Bahrain opens door to bank share trading

11 February 1994

Non-GCC nationals will be able to purchase shares in two more Manama- based offshore banks due to be registered on the Bahrain stock exchange in the next few months. The development is part of a programme by Bahrain to widen international participation in the stock exchange and set up links with other regional markets.

The two institutions are Faysal Islamic Bank and TAIB Bank, formerly known as Trans-Arabian Investment Bank. Only two other institutions, Arab Banking Corporation (ABC) and Bahrain International Bank (BIB), have been authorised to sell their shares to non-GCC nationals. GCC citizens have been allowed to trade on the stock exchange since 1986.

TAIB says it has received cabinet approval to list its shares, and anticipates completion of the arrangement in the first quarter of 1994. It will not involve a new issue for TAIB as only existing shares will be registered. In January, the bank established a wholly-owned subsidiary, called TAIB Securities. The company will offer full brokerage facilities on the Bahrain stock exchange.

TAIB has also just announced that it has been registered as a foreign institutional investor with the Securities Exchange Board of India. This allows TAIB to participate in the Indian primary and secondary markets for equities and debt.

TAIB is 49.5 per cent owned by TAIB Holdings in Luxembourg; the rest is held by Saudi investors.

Faysal has also obtained government approval for its shares to be listed and expects to do so in the next two to three months. It is still considering whether this will involve a new issue of shares, a bank official says. Faysal's board approved plans to raise its authorised capital to $200 million in 1993 (MEED 20:7:93; 23:3:93). Its paid-up capital was increased that year to $70 million. The bank opened its first commercial branch in Bahrain in October and two more are planned for 1994, it says. The bank is 60 per cent owned by Dar al-Maal al-Islami Trust (DMI); Saudi investors own the remainder.

Several other developments are planned this year to widen international participation, stock exchange officials say. These include allowing non- Bahraini companies to be listed on the Manama exchange, a move that is expected to be authorised by June. However, Bahraini bankers say it will be subject to conditions such as the company either being incorporated in Bahrain or registered with a major international stock exchange.

Bahrain has been at the forefront of plans to establish linked regional stock exchanges. 'Bahrain has recognised that the size of the domestic market is not sufficient, therefore it has to open to regional and international participation,' a local banker says.

An Omani delegation is due to visit Bahrain in February for further talks on cross-linking the two stock exchanges, which Bahraini officials now expect to be completed by the end of 1994. The scheme would allow a buyer in Muscat to purchase shares in companies on the Bahrain exchange and vice versa. However, local bankers say there will be many practical details to sort out. Individual companies would have to decide if it would suit them to be registered in both centres and whether they would then have to pay additional fees.

Discussions about linkages have also been held with Kuwait, and there were even preliminary talks with the Central Bank of Lebanon in November. The UAE and Qatar have both announced plans early this year to establish official exchanges.

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