Despite talk of the kingdom losing its sheen as a financial hub amid its political instability, new data shows that a growing number of financial institutions registered in Bahrain up to the end of January, bringing the amount registered to 415 from 403 a year earlier.
While banks such as Crédit Agricole CIB and BNP Paribas grabbed headlines last year on news that some of its operations in Bahrain will move to Dubai, it has since emerged that those decisions were not based on the political situation in the kingdom. Instead, Bahrain’s financial sector has appeared to remain resilient, charting a 1.7% growth during the first half of last year.
According to data from the Bahrain Economic Development Board (EDB), among new financial firms that registered in the kingdom in 2011 include India’s Canara Bank, AMP Capital Investors from Australia and Deloitte Corporate Finance.
“That these businesses are choosing Bahrain as their base for accessing the Gulf economies and the wider Middle East is testament to the strength of the local Bahrain workforce, the quality of the Central Bank of Bahrain’s regulation and the access we provide to the strong-growing Gulf market,” said Mohammed Essa Al-Khalifa, the chief executive of the EDB.
Furthermore, while a need for consolidation in the financial industry remains and despite the dead-end in merger negotiations between Bahrain Islamic Bank and Al Salam Bank-Bahrain; local banks appear positive of bright prospects ahead. These include local giant Al Baraka Banking Group, which has projected a 15% growth in group profits this year and has embarked on an aggressive expansion plan covering Algeria, Egypt, Indonesia and Turkey.
Bankers are also reportedly looking toward a recovery in local infrastructure spending, which has been estimated at between US$15-20 billion in the next two-three years, in addition to the kingdom’s proximity to Saudi Arabia, to boost business.
Nonetheless, it cannot be ignored that concerns remain, with market players noting local bank liquidity levels; with a number of maturities due this year, the closure of retail shops, lower office occupancy levels and rising unemployment as among limitations that still prevail.
source: Islamic Finance News