to sell new shares to existing
shareholders to double its paid-up capital to ($502 million).
The bank will issue 176 million shares in a private placement to
existing shareholders, with every shareholder entitled to an
amount equal to their shareholding. Over the last few years,
Arab Bank has shed its traditional conservative image and has
began aggressive marketing a wide range of investment funds as
part of its wider retail services. Among the shareholders of the
bank, which boasts total assets of over $36.5 billion, are the
region's most successful private enterprise businessmen and
emigre Palestinian tycoons. One of these was former Lebanese
Prime Minister Rafik al-Hariri. His family interests control
nearly 12 percent of Arab Bank shares. The bank's shares, which
account for over a third of the Amman stock exchange
capitalisation, have almost doubled since a stock split earlier
this year.
Kuwait
National Bank of Kuwait Opens Branch in Salmiya Area
Commercial bank National Bank of Kuwait (NBK) has opened its
50th domestic branch in the Salmiya area in Kuwait City, local
media reported in late October 2005. In September 2005, the bank
opened its 49th branch in the Shuwaikh area. NBK operates an
international network of branches in London, New York, Geneva,
Paris, Lebanon, Bahrain, Singapore, Jordan, Qatar and Vietnam.
NBK ( www.nbk.com ) was established in 1952 and was listed on
the Kuwait Stock Exchange (KSE) in 1984. NBK posted a net profit
of 98.3 mln Kuwaiti dinars ($336.5 mln/278.8 mln euro) for the
first half of 2004, up from 65.2 mln dinars ($223.2 mln/184.9
mln euro) in the year-ago period, the Kuwaiti News Digest
reported on July 6, 2005.
HSBC's Custody and Clearing launches Sub-custody service
HSBC’s Custody and Clearing has launched a sub-custody and
securities clearing operation in Kuwait. HSBC now provides
sub-custody and clearing services in 10 markets in the Middle
East and 35 markets globally. With the growing interest from
foreign investors in Kuwait, HSBC’s Custody and Clearing will
provide the full range of sub-custody and securities clearing
services including settlement, safekeeping and corporate actions
to institutional investors. HSBC has been providing sub-custody
services in the Middle East for over 10 years, and is still the
only international bank to do so. HSBC’s Middle East sub-custody
network includes Bahrain, Egypt, Jordan, Lebanon, Oman,
Palestinian Autonomous Area, Qatar, Saudi Arabia and the United
Arab Emirates, and now Kuwait.
CBK aims for BBK takeover
Commercial Bank of Kuwait (CBK) is negotiating to take a
majority stake in and management control of Bank of Bahrain &
Kuwait (BBK), which is jointly owned by Bahraini and Kuwaiti
investors and has operations in both countries. Talks are
understood to be ongoing with four or five existing shareholders
about selling their stakes in the bank. A group of investors
from Saudi Arabia is also thought to be looking at taking
control, although observers say that a takeover by CBK is the
most likely outcome. At the end of 2004, BBK had assets of about
BD 1,421 million ($3,739 million) and shareholders’ equity of BD
158 million ($415 million). The share price on 25 October was BD
0.718 ($1.889).
Lebanon
Lebanon's Fransabank buys 37 pct stake in BBAC
Fransabank, one of Lebanon's leading banks, has bought a 37
percent stake in fellow Lebanese bank BBAC for an estimated $55
million. BBAC said in a statement published on Tuesday the sale
of the Saudi Sheikhalard family's stake to Fransabank would have
no impact on control of the bank, which is 60-percent owned by
the Lebanese Assaf family. The two banks would not merge, BBAC
said in a statement. It did not say how much the deal was worth,
but Lebanon's al-Mustaqbal newspaper said Fransabank paid $55
million for the stake. Fransabank was not immediately available
for comment. Lebanon's central bank has for years encouraged
consolidation among Lebanon's more than 50 banks. Larger banks
acquire smaller players from time to time but there has been
little consolidation among big banks.
BLOM to list on DIFX
Lebanon's biggest bank BLOM is set to list on the new Dubai
International Financial Exchange, reported Reuters. The float
could raise up to $200m, said sources close to the project. BLOM
has appointed Credit Suisse First Boston to handle the secondary
listing. Lebanon's largest bank, BLOM , is set to take a
secondary listing on the new Dubai International Financial
Exchange and raise up to $200 million from the float, sources
familiar with the situation. BLOM has hired Credit Suisse First
Boston to lead the listing, which will happen before the end of
this year. The bank, which is currently listed on the Beirut
Stock Exchange and in Luxembourg, also looked at a liquid
listing in London but decided against it. The bank had received
several suggestions from investment banks about listing its
shares on bourses in Dubai, Qatar or London though no decision
had been made. CSFB declined to comment. Local officials have
trumpeted the Dubai exchange as an eventual rival to London and
New York. Lebanese telecom firm Investcom listed there in
October. Listing in Dubai would also take advantage of buoyant
conditions in the Gulf region for IPOs, as investors look for
places to put their petro-dollars. BLOM is looking to expand
abroad, beginning operations in Syria and Jordan last year and
announcing last month it would bid for Egypt's Misr Romanian
Bank in a deal that would be worth about $103 million.
