3-0 Again!

I'm beginning to like the repetition, though would not be adverse to increases in the first number.

The Bigger the Better: UAE Banks Capital Largest in Arab World

A report from WAM.

Capital is one measure of the health of the banking system.  The other would be the quality of assets.  And then capital adequacy ratios.

Tip of the Iceberg: Nakheel Consultant Charged with Accepting Bribes

This is just the tip of the iceberg.

As one of my local mates from another Gulf country said to me during a visit to Dubai,  "This is impressive, there's quite a lot of business potential".

When I objected that most of the building was speculative, he remarked, "No, not the construction.  The commissions".

Those who follow Dubai will recall a raft of court cases from early 2008. 

SR is just a samak saghir.

Hadith Qudsi #21

 

 
Greed knows no bounds.

For some people it's not enough to hire workers for starvation wages.  One has to figure a way to cheat them out of their dues.

There's pretty good authority that Hadith Qudsi #21 applies to both Muslims and non-Muslims.

Saudi Volcano ? !

Maybe it's my lack of familiarity with local geology but this is something I never would have expected:  the possibility of a volcanic eruption in Saudi.

The region is 150 km northeast of Yanbu.

Apparently this story began "heating up" around May or so this year.

Agility Confirms Merger of Qatar Subsidiary with Gulf Warehousing

Agility Kuwait announced on the KSE today that it was in the final stages of negotiations for the merger of its subsidiary Agility Qatar with Gulf Warehousing.   Agility Kuwait owns 49% of Agility Qatar.  Agility notes that it first announced merger plans last January.  So this merger is not related to the court case in the USA against Agility.

Below is the KSE announcement.

[8:38:2]  ِ.ايضاح من (اجيليتي) بخصوص اندماج "اجيليتي قطر" مع "الخليج للمخازن"‏
يعلن سوق الكويت للاوراق المالية ان شركة المخازن العمومية (اجيليتي) تود
ان توضح بخصوص ما نشر مؤخرا في الصحف حول ان الخليج للمخازن ‏
تقترب من الدمج مع اجيليتي ،تفيد الشركة وكما اعلنت في السابق في يناير2009‏
ان شركة اجيليتي قطر والمملوكة بنسبة 49% لشركة المخازن العمومية (اجيليتي)‏
دخلت في مفاوضات جدية مع شركة الخليج للمخازن، المدرجة في سوق الدوحة ‏
للاوراق المالية لدمج عملياتها، وانها حاليا في مرحلة وضع التفاصيل النهائية
لعملية الدمج .‏
وسوف تقوم الشركة باخطار ادارة السوق باي شيء جديد بخصوص عملية الدمج في ‏
حينها .‏

And here  is the announcement by Gulf Warehousing from January 2009 that it has signed an MOU with Agility Kuwait for the merger which is described as being designed to create the largest logistics company in Qatar.

Ahmad Muhammad AlMishary Resigns from Board of Commercial Bank of Kuwait

KSE announcement below.

You'll recall that Fuad Dashti resigned earlier this month.

[13:41:56]  ِ.استقالة عضو من البنك التجاري الكويتي ‏
يعلن سوق الكويت للأوراق المالية بأن البنك التجاري الكويتي ‏
أفاده بأن السيد / احمد محمد المشاري قد قدم استقالته من عضوية ‏
مجلس إدارة البنك التجاري الكويتي وان مجلس الإدارة اعتمد ‏
استقالته في اجتماعة المؤرخ في 23-12-2009 .‏

Merry Christmas

Holy Family Cathedral Kuwait City - Picture Copyright Arab Times Newspaper Kuwait

And here is the newspaper article.

Kuwaiti Banking Sector Review

Al Joman Center for Economic Consulting has issued a report on the Kuwaiti banking sector through the first three quarters of 2009.

Here's the text, which I found, on one of their interactive blogs. Note that the bank labels in the penultimate chart appear to be wrong. I'm presuming this is an early draft.

First, a summary of the data from the report. All amounts in the below tables are KD millions.

A market share summary.  Net loans are after provisions, which are discussed in the next table.

