Ithmaar revamp plan approved

29/03/2016 07:51 AST

Shareholders of Ithmaar Bank, a Bahrain-based Islamic retail bank, yesterday approved plans for a new group structure, which top officials said is designed to boost core retail banking growth.

The plans involve the creation of a new holding company that will be listed on Bahrain Bourse and Kuwait Stock Exchange and licensed and regulated by the Central Bank of Bahrain (CBB).

The new holding company will retain 100 per cent ownership of all assets presently held by Ithmaar Bank.

The assets will be allocated into two wholly-owned subsidiaries, an Islamic retail bank subsidiary which will hold the core retail banking business, and an investment subsidiary which will hold the investment assets.

These two subsidiaries will also be licensed and regulated by the CBB. The announcement was made by Ithmaar Bank chairman Prince Amr Al Faisal yesterday at the Ramee Grand Hotel after an extraordinary general meeting (EGM) which followed the annual general meeting (AGM).

“This new structure is designed to assist in realising our long-term strategy for growth by providing greater insight into the strength of our core retail banking operations and further facilitating the management of the group’s investment assets,” he said.

“It follows extensive internal review and discussions, and is driven by our commitment to ensuring we are well-positioned to benefit from new opportunities in the current market.”

According to the chairman, the new structure would help lower the risk profile of the new banking entity and enhance shareholder value by showing growth and improved performance in the core business.

“In the current structure, this growth is being adversely impacted by investment valuations and impairment provisions,” he added.

Chief executive Ahmed Abdul Rahim said the plans build upon improvements achieved due to key strategic decisions taken by the board in 2014.

“They included initiatives for increased revenue, improved margins, the divestment of non-core assets and cost reductions and have, together with the continued growth of the core retail business, contributed in a big way to the continuously improving financial performance,” said Mr Rahim.

“By allocating our assets into separate subsidiaries, we will be able to better focus on our core retail banking businesses held in the new banking entity, including Faysal Bank, Pakistan, a retail and corporate banking subsidiary of Ithmaar Bank.

“At the same time, we will be able to facilitate independent and focused disposal of investment assets held by the investment entity, when suitable opportunities arise,” he added.

The bank plans to open a new, full-service branch in Galali which will be its 18th in the kingdom.

Gulf Daily News