The fate of Gulf Riyad Bank (GRB), an offshore bank set up in Bahrain in the 1970s, is expected to be decided before the end of this year by its two shareholders, Riyad Bank of Saudi Arabia and Credit Lyonnais of France. MEED understands that the bank is likely to be closed down.
No official decision has yet been taken to wind down GRB, but the bank has faced the prospect of closure or a buyout by one of its shareholders since the end of 1993, and has taken on no new business since then, only managing its existing assets which have shrunk steadily. At the end of 1995, the bank had assets of about $152 million, down from $197 million the previous year. In 1989, GRB had assets of $743 million.
The bank was set up in Bahrain in 1978 to channel petrodollars from the newly wealthy Gulf states to the rest of the world.
However, MEED understands that neither of the shareholder banks now consider it to be a useful investment. Both have their own direct representation in the Middle East and Europe.
‘The situation has changed completely in the last 20 years when the offshore banking units were set up,’ says one Gulf banker.
‘You can do everything you want to from Saudi Arabia, so why go to Bahrain?’.
GRB employs a small staff, understood to be less than 20 in number, who would face dismissal if the bank shuts down. There had been reports in the past two years that Credit Lyonnais, which owns 40 per cent of the bank, might take over Riyad Bank’s 60 per cent stake. Nothing has been said officially by either bank, but this no longer appears to be an option.
In May, Riyad Bank sold its remaining stake in another small joint venture from the 1970s, Saudi-Swiss Bank. Union Bank of Switzerland, the European partner, bought control of Saudi-Swiss and plans to absorb it into its own operations (MEED 31:5:96).