Bank	Gross Loans	Market Share	Net Loans	Net Market Share
Natl Bk Kuwait	7,823	28.4%	7,532	29.3%
Gulf Bank	3,877	14.0%	3,418	13.3%
Commercial Bank	2,676	9.7%	2.402	9.4%
Ahli	2,149	7.8%	2,003	7.8%
BKME	1,637	5.9%	1,544	6.0%
KIB	821	3.0%	761	3.0%
Burgan	2,388	8.7%	2,276	8.9%
KFH	5,472	19.9%	5,036	19.6%
Boubyan	715	2.6%	690	2.7%
TOTAL	27,558	100%	25,662	100%

Analysis of loan loss provisions for total provisions as of 30 September 2009.

Bank	Total Provisions	% of Gross Loans	% of Total Provisions
Natl Bk Kuwait	291	3.7%	15.3%
Gulf Bank	459	11.8%	24.2%
Commercial Bank	274	10.2%	14.5%
Ahli	146	6.8%	7.7%
BKME	93	5.7%	4.9%
KIB	60	7.3%	3.2%
Burgan	112	4.7%	5.9%
KFH	436	8.0%	23.0%
Boubyan	25	3.5%	1.3%
TOTAL	1,896	6.9%	100%

Analysis of loan loss provisions taken during the first three Quarters of 2009.

Bank	2009 Provisions	% Gross Loans	% of Total
Natl Bk Kuwait	35	.5%	7.1%
Gulf Bank	101	2.6%	20.4%
Commercial Bank	74	2.8%	14.9%
Ahli	30	1.4%	6.1%
BKME	34	2.1%	6.9%
KIB	19	2.3%	3.8%
Burgan	50	2.1%	10.1%
KFH	137	2.5%	27.7%
Boubyan	15	2.1%	3.0%
TOTAL	495	1.8%	100%

Now for some introductory comments:

First, individual banks' portfolios differ and therefore the level of provisioning should as well. A bank with a higher percentage of consumer loans would on average by expected to have a lower loan loss reserve than one dealing with below investment grade companies. For example, National Bank of Kuwait has a more international portfolio than the other Kuwaiti banks, though that is only one factor affecting NBK's loan loss reserve.

Second, the management of each institution makes a determination as to the appropriate level of provisions using a variety of assumptions and estimates. Conceivably banks could rate the same loan as requiring different provision levels.

Third, while external auditors review financials including provisions, they have to rely on their assessment of a management's estimates and assumptions and how these are applied to the loan portfolio. It's likely that two different audit firms might hold different views on the required provisions for the same loans. Additionally, in Kuwait the Central Bank must approve the financials of each firm it regulates before publication. Often the Central Bank requires changes as a condition for approval.  You will recall that in November the KSE had warned Burgan and Commercial Bank that they would be suspended from trading if they did not provide their financials by the next Monday.  Both banks made the deadline. But it's a reasonable guess that the financials were delayed due to discussions with the Central Bank about the adequacy of provisions, though this is not the only possible explanation. If provisions were an issue, the discussion was probably not a criticism of excessive provisions.

And now some conclusions:

1. On a macro level, the deterioration in loan portfolios is clear.  As Al Joman notes, 26% percent of the aggregate outstanding provisions were taken in the first 9 months of 2009.  Problematical sectors are real estate and investment firms as well as specific exposure to AlGosaibi and Saad.  Kuwait banks do not seem to have any significant exposure to Dubai Inc.
   
2. Among Kuwaiti banks, NBK appears to have the "best" portfolio. This is no surprise to anyone who knows NBK and Abu Shukry. They've dodged  previous lending problems (e.g., the Suq Al Manakh) due to their generally sound underwriting standards and business prudence.
   
3. Gulf Bank  and Commercial Bank have the highest ratio of provisions to gross loans which is probably a good indication of the riskiness of their portfolios.
   
4. KFH and KIB (the old Kuwat Real Estate Bank), and Boubyan are "Islamic" banks representing some 22.5% of the financing market. BKME sees a growth opportunity here as that is the reason for its decision to switch to Shari'ah compliant banking. NBK, the clear market leader, also is interested in this segment as evidenced by its acquisition of 40% of Boubyan.

Venues for 2010 and 2011 Gulf Cup Football Championship Announced

Announcement here:  Yemen 2010 and Iraq 2011.

I think I will miss both though I suppose a loss might be easier to take in Yemen.  Wonder if there are qat vendors in the stands?  Both sites in Yemen are in the south of the country, if you're wondering.

Bank of Kuwait and Middle East To Switch To Islamic Banking

BKME will hold a shareholders' ordinary general meeting and extraordinary general meeting on 10 January to authorize the various steps, including revision of the bank's memorandum and articles of association, in connection with the bank's reversion* to an Islamic bank.

