Finance

Fitch downgrades several GCC bank individual ratings, most IDRs affirmed

Fitch Ratings has downgraded the individual ratings of a number of GCC, as well as taking other rating actions. The downgrades come as Fitch releases a new report, which assesses the growing impact of the global credit crisis on GCC financial institutions. A full breakdown of the rating actions is provided at the end of this commentary. Most GCC banks' Issuer Default Ratings (IDRs) remain driven by Fitch's view of the probability of support from the respective sovereign authorities, and most of these have been affirmed by Fitch today. The exceptions are the downgrades to the IDRs of Dubai Bank and TAIB Bank, respectively owned 70% and 60% ultimately by Dubai Holdings, whose creditworthiness is in turn strongly linked to the Dubai government.

Doha Bank approves share sale to Qatar wealth fund

Doha Bank said shareholders had approved a plan to raise its capital by up to 20 percent in order to sell a stake to the Gulf state's sovereign wealth fund, the Qatar Investment Authority (QIA). The shares would be issued at their closing price on October 12, Doha Bank said in a statement on the bourse website. The shares closed at QAR42.7 (US$11.72) that day. Doha Bank said the capital increase would take place in two stages.

The future of Islamic finance after crunch

The current crisis provides Islamic finance with a rare opportunity to reinvent itself and to appeal not just to the 1.5 billion Muslims in the world but the rest of humanity too, which is suffering as a whole from the collapse of free market capitalism and for whom the pain is likely to intensify next year, as the effects of the financial crisis are fully felt in the real economy in the form of higher costs and fewer jobs. Islamic finance needs to focus less on complying with each rule and more on reflecting the principles which underlie those rules so that transactions are no longer Shariah-compliant but are Shariah-based.

GCC stock markets lose US$127bn in November

GCC stock markets recorded one of its worst month-on-month (MOM) performances in 2008 in November, according to the latest report by the Kuwait Financial Centre (Markaz). The region's market cap fell by US$127 billion during the month to US$595 billion which represented a nearly four-year low. According to the Markaz Index, all markets in the Gulf saw a decline in volatility compared to October, with the exception of Saudi Arabia which reported a 12 per cent rise in volatility levels.

Abu Dhabi Islamic Bank plans expansion through takeovers

Abu Dhabi Islamic Bank plans to open six new branches in the United Arab Emirates by the end of April 2009, and is seeking acquisitions and expansion in other parts of the Middle Eastern region, as the demand for Islamic banking is increasing in the region. Earlier, the bank and the finance ministry of the United Arab Emirates have established an AED120 billion emergency funding facility to combat the global financial crisis.

BNP Paribas launches US$300m fund for SMEs

BNP Paribas is launching a private equity fund that could help boost business for smaller and medium-sized enterprises (SMEs) in the region. The bank was the lead sponsor at Fund Forum Middle East 2008. The bank's Bahrain-based asset management operation has set up a US$300 million fund that will invest in 10 to 12 regional businesses by taking an equity stake and providing its technical know-how for businesses that could help them go from being local players to regional players or from regional players to global players.

Oman, Libya sign US$500m JV deal

The Sultanate of Oman and Libya have signed a US$500 million deal to establish a joint investment company to be based in Tripoli.The company will invest in economic, real estate, tourism, industrial, service and energy projects and will also set up joint stock companies to undertake different projects, according to a joint statement. The State General Reserve Fund will represent Oman in the Oman-Libya Investment Holding Company.

NoozzVIEW; Beirut banks weather storm

In recent years, good news has been little and far between from war-battered Lebanon, where internal confessional hatreds have been whipped up by outside powers and where, since the brief but bloody 34 day war with Israel in the south of the country in 2006, there has always been a feeling that hostilities involving Hezbollah could always break out again. But suddenly, rather in the geographical equivalent of the way in which British PM Gordon Brown has saved his reputation as a result of the world financial crisis, the Lebanese business community – notably its bankers – have been able to demonstrate their skills, and so far, have avoided the disasters that have met fellow bankers in other financial capitals from New York to Kuwait City.

Dubai exchange to launch plastic futures

The Dubai Gold and Commodities Exchange (DGCX) will launch the world's first region-specific plastic futures in February 2009. DGCX will offer plastic futures contracts on linear low density polyethylene (LLDPE) and polypropylene (PP) from February the 5th next year. The launch of the LLDPE and PP futures contracts will create a new and transparent pricing mechanism specific to two regions, the Middle East and Southeast Asia.