Finance

Qatar: Islamic finance consolidating

Thanks to a combination of steady management and timely state assistance, Qatar's Islamic finance sector has seen off the worst of the global economic crisis and is now well positioned to take full advantage of the predicted surge in growth this year. Along with the rest of the country's financial sector, the Sharia-compliant component should continue to benefit from the government's continued economic stimulus program throughout 2010, which will combine direct pump priming efforts with fiscal support for the banking services industry. Through its massive injection of cash into the economy by way of US$66 billion in infrastructure projects, the government is helping to bolster activity in the construction and property sectors, both of which are central to many banks' portfolios. (Source: OBG)

Saudi prince plan shows he sees lengthy Citi recovery

Saudi billionaire Prince Alwaleed bin Talal's announcement of a rescue plan for his investment vehicle indicates he expects a long road to recovery for his shares in Citigroup. The plan will help Alwaleed wipe out some US$7.8 billion of accumulated losses his firm has reported by end-September but it still leaves it with an additional US$4-billion-plus in unrealized losses that could swell further especially if US equity markets do not improve in 2010. His 95-per cent-owned Kingdom Holding Co said that it would slash its capital by almost half and he announced the free-of-charge injection from his own pocket of 180 million Citi's shares -- which he valued at US$3.31 each -- into its balance sheet. Analysts say this was necessary to shore up the finances of the firm whose assets were hurt by the global market turmoil as it prepares for the launch of major property projects and avoid the potential damage if it loses its listing.

Dubai’s port firm seeking stock listing in London

Dubai’s port operator said it plans to list its shares on the London Stock Exchange, aiming for additional investors as its troubled parent Dubai World struggles to dig out from a pile of debt. DP World said it could seek the listing as early as the second quarter of 2010. The cargo handler ranks as one of the world’s biggest container terminal operators, running the Middle East’s largest port in Dubai and 48 other seaports around the world. The company said the decision follows a review launched last March to "evaluate all available options to address its continued disappointment with the market('s) valuation of the company." The port operator already lists its shares on the Nasdaq Dubai, one of two stock exchanges in the Arab emirate. Its shares would continue to be traded on that bourse alongside the London listing.

2010 outlook for Saudi banks more positive after mixed 2009 – Fitch

Fitch Ratings says that 2009 proved to be, as anticipated by Fitch, a challenging year for banks in Saudi Arabia as the full impact of the global economic crisis caught up with the region, reflected in rising loan impairments and a rapid slowdown in lending. The preliminary 2009 results released by the 10 main Saudi commercial banks rated by Fitch showed different trends in net income in 2009, with Q409 being the worst quarter of the year. In addition, the 10 main commercial banks in Saudi Arabia rated by Fitch remain amongst the highest-rated banks across the Gulf Cooperation Council (GCC) region. Their Long-term Issuer Default Ratings largely remain driven by the extremely high probability of support from the Saudi Arabian government (rated 'AA-'/Stable Outlook) and are unlikely to change unless the Sovereign rating changes. Their Individual Ratings reflect their generally sound domestic franchises and financial strength. Fitch notes that five of the 10 largest commercial banks operating in Saudi Arabia showed improvements in their net income y-o-y, but overall growth in total net income for all 10 banks stagnated in 2009 y-o-y (2008: -14.2 per cent). Areas of concern included lower domestic economic growth, mainly reflecting lower oil revenues and exports, and the negative impact on asset quality of recent rapid credit growth as well as problematic exposures to some large Saudi trading groups (primarily Algosaibi and Saad). The agency has yet to see the full audited financial statements of the Saudi banks but will review them fully in the near future. At this stage, Fitch does not expect to see further downgrades of Individual Ratings in 2010.

Riyadh takes steps to woo investors

A specialized center will be established in Riyadh shortly to strengthen the capital city’s competitiveness in terms of attracting foreign and domestic investment. Riyadh Gov. Prince Salman set up an executive committee to supervise the formation and operation of the center as well as to draft its rules and regulations. The move comes as part of the Riyadh governorate’s efforts to improve the city’s investment climate in order to attract private companies and investors to carry out vital projects. “The center aims at achieving a prominent position for Riyadh on the world investment map by highlighting its economic potential and competitive capacity,” said an official statement issued by the governorate. Prince Muhammad bin Salman, chairman of the committee, said his panel would coordinate with government departments and businessmen in the region to achieve its goals.

UAE and Luxembourg to enhance financial cooperation and activate double taxation prevention agreement

With a view to strengthen UAE's financial ties with other countries and to support investment and economic development, HE Obaid Humaid Al Tayer, Minister of State for Financial Affairs, met with His Royal Highness Prince Guillaume of Luxembourg and HE Luc Frieden, Minister of Finance of Luxembourg, at the ministry's headquarters in Dubai. The discussion focused on ways to strengthen cooperation between the two countries, especially in the financial and banking sectors, and increasing trade relations between the two countries. The volume of non - oil sector trade between UAE and Luxembourg reached AED238 million in 2008. They also discussed strengthening cooperation between the world's leading financial centers in Luxembourg and the United Arab Emirates. The agreement provides a balanced tax treatment for investors in both countries, reinforces capital flow, encourages investments and establishes more joint ventures that will positively benefit both countries. The agreement provides governmental investments advantages in making profit on the stocks and bonds and promotes tourism.