The bank intends to begin operating according to Shari'ah principles beginning in 2Q10.

AlQabas news item here.

(*Reversion in the theological sense.  BKME has always operated as a conventional bank).

Dubai - World's Longest Ambulance

Picture Copyright AlArabiyya

Here's the announcement from WAM dated today.

Here's one from AlArabiyya dated 21 May 2009.

No apparent reactions yet from Russia or Texas.

Novaar Capital Announces JV with Urals Polar

FT news report here.

Novaar's press release on the subject.

HRH Prince Saud Bin Mansour Bin Faisal Bin Saud Bin Abdulaziz Al Saud is the owner of Novaar.

Here's some background on Novaar:

1. An earlier article about its formation.  
2. And here's the registration information from the DIFC website.

Dubai Assumes Leadership Role in Tackling Global Financial Crisis

(The following article has been prepared according to press guidelines at "Gulf News" for reporting on the non-crisis in Dubai. Delay in publication resulted from the normal review process to ensure that the article did not contain any deviant or incorrect thoughts).

14 December 2009 – Dateline Dubai, United Arab Emirates

Under the patronage of the wise and benevolent leadership of the Emirate of Dubai, the Government of Dubai graciously hosted a meeting for international bankers still reeling from the effects of the global financial crisis. While the meeting was called in part to afford international bankers an opportunity to enjoy the much warmer climes of Dubai during this winter season, the meeting had a much more serious purpose.

As a leading global financial centre, Dubai and its progressive leadership are well aware of the responsibilities such an unrivaled status places on their capable shoulders. Therefore, Dubai World took the unprecedented step of advising its creditors at this meeting that it was willing to extend the repayment tenor of its obligations. This generous sacrifice is being made in view of the desperate need of international and local creditors for high quality earning assets, saddled as they are with poor underwriting decisions made outside the UAE. A Dubai World spokesman was reported to have said that while this step was perhaps inconvenient for Dubai World and its subsidiaries "the decision was sound and favours all parties in long term and not short term as Dubai World Group has strategic projects."

Not unexpectedly, creditor response was enthusiastic.

One unnamed European banker said, "GLOBAL crisis or not, Dubai has done it again. It has once again shown the world, beyond doubt, its ability and willingness not only to meet its obligations but any challenge to its unrivalled status as the most dynamic global financial and trading hub in the Gulf region."

Another grateful banker noted: 'Usually, each of the world's countries has an icon to be proud of. Dubai has many, such as Burj Dubai, Burj Al Arab, Dubai Mall, as well as Dubai International Airport and the Emirates Airlines which are seen as major drivers for tourism."

A local banker from Dubai commented: "People try to pelt stones or anything else within their reach at a fruit bearing tree. Then how it will be when we have seven fruit-bearing trees or more? It is natural that we are exposed to all these exaggerations, which are far from reality".

One US investment firm with a sizeable position in Nakheel sukuks said: "However, the markets might react, this is Dubai we are talking about. An emirate that has redefined the terms "vision" and "ambition" for the world, which has given it the tallest tower, the largest mall, the tallest hotel, the largest man-made harbour and, in-the-making, the world's largest airport, among a host of other marvels. It has a track-record second to none. Dubai is one of the foremost centres of world gold trade and has indeed been gaining in importance as the preferred global destination for tourism, entrepot, real estate and construction activity, especially over the past three decades."

A banker with a faint Scots burr in his voice remarked: "The Dubai dream lives on. If anything, this latest episode is a sign of Dubai's economic maturity, a clear conscience and commercial intent." In a culturally uncharacteristic bit of loqaciousness, he continued: "Dubai World's debts are small and some companies have been saddled with debts more heavier than tnose of the Dubai Group."

Finally, another banker from Dubai neatly summed up the consensus of attendees at the meeting: "And I want to tell those people who nag about Dubai and Abu Dhabi to shut up."

(Editor's note: All quotes are actual verbatim statements made by various parties and reported in the press, though attribution may vary from that in the original reports).

The Investment Dar Restructuring - Alternative Views on Success

Here are a couple of alternative views on the results of TID's approach to its creditors for agreement on the proposed restructuring.

The view is success at The National.

At Maktoob it's "close to success".

That leaves AA as Scrooge, though I may take a mid day nap so stay tuned.

