Esam Janahi, the chairman of Gulf Finance House (GFH) in Bahrain, has resigned from the board of Khaleeji Commercial Bank in a move that may presage the sale of a 37 per cent stake in the lender. The prominent Bahraini businessman's resignation was effective from February 8, according to a statement to the Bahrain Stock Exchange yesterday.
In addition to GFH's 37 per cent stake in Khaleeji Commercial Bank, Mr Janahi personally owns a further 10 per cent. The resignation comes as GFH, which is heavily exposed to property projects across the Middle East, seeks to sell "non-core" assets amid heavy losses sustained last year. The Islamic investment bank this week reported losses of US$728 million (Dh2.67 billion) for last year, including $607m in the fourth quarter alone.
"We have closely reviewed all of our assets, made provisions where appropriate and have also begun to dispose of those which are non-core," Mr Janahi said in a statement announcing the results. "We have asked management to review our cost base and also to ensure that we have a strategy to grow revenues." GFH has numerous large