Gulf Finance House Sets the Record Straight and Answers Mis-Informed Naysayers

Sadly, there's been a lot of negative press out there, which as GFH has taken the trouble to point out yet again is pretty much misguided.  And this seems to be the week for setting the record straight as another Bahraini banking personality - now absent from the country - did just a few days ago.

You may have seen misguided quotes like this earlier:

Asset sales are likely therefore to be critical over the next 12 to 18 months.  GFH is unlikely to develop sufficient cash flow from operations to repay US$120 million this year and pay roughly an additional US$30 million to US$45 million in operating expenses.  And I am low balling those expenses.

As Ted Pretty notes:

"GFH is a landmark institution in Bahrain and across the Middle East and North Africa region and does not deserve the recent attacks by certain sections of the international media," he added.

"The recent comments about GFH are ill-informed and I am concerned about their sources and the motivation behind them which directly challenge the Islamic financial system and the regulatory oversight of our institutions. Bahrain is a strong vibrant financial centre.

From what I've seen some of these comments are not so much attacking  the practice  of Islamic banking as what is perceived as  the malpractice of Islamic banking.

And

"Every global investment bank has had to review its business model, adjust its liquidity profile and reassess its investment projects and GFH is no different.

Indeed, though one might note that not every global investment bank or regional investment bank for that matter has rescheduled its loans, had a massive loss, and embarked on selling off a material portion of assets which suddenly became "non core".  And is in the position of having 67% of the rescheduled debt due in the next three months. 

And 

The bank exited its investment in Bahrain Financial Harbour for a total consideration of $262m, which included a cash consideration of up to $40m which will help enhance GFH's liquidity position as it builds the business around its new strategy of becoming a creator of Islamic financial institutions in the region and beyond.

Indeed it did.  It sold the BFH Company which owned the land.  Emar apparently didn't want the land and so gave it back to GFH as part of the US$262 million consideration.  So what that means is GFH received US$222 million in consideration in land which if I'm considering things properly it owned before the sale.  

They often say (and are generally correct) that success in investment banking requires intellectual skill, hard work and marketing prowess.  Selling yourself your own property and claiming a great success fits into one of these three for sure.

Hopefully, with GFH's explanation, the unfounded and unwarranted criticism of the bank will end.  That seems only fair.