The Investment Dar Restructuring - One Third of Creditors Refuse to Agree

TID announced today that it had gotten agreement of over two-thirds of its creditors to its rescheduling proposal.

Bader Al Ali, as official spokesman for the Creditors' Committee said:

“We are delighted to have achieved this important milestone and would like to thank all banks and investors for their strong support and commitment to this complex restructuring process. We are looking forward to working with the consenting banks and investors towards a final implementation and quick resolution of this matter.  In the meantime, we continue to encourage the small minority of banks and investors who have not yet expressed their support to do so as quickly as possible in order for them to be included in the final implementation phase.”

The full press release is here.

When did 33.3% become a small minority?

Clearly, TID has failed and is trying to put the best possible face on the situation.   Wonder if they're getting PR advice from someone in the UAE?

Also interestingly enough, the press release was issued after market closing hours.  It made it on Nasdaq Dubai but not the KSE.  

Bahraini Saudi Bank - New CEO

Abdisheikh not Sheikh.

Correction to earlier post and press release here.

The Investment Dar - More Bad News on the Restructuring

If yesterday's news in AlQabas wasn't distressing enough, here's another.

Key points from the article:

1. Khatif Holding Company (I think this is the Kuwaiti PE/VC firm) has withdrawn from the Creditors' Committee.  As such, its resignation means it is not agreeing to the extension.
2. The Creditors' Co-Ordinating Committee ("CCC")  has yet to secure a sufficient level of acceptance to proceed with the initial steps of implementing the restructuring, e.g., transferring TID's assets to the holding companies.
3. As well, many of the existing creditor agreements are not final.  Others are pending and the  article says that the committee has "built great hopes on them".
4. Part of the problem is that in many cases there are funds or syndicated facilities.  In some cases the agents have asked for more time to get their shareholders or participants to agree.  In some cases it appears the agents themselves are not agreeable which complicates getting approval from the shareholders or participants.
5. As noted before, those who financed TID through wakala or murabaha transactions believe that they are not "lenders" but rather have a deposit or trust arrangement and therefore have ultimate priority of payment over lenders.  If that view is legally upheld, they might well secure 100% repayment.
   
6. Complicating matters is the fact that there are 149 separate creditor entities - banks, funds, individuals, wakala holders, murabaha - and each group has its own characteristics which require different methods of accommodation.
7. While creditors may agree to these first steps to implement the restructuring, there will be another decisive phase in February where they will have another option to refuse.
8. Finally, the following companies were identified as those who intend to pursue legal actions to secure repayment:  Khatif Holding Company, National Investment Company, Aref Investment Group, Al Masar Company (Kuwaiti Leasing Company?) , Noor Investments plus unnamed numerous others.

Apparently, the plan (at least according to AlQabas' sources) is to extend the time period two weeks and then if results are not obtained another two weeks.

TID seems to be in a very difficult position.  It's unclear how two weeks or four is going to be sufficient to overcome the various obstacles in path of securing creditor agreement.

If a significant enough group of creditors believe they have legal priority, it's going to be hard to get them into a restructuring where the creditors themselves estimate that TID cannot pay back 100% of principal.   If in fact these creditors do have a legal priority, they have absolutely no incentive to join.  The other creditors are left with the prospect of a bankruptcy - with the inevitable further loss of value in the remaining estate.  One solution might be to pay off this creditor group assuming it's not too large.  Then go forward with the remaining TID assets to maximize recovery.

Another would be to hope the government would lean on the recalcitrant creditors to force them to agree.  If it does this, it seems to me that the Kuwaiti Government would want to avoid taking any steps that could legally undermine the legal status of Islamic structures, e.g., interpreting wakala and murabaha transactions as equivalent to loans.  Kuwait is the second largest GCC market (by assets) for Islamic banking.

I wonder if TID will be the first case under the Financial Stability Law?

Faysal Private Bank Appoints Mark Koch as CEO

Reuters story here.

Previous posts here and here.

Pretty Nice Moves

Pretty moves up to Acting CEO at Gulf Finance House after Ahmed Fahour resigns after five months as CEO to take up a post with Australia Post.

In a completely unrelated story, Bahraini Saudi Bank announced that Mr. Khalid Shaheen, CEO, had been appointed an advisor to the board and Mr. Ahmed S. Shaikh, the COO of Al Salaam Bank Bahrain was appointed Acting CEO as well.

