CGI Gulf Insights of the Week

  • ByCGI Gulf Insights of the Week
  • Monday, 17 December 2018
  • Published inDecember 2018
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Country Risk Update - Bahrain

Risk Indicator - DB5b
Risk Level - High
Ratings Trend - Improving

Dun & Bradstreet upgrades its rating outlook for Bahrain due to the agreement made with Saudib Arabia, UAE and Kuwait to provide USD10bn in financial support. Saudi Arabia's strong support for Bahrain provides a backstop to the economy.
Market Overview
UAE Central Bank to support Invest Bank with 'all available liquidity facilities'
The UAE’s Central Bank (CBUAE) has pledged its support for the embattled Sharjah-based Invest Bank with “all available liquidity facilities” as it works to strengthen its capital base, it was announced on 16 December, 2018. In a statement, the CBUAE said it is “closely monitoring Invest Bank’s financial developments” and has been working to develop a plan with the bank and the government of Sharjah. Last week, the bank said that its board of directors will recommend the injection of Sharjah government capital, which would make it a majority investor in the bank. “In this regard, the government of Sharjah is firmly committed to support the bank via a direct equity investment and this plan will be presented at the banks AGM (annual general meeting) scheduled for the 29th of December 2018 for approval,” the CBUAE statement said. “In the meantime, the CBUAE will support Invest Bank with all the available liquidity facilities, which remain at Invest Bank’s disposal; if, and when, needed.” The Sharjah-based bank – which is 15.5 percent owned by Sharjah-based International Private Group – has been hit by high levels of non-performing loans, in part because of its exposure to the real estate and construction markets.In October, Invest Bank denied media reports linking it with a potential three-way merger with United Arab Bank and Bank of Sharjah, in which the government of the emirate has a 17.2 percent stake.
Saudi fund for development reschedules Jordan's debt
The Saudi Fund for Development and the Jordanian government signed a deal to reschedule Jordan’s $114 million owned to the fund, the Ministry of Planning and International Cooperation says in an emailed statement. The debt includes 19 due loans and it would be settled over 20 years with a grace period of 5 years.The agreement will help support Jordan in seeking to reduce overall public debt, Minister of Planning and International Cooperation Mary Kawar said in the statement.
UAE said digital currency not being used for cross-border settlements with Saudi Arabia
The UAE’s Central Bank has denied media reports stating that the UAE and Saudi Arabia have begun using a digital currency for cross-border settlements.In a clarification sent to media outlets, the CBUAE said that it is currently working with the Saudi Arabian Monetary Authority (SAMA) on a joint project “which constitutes a proof-of-concept (PoC) for experimenting with blockchain technology to facilitate cross-border payments between the two countries.”The PoC, the statement said, is still in an early stage. “[It] will help CBUAE gain a deeper understanding of the feasibility of distributed ledger technology in this field and explore the potential opportunities and benefits of a digital currency,” the statement said.Both the CBUAE and SAMA have selected a tech company to support the implementation of the PoC, which is slated for Q4 2019. Once completed, the outcome of the PoC will allow both countries to determine with a digital currency could be used in normal market operations between the two.
Foreign investors can now own and trade shares in Kuwaiti banks
Foreign investors will now be able to own and trade in the shares of Kuwaiti banks', according to a new decision from the country's Ministry of Commerce and Industry. According to the new rules, the Central Bank of Kuwait will need to give permission if ownership exceeds five percent of the bank's capital, according to a ministry statement. The ministry statement added that the move comes after a number promotional tours abroad in which international investors inquired about the ease of doing business in the Kuwaiti market. The statement noted that many of the foreign investors who approached the ministry identified a number of obstacles and restrictions imposed, such as the maximum percentage of non-Kuwaiti investors’ ownership in a single bank, which is not supported to exceed 49 percent of the bank's capital unless permission is given by the cabinet and the Central Bank.
Standard Chartered cuts jobs in Indian retail bank operation
Standard Chartered cut jobs in its Indian retail banking business, citing users’ switch to mobile and internet transactions. “A small number of retail banking roles have fallen away,” the London-based lender said in an email. “We are working closely with these employees and relevant parties on existing opportunities and fair separation packages, as well as offering outplacement services.” Standard Chartered declined to disclose the number of jobs affected, while sources, which reported the move earlier, said the firm laid off more than 200 retail banking employees. The layoffs come at a time the bank is attempting to address investor concerns such as rising expenses and an about 40 percent decline in the share price since Bill Winters became chief executive officer in June 2015. Winters said in October that the firm was working on a three-year plan to improve performance. The bank is also cutting jobs in Dubai and key markets including Singapore, including some senior roles, people familiar with the matter said earlier this month. As many as 100 positions may be impacted in Dubai although the number hasn’t been finalized, two of the people said. The bank had about 86,000 employees at the end of June.
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Date: 22nd - 23rd December,2018
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