After several years of uncertainty, Bahrain-based Gulf Riyad Bank is to be closed because its shareholders, Credit Lyonnais of France and Riyad Bank of Saudi Arabia, no longer see it as a useful investment. The offshore bank stopped taking new business in 1993 and its balance sheet has slowly been wound down (MEED 20:9:96).
‘The decision was reached last week to shut down the bank,’ a Credit Lyonnais official told MEED on 21 March. Gulf Riyad Bank no longer has any deposits other than those belonging to its shareholders, which will be refunded. At its peak in 1989, the bank had assets of $743 million. By the end of 1995, assets had fallen to about $150 million. Of 10 staff currently working at the bank, one will return to Credit Lyonnais and the rest will be made redundant.
The bank was founded in the late 1970s, when Western banks began to set up in the Gulf to capture petrodollar flows and Arab banks teamed up with them in order to get access to international markets. Since then, Arab banks have gained in confidence and expertise and now tend to prefer direct representation in the West. Credit Lyonnais itself, which is owned by the French government, is looking at scaling back its overseas presence as part of a recovery plan following recent bad debt problems.