Esterad Bahrain Offers Convertible Bond

I thought that readers might find the transaction description of interest.  So here's the link.

The announcement provides a description of several of the requirements/features under Bahrain law:

1. Shareholder pre-emptive rights
2. Renunciation of those rights
3. Conversion mechanism (See comment below)
   

Regarding the conversion, you will notice it is at the option of the bondholder not the issuer.

And you will notice the strike price mechanism provides the buyer a bit of protection.  If the book price (and note that is not the same as the market price) goes below BD0.365 per share, the bondholder may convert at the book price.  Current trading range for the shares is around BD0.300 and the book value is close to the strike price.

S&P BICRA Ratings - Kuwait Downgraded from 4 to 5

Standard and Poor's analyzes the health of national banking sectors and then assigns them a rating from 1 (best) to 10 (worst).

Here's a recent ranking report from 2 October 2009.  A more recent report requires a subscription to S&P.

This week S&P downgraded Kuwait from 4 to 5.

When the Going Gets Tough, The Tough Shut Up Any Criticism

Rupert Bumfrey posted this gem about the new "style guide" at Dubai's "Gulf News" newspaper at his blog.

All the news that fits the government view is fit to print.

You can measure how bad a situation is by the attempt to control the press.

Though I suppose points should be given for upholding the sacred concept of lèse majesté.  They are often quite fragile I'm told.  A sad condition of those in power.

Abu Dhabi Islamic Bank Signs with Emcredit

Emcredit is the UAE's first government backed credit bureau founded in 2006.

Here's the official announcement that ADIB has signed up for Emcredit's services.

Some interesting footnotes to that story:

1. ADIB announced that it had signed up for Emcredit's services today.  (Small note it is 2009, three years after the founding of Emcredit).  
2. ADIB is the first Abu Dhabi bank to have signed up.
   

Let's file this news item in our "Лучше поздно чем никогда" file with the comment that when lending it's a good idea to use all credit tools at one's disposal. 

Otherwise, it's like having a building without fire alarms and sprinklers.  And one really doesn't have to wait for a fire to figure out that's not a particularly bright idea.  There is abundant pre-existing evidence.  Just coincidentally as there is with extensions of credit.

Global MENA Financial Assets Update

Some news on Global MENA Financial Assets ("GMFA") from the London Stock Exchange:

(1) GMFA's EGM has approved settling the debt with Global by taking shares in AlFajer.  60.3 million shares voted "yes".  6.6 million no.  The "Yes" votes were 90.2% of those voting.  However,  GMFA has 252 million shares so the "Yes" vote represents 23.9% of total shares. In any case GIH's obligation to GMFA is now extinguished in exchange for the AlFajer shares.  As per GMFA's notice to the LSE, the formal re-registration of the shares will take place in January.  Earlier post here.

(2) The Board of Directors of GMFA has informed the LSE that it intends to ask the shareholders to vote to delist.  The reason is essentially to get around the IFRS requirement that the quoted price of the shares be used to determine their value for financial statement reporting for shareholders preparing financial statements according to IFRS.  The justification is that the shares are thinly traded and are trading below market.

(3) An EGM is scheduled for 27 January to vote on this measure.

(4) GMFA has filed the necessary notice with the LSE to advise that Global Investment House's shares in GMFA have been transfered to Global MENA Macro Fund (as per the requirements of the restructuring agreement).

Earlier posts on GMFA and Global can be found by using the respective labels on Suq Al Mal's homepage.

The Investment Dar - Apparent Failure to Secure Approval of Restructuring Proposal

If AlQabas' sources are right, TID and the Creditors'  Co-Ordinating Committee ("CCC")  have been unable to convince all creditors to accept the proposed restructuring agreement.  The deadline for agreement (already extended once) is 23 December.

According to the article, the CCC pulled out all the stops in an effort to persuade the creditors.  Appeals were made over the heads of the management of the creditor companies to their large shareholders and to various other parties in an attempt to get acceptance of the deal.  Visits and pressure continued through 22 December.

Apparently, the plan will be to try to go forward with the restructuring.  I had mentioned earlier that this is one tactic that can be used when less than 100% of the creditors sign up.  Those promoting the restructuring treat the recalcitrant creditors as having signed up and make payments to them according to the restructuring agreement.

This does not abrogate those creditors right to sue, but the hope is that the courts will consider the restructuring or that the debtor and agreeing creditors can tie up the rejectionists long enough so that they simply give up.