Credit to
private sector registers decline
A recently publicized report by the Association of Banks in
Lebanon shows that the total granted credit to the private
sector in Lebanon amounted to LL 23,897 billion ($15,852
million) in August 2005 compared with $15,850 in the previous
month of July 2005. The total granted credit to the private
sector withdrew by $82 million (3%) in the first eight months of
2005 compared with the same period last year.
Bank of
Beirut increased loans to customers
Bank of Beirut, one of the leading banks in Lebanon, announced
that the customer loans in the first nine months of the year
increased by 12 percent to reach $710 million. This high ratio
of lending illustrates the bank's intention to contribute to the
growth of the national economy through useful credits to
corporate as well as small and medium-size businesses, it added.
BLC Bank
sale attracts 12 potential buyers
Central Bank Governor Riad Salameh said that more than 12
Lebanese and Arab banks have expressed interest in buying BLC
Bank after it was restructured and returned to profitability.
The bank is asking of a minimum price of $150 million for BLC
which will be put on sale in December of this year. BLC Bank,
which has been controlled by the Central Bank since the previous
management was found to be involved in mismanagement and
misappropriations of funds, will be sold directly to the highest
bidder without any intermediary. The Central Bank invested $150
million in BLC which managed in few years to pay off most of its
bad debt and turn a profit beginning in 2003. BLC's profits in
2004 reached $16 million and its chairman Shadi Karam expects
higher profits at the end of 2005. A number of Arab Gulf banks
seem interested in buying BLC to establish a foothold in the
Lebanese market.
Oman
Omani
Bank Muscat To Open Branches in GCC Region
Oman's retail and corporate bank Bank Muscat will open a number
of branches in the Gulf Cooperation Council (GCC) countries.
Bank Muscat got a license to open a branch in Riyadh and also
wants to get licenses for Kuwait and Qatar, the chairman of Bank
Muscat, Sheikh AbdulMalik bin Abdullah al-Khalili, said,
explaining the move as part of the bank's strategy to expand in
the GCC region. The bank received a total of $149 mln (122.4 mln
euro) from the global depository receipts (GDRs) issue it had
listed on the London Stock Exchange. The issue has increased the
bank's paid-up capital to 76 mln Omani rials (197.4 mln/162.2
mln euro) from 69 mln rials ($179.2 mln/147.2 mln euro), al-Khalili
added. Bank Muscat registered a net profit of 21.2 mln rials
($55.1 mln/45.2 mln euro) for the first six months of 2005, up
from 15 mln rials ($39 mln/32 mln euro) in the corresponding
period of 2004, the Omani News Digest reported on July 27,
2005.)
Saudi Arabia
Saudi Banks Combined Net Profit Soars to $4.24 Bln Jan-Sept 2005
The combined net profit of Saudi Arabia's 10 commercial banks
reached 15.9 bln Saudi riyals ($4.24 bln/3.52 bln euro) for the
first nine months of 2005, up from 9.8 bln riyals ($1.029 bln/789
mln euro) in the same period of 2004. Al Rajhi Banking and
Investment Corp reported the largest net profit of 3.8 bln
riyals ($1.013 bln/841 mln euro). Al-Rajhi was followed by the
National Commercial Bank (NCB) with a net profit of 3.6 bln
riyals ($960 mln/797 mln euro), and SAMBA Financial Group with
3.0 bln riyals ($800 mln/664 mln euro). Bank Aljazira ranked
first in terms of year-on-year net profit increase with 307 pct,
followed by Al-Rajhi with 82 pct, and Saudi Hollandi Bank with
33 pct. The 10 commercial banks are the NCB, Al Rajhi, Riyad
Bank, Saudi Investment Bank, Saudi Hollandi Bank, SAMBA
Financial Group, Saudi French Bank, Arab National Bank, Bank
Aljazira and Saudi British Bank.
Riyadh denies
WTO role in bank licence.
The deputy governor of the Saudi Arabian Monetary Agency (SAMA)
Dr. Mohammad Al Jasser has denied that the licence awarded to
the French bank BNP Paribas was one of the conditions demanded
by the World Trade Organisation (WTO) to allow the country to
join the organisation.
NCB beefs up marketing
team
In line with its new marketing strategy, the National Commercial
Bank (NCB) of Saudi Arabia recently announced the appointment of
Amr Banaja as Head of Marketing for the Asset Management
Department. As Head of Marketing for the Asset Management
Department, Banaja is responsible for the marketing of AlAhli
Mutual Funds, the Brokerage division and investment products
offered by NCB’s Treasury division.
