Post by Frederic Richter on Jun 2, 2009 10:39:33 GMT 4
June 1, 2009
Kuwait's largest investment bank Global Investment House plans to sell its stake in Bahrain-based Islamic lender Salam Bank, offloading assets following a debt default earlier this year.
The bank said in regulatory filings on Monday it aimed to sell the 14.1 percent stake in Salam by June 9 and would book profits in the second quarter.
Global is among the most prominent financial firms in the Gulf Arab region to face serious problems as credit conditions tightened during the financial crisis.
"They want to improve the balance sheet," said Mustapha Behbehani, a director at Gulf Consulting Co. "Whatever they can sell."
He said he expected Global to sell more of its international holdings. "They've invested in different places. That's why they were so exposed internationally," he said.
Global in December closed the sale of a 14.7 percent stake in Bahrain's BBK bank for 43.6 million dinars, making an 18 million dinar loss.
"The sale of Al Salam Bank is part of Global's strategy of streamlining its proprietary investments and focusing on its core activities," Shahid Hameed, the head of GCC asset management at Global told news agency Reuters.
He declined to say whether more stake sales were planned.
Global said the lowest acceptable price it would accept for Salam shares was 140 Bahraini fils per share, which would generate a profit of 6.4 million Kuwaiti dinars ($22.2 million).
The bid comes at a premium of 16 percent to Salam's last closing share price of 121 fils on May 31 and values the bank at 168 million Bahraini dinars ($445.7 million), according to Reuters calculations.
Shares in Global rose 1.5 percent but Salam traded flat after the announcement.
Global posted a first-quarter net loss of 69.5 million dinars, an improvement from a loss of 360.5 million dinars in the fourth quarter. It defaulted on most of its debt earlier this year.
"Global intends to sell the shares in one go to a single investor or to an alliance or temporary consortium of investors," the statement said.
Salam Bank was not immediately available for comment.
Kuwait's largest investment bank Global Investment House plans to sell its stake in Bahrain-based Islamic lender Salam Bank, offloading assets following a debt default earlier this year.
The bank said in regulatory filings on Monday it aimed to sell the 14.1 percent stake in Salam by June 9 and would book profits in the second quarter.
Global is among the most prominent financial firms in the Gulf Arab region to face serious problems as credit conditions tightened during the financial crisis.
"They want to improve the balance sheet," said Mustapha Behbehani, a director at Gulf Consulting Co. "Whatever they can sell."
He said he expected Global to sell more of its international holdings. "They've invested in different places. That's why they were so exposed internationally," he said.
Global in December closed the sale of a 14.7 percent stake in Bahrain's BBK bank for 43.6 million dinars, making an 18 million dinar loss.
"The sale of Al Salam Bank is part of Global's strategy of streamlining its proprietary investments and focusing on its core activities," Shahid Hameed, the head of GCC asset management at Global told news agency Reuters.
He declined to say whether more stake sales were planned.
Global said the lowest acceptable price it would accept for Salam shares was 140 Bahraini fils per share, which would generate a profit of 6.4 million Kuwaiti dinars ($22.2 million).
The bid comes at a premium of 16 percent to Salam's last closing share price of 121 fils on May 31 and values the bank at 168 million Bahraini dinars ($445.7 million), according to Reuters calculations.
Shares in Global rose 1.5 percent but Salam traded flat after the announcement.
Global posted a first-quarter net loss of 69.5 million dinars, an improvement from a loss of 360.5 million dinars in the fourth quarter. It defaulted on most of its debt earlier this year.
"Global intends to sell the shares in one go to a single investor or to an alliance or temporary consortium of investors," the statement said.
Salam Bank was not immediately available for comment.