Earlier posts on The Investment Dar can be found by using the label "The Investment Dar" in the Label Section on SAM home page.

Manazel Restructuring - Gulf Bank

AlQabas reports that the bank involved in the restructuring is Kuwait's Gulf Bank.

Earlier post here.

By the way earlier I omitted mentioning that The Investment Dar owns 25% or so or Manazel.  Carrying value in 2007 was some KD 25 million.  A recovery in Manazel will be positive for TID, but isn't going to close the asset - liability gap identified in the creditors' assessment.

Faysal Private Bank Geneve CEO Resigns

Reuters reports that Marco Rochat has resigned.

Earlier post here.

Property Sector to Build on Past Mistakes (UAE)

Picture Copyright The National Newspaper Abu Dhabi

This probably consists of piling on, but I just couldn't resist quoting this headline from The National Newspaper in Abu Dhabi. 

And this absolutely delightful quote:

“A large number of brokers have left and the same with developers. There’s been a lot of correction. Going forward, you’ll have a much maturer market. People are now aware of the risks.”

Usually, it's considered better form to be aware of the risks before the project heads south.  But as those rich visitors from up North say, "Лучше поздно чем никогда".

Adeem Investments Kuwait - Still Hard at Work

Still hard at work improving the website in order to "better serve you".

Since at least 18 November.

It's quite a task apparently.  But well worth the wait, I'm sure.

S&P Nicholas Hardy on Islamic Banking

Here's the S&P podcast link.

Manazel Signs Restructuring Agreement KD43.66 Million (US$152.8 Million)

Manazel announced on the KSE today that one of its subsidiaries Manazel Construction Company had signed a rescheduling with a local bank for KD43.66 million (US$ 152.8 million).  This represents 80% of the debt of the consolidated group.   As of 30 September, Manzel had approximately KD138 million in assets, KD62 million of shareholders' equity, KD 11 million of minority interest and KD 65 million of liabilities.

Here's the KSE announcement:

12:11:10]  ِ.شركة مملوكة ل(منازل) توقع اتفاقية وكالة في الاستثمار لاعادة جدولة ديونها
يعلن سوق الكويت للاوراق المالية انه قد ورد الية الان من شركة منازل ‏
القابضة (منازل) كتاب يفيد بان شركة منازل للتعمير وهي احدى الشركات ‏
المملوكة بنسبة 100% قد وقعت اتفاقية وكالة في الاستثمار لإعادة جدولة ‏
ديونها بمبلغ 43.660.000 د.ك مع احدى البنوك المحلية لمدة خمس سنوات
وهو ما يعادل 80% من اجمالي ديون شركة منازل القابضة .‏

Safat Global Holding Kuwait

If you've been following the investment companies up in Kuwait (and who hasn't?), this name is familiar to you.  Last August the old board was removed and a new board elected by the shareholders.

On 30 September the new Chairman, Badr AlYahya, gave an interview to AlQabas in which he basically said that there was no substance to the company - no offices, no employees, no financial records, and perhaps no assets.

Safat also has been on the list of companies suspended from trading on the KSE due to failure to publish financials.  Both it and Shabka Holding  have not published any financial reports for 2009.  Both share the dubious distinction of being the only two firms also suspended for failure to pay their KSE listing fees.  (And for those who are keeping score, we're down to seven on the suspended list).

AlQabas published an interview with the Deputy Chairman, Ahmad S AlMutairi, in which he said that the company was preparing a formal legal complaint to the Public Prosecutor against the members of the former board of directors and companies they represented for an investigation in the cause for the disappearance of KD 6 million (US$21 million) in real estate assets.  AlMutairi noted the assets were in the audited 2007 financials but were not in the 2008.  (The 31 December 2008 financials about which there is currently some dispute show total assets of just short of KD 10 million).

He also said that the old Board had asked the MOIC to call for a shareholders general meeting and that they were ready to co-operate with the old board to recover the rights of the shareholders.

It's also expected that the meeting (which if I recall properly is scheduled for February) will vote on changing the auditors  and reducing the board to 3 members.

DIFC Guide to Issuing Sukuk

From the DIFC press release.

"The Dubai International Financial Centre Authority today announced the release of the “DIFC Sukuk Guide” - a comprehensive introduction to various sukuk structures, as well as legal and regulatory information on issuing sukuk from the DIFC and listing sukuk on NASDAQ Dubai."

Prepared by Clifford Chance, Amanie Consulting, the DFSA and the DIFC,  "The guide provides detailed descriptions of more than 10 sukuk structures, information on the history and current status of sukuk globally, an overview regarding the issuing and listing of sukuk in or from DIFC, and regulatory licensing in the district."

Here's the link to download a copy.

Warba Bank - Delay in Founding General Meeting to February 2010 - Rationale and Consequences

AlQabas reports that the KIA has decided to postpone the founding general meeting of Warba until February 2010 for a variety of reasons.

1. First, apparently all the requirements for the general meeting and agenda are not yet decided or completed.   The most important of these include the final announcement of the establishment of the bank though a decision of the founding shareholders, appointment of the board of directors, appointment of (financial) auditors as well as Shari'ah supervision committee, delegation of authority to the board to issue fractional shares resulting from the allotment of shares.
   
2. Second, the delay to February 2010 will mean that WB will not have a full 12 month fiscal year in 2010.  Therefore, that it will not be eligible to be listed on the KSE until 2012. since  a new listee must have at least one profitable fiscal year. During this almost two year period, it's expected  that the stock market will recover and the price of the shares will trade at an appropriate level.  Not being listed will also mean that the shares cannot be easily traded, thus, forcing Kuwaiti citizens to hold on to their allocated shares.
   
3. Third, the additional period will allow the new management time to establish the bank -- it will take several long months just to properly set up  the internal organization of the bank.  And as well to  establish a solid track record in line with a boost from the anticipated improvement in the economy the economy.

Agility Announces Loss of SubContract for US Military

Agility informed the Kuwait Stock Market this morning that Dyn Corp International had informed it that it was canceling Agility's subcontract given its indictment on another US Government contract.

KSE announcement here.

[8:47:46]  ايضاح من (اجيليتي) بشأن عقد البرنامج اللوجستي لتطوير الحياة المدنية ‏
يعلن سوق الكويت للاوراق المالية ان شركة المخازن العمومية (اجيليتي) افادت
بان احدى شركاتها التابعة بنسبة 100% وهي شركة اجيليتي للخدمات الحكومية
والدفاع تفيد بانه قد تم وقفها من قبل شركة داينكورب انترناشونال كمقاول من ‏
الباطن لعقد البرنامج اللوجستي لتطوير الحياة المدنية ، والذي كانت الشركة ‏
قد اعلنت عنه في يونيو 2007 ، وتفيد شركة اجيليتي للخدمات الحكومية والدفاع ‏
بانها تؤمن بان هذا الاجراء الذي اتخذتة شركة داينكورب يعد انتهاكا لشروط ‏
العقد بين الطرفين وتقوم الشركة حاليا بالبحث في الخيارات القانونية المتاحة ‏
لها في هذا الشأن.‏

A bit more detail here in an article in the Abu Dhabi newspaper, The National.

Woman First in Abu Dhabi Chamber of Commerce and Industry Elections

Mabruka ya Fatima!

Details here.

Administrative Consolidation in Dubai Government?

Лучше поздно чем никогда

The GulfNews reports.

Dubai World - Off To A Running Start

Unclear which direction though at least per this article.

Ahead of the meeting, expectations fell for a quick resolution due to a Dubai email advising banks not to expect much from the event, and Dubai World moved to characterise the meeting as an "expectation management exercise".

"We got less out of it than we hoped for," said a representative of a European bank.

Perhaps from the unnamed European banker's comment above the expectation management exercise may have been successful after all.

A Well Regulated Militia Being Necessary to the Security of a Free State ...

Or "The Iranians Are Coming, The Iranians Are Coming"

You may pick your favorite slogan.

Details outlined in this court case in Bahrain.

Dubai World's Press Release on Today's Meeting with Creditors

Original text here.

Dec 21, 2009 - 09:04 -

Dubai, 21 Dec. 2009 (WAM) - Dubai World has announced that it today held a meeting in Dubai with its creditor banks involved in the restructuring of the Group's debt. The purpose of the meeting was to provide an update to the banks on the development of the Group's restructuring plans as it seeks to reach a standstill agreement with financial creditors.

Also in attendance were Dubai World's appointed advisers Deloitte, Rothschild and Clifford Chance.

As was confirmed in its statement of December 14th, Dubai World will continue to work with financial creditors to seek a standstill in an orderly way. As long as a standstill is successfully implemented, Dubai World has assurances that the Government of Dubai, through the DFSF, will provide financial support to cover working capital and interest expenses to ensure the continuity of key projects.

Dubai World is committed to working closely with the banks' appointed Coordinating Committee to work towards a consensual solution for the benefit of all lending banks, trade creditors and other stakeholders affected by the restructuring.

International Investment Group Kuwait - Court Case Loss = KD2.7 Million Loss

International Investment Group Kuwait ("IIG") (KSE #215) announced this morning that the Court of Appeals (or more properly for Kuwait Court of Cassation) had ruled against it  on 17 December.  The Court ordered IIG to pay KD3.2 million plus legal interest at 7% from 23 February 2009 (roughly US$11.8 million including about US$0.6 million in interest).  IIG states that as a result it will recognize KD2.7 million (US$9.9 million)  in losses for the final quarter of 2009.

At 30 September 2009, IIG had published losses of KD8.1 million (US$28.4 million).  Total assets were KD135 million (US$473 million) and shareholders' equity KD56.3 million (US$197.1 million).

KSE press release below.   There is also one at the Bahrain Stock Exchange. 

[9:23:5]  ِ.(المجموعه د) تحقق خساره 2.6 مليون د.ك نتيجة صدور حكم ضد الشركة
يعلن سوق الكويت للأوراق الماليه ان شركة المجموعه الدوليه للاستثمار ‏
ِ(المجموعه د) أفادت بأن محكمة التمييز أصدرت حكم بتاريخ 17-12-2009 ‏
في الطعن بالتمييز رقم 990/09 تجاري /4 المرفوع من الشركة ضد أحد الاشخاص
و الذى جرى منطوقه كالتالي :‏
حكمة المحكمه أولا : بقبول الطعن شكلا و في الموضوع بتمييز الحكم المطعون
فيه و ألزمت المطعون ضده المصروفات و مبلغ عشرين د.ك مقابل اتعاب محاماة.‏
ثانيا : و في موضوع الاستئناف رقم 1671 لسنة 2009 تجاري بإلغاء الحكم
المستأنف و القضاء مجددا بإلزام المستأنف ضدها بأن تؤدي للمستأنف عن نفسه
و بصفته مبلغ 3.247.780 د.ك و فوائدة القانونيه بواقع 7% سنويا من تاريخ
رفع الدعوى الحاصل في 23-02-2009 حتى تمام السداد و ألزمتها بالمصروفات
عن الدرجتين و مبلغ ألف دينار فعليه للمحاماة.‏
و تفيد الشركة بأن أثر هذا الحكم على البيانات الماليه للشركة حتى تاريخه
خساره بمبلغ 2.687.495 د.ك سوف يتم ادراجه في بيان الدخل للربع ‏
الأخير من عام 2009 .‏
و عليه سوف تعاد الشركة للتداول بعد عشر دقائق من نزول الاعلان .‏

This court case was one brought by Mr. Hussayn Ali AlKharafi and his son Ahmad against IIG.  This case is not related to the earlier case by the World Islamic Charitable Organization. Nor to the one involving Kuwait Finance House. 

Nor it seems the one involving the Islamic Development Bank.  As a side note, in the IDB case, IIG advised it was in negotiations with the IDB regarding the legal interest applied by the court  to secure a waiver of  "a part of the interest" "due to conflict with Shari'ah principles".  It is unclear to me what the results of the negotiations were.  And how one determines which part of the interest is halal and which is not.

Mr. AlKharafi's charge is that IIG didn't sell a portfolio of stocks in line with his instructions and that therefore IIG is liable.  IIG contended (and presumably still does) that the legal document given by Mr. AlKharafi was merely a proxy or authorization to sell and not an instruction.

Note 25 to the 2008 financials discusses court cases as of that date.

More on IIG to follow.

Warba Bank Kuwait - Update

AlQabas reports that there is great excitement in the Islamic banking community in Kuwait and an apparent rush to the doors of Warba to secure positions, ascribed to the belief that given the KIA ownership stake the bank will have a favored position compared to other banks.

As a keen student of Islamic and other banking, AA personally thinks that many see a position in the new bank as a way to step up the career ladder. 

As one old teacher of AA's once put it:  "It's pretty much an undisputed scientific fact that the most sensitive human organ is the pocketbook".  I don't think he meant that as a complimentary statement though.