UAE
Dubai Islamic Bank launches new corporate identity
Dubai Islamic Bank (DIB) has announced the launch of a new
Corporate Identity. The new identity retains the Alislami
'circular shape' and reflects the design of the first ever
Islamic coins known to history, thus reiterating DIB's position
as the first Islamic bank in the world. The newly-added brighter
green and yellow background aims to represent DIB's spirit of
modernity, evolution and customer friendly services. The Arabic
typeface has been changed to Al Thuluth, a very distinct and
original Arabic font, which is easy to interpret and read.
Dubai rental costs up 40%
Rental increases of 40% in Dubai in the first half of 2005 are
responsible for soaring UAE consumer price inflation which will
be 15-20%, according to the National Bank of Dubai's latest
report. The current sharp increase in rentals, which form the
single largest constituent of the CPI at 36.1%, raises
considerable fears over the exact market rate of inflation, it
added.
UAE Abu Dhabi Islamic Bank Plans Capital Hike to $816.8 Mln
UAE's Abu Dhabi Islamic Bank (ADIB) has proposed a capital
increase to 3.0 bln UAE dirhams ($816.8 mln/684.5 mln euro) from
1.0 bln dirhams ($272.3 mln/228.2 mln euro), the bank said in a
press release. The bank is awaiting approval for the capital
hike by the UAE Ministry of Economy and Planning. ADIB (
www.adib.co.ae ), established in 1997, is traded on the Abu
Dhabi Securities Market (ADSM). ADIB achieved a net profit of
238.1 mln dirhams ($64.8 mln/53.6 mln euro) for the first nine
months of 2005, the UAE News Digest said on October 17, 2005.
Islamic banks operate according to the Islamic religious law
Sharia which bans the payment and receipt of interest.
NBAD set to double its capital to Dh2b; plans to divest 25%
share to foreigners
The National Bank of Abu Dhabi is doubling its share capital to
Dh2 billion and will also raise resources through private
placements. The largest bank in the UAE in terms of profits also
plans to divest 25 per cent of its share capital to foreigners.
The bank is raising its capital to Dh2 billion but it is not yet
decided how the capital will be raised. It could be through
issue of bonus shares, a rights issue or through convertible
bonds. NBAD is also raising capital through a privately placed
10-year convertible subordinated note up to Dh2.5 billion in
tranches over time that will count as tier-two capital resources
for the bank. The bank also plans to launch a $5 billion
(Dh18.35 billion) medium-term note programme. The bank will also
make a proposal at the EGM to permit non-UAE nationals to own up
to 25 per cent of the share capital. NBAD is among other banks
that allow foreigners to own equity. Some other local banks have
also raised resources in the recent past by issuing convertible
subordinated notes.
UAE Emirates Islamic Bank Approves Capital Hike to $177 Mln
The extraordinary shareholders' meeting of UAE Emirates Islamic
Bank, part of financial services provider Emirates Bank Group,
has approved a capital hike to 650 mln UAE dirhams ($177 mln/145.8
mln euro) via a bonus issue. The bank's capital currently
amounts to 500 mln dirhams ($136.1 mln/112.1 mln euro). Emirates
Islamic Bank (www.emiratesislamicbank.ae) was formed after the
conversion of Middle East Bank (MEB) into Islamic bank. Islamic
banks operate according to the Islamic Sharia principles which
ban payment and receipt of interest. Emirates Islamic Bank
planned to open three branches in the UAE emirates Abu Dhabi,
Ajman and Dubai by the end of 2005, according to the UAE News
Digest. The bank aims to expand its network to 20 branches in
the UAE in the near future.
Turkey
Consumer Credits in Turkey Up 96 Pct Dec 2004-Oct 28, 2005
Consumer credits extended in Turkey rose by 96 pct to 25 percent
$18.786 bln/15.743 bln euro in the period from December 31, 2004
to October 28, 2005, the Central Bank data showed. Home loans,
which accounted for almost 40 pct of the total, jumped by 278.5
pct to 9.998 bln lira ($7.411 bln/6.211 bln euro). Loans
provided for vehicle purchases went up by 30 pct to 5.6 bln lira
($4.162 bln/3.488 bln euro). Credit card spending marked an
increased of 15.3 pct to 15.8 bln lira ($11.750 bln/9.847 bln
euro). On the other hand, the Central Bank's foreign exchange
reserves grew by $605 mln (506 mln euro) to $44.847 bln (37.582
bln euro) in the week to October to 28, 2005.
National Bank of Fujairah Lists Shares on the Abu Dhabi
Securities Market
National Bank of Fujairah (NBF) announced that its shares will
be listed and traded on the Abu Dhabi Securities Market (ADSM).
Senior bank officials stated that the move was aimed at
increasing shareholder value and at the same time, increasing
transparency by complying with ADSM regulations. Since its
inception in 1982, the bank has continued to show all round
growth, evidenced recently by NBF assets growing to AED4.23
billion in 2004 from AED3.40 billion in 2003. The Bank had
concluded a rights issue, which raised an additional AED225
million of shareholders’ funds. Shares were offered to existing
shareholders who fully subscribed to the rights share offering.
The bank thus increased its share capital by AED150 million and
raised a further AED75 million as share premium, bringing the
total raised to AED225 million.
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