The government’s Privatisation Commission rejected the sole bid for a 26 per cent stake in United Bank (UBL) on 14 February.

Faysal Islamic Bank of Bahrain (Fm), the only bidder in the overdue privatisation, submitted a bid valued at about $39 million with eight conditions attached to it.

The sale of UBL was delayed when neither of the two prequalified groups submitted a bid on 29 January. FIB pulled out completely and the Bisharahil group of Saudi Arabia submitted a bid without the required bond (MEED 9:2:96).

The privatisation has been problematic because the government has refused to compensate for the bank’s bad loans portfolio, estimated to stand at Rs 20,000 million ($585 million). FIB’s eight conditions are understood to have included a demand that the government maintain a deposit in the bank equivalent to the value of the bad debts. A Privatisation Commission spokesperson said that the commission rejected FIB’s conditions.

The government will now have to consider other bidders who failed to prequalify or it will have to abandon the privatisation. Sale of the bank by the end of January was one of the conditions attached to the IMF standby credit of $600 million.

UBL has paid up capital of Rs 1,480 million ($43 million), reserves of Rs 2,140 million ($62.3 million), and deposits of Rs 108,000 million ($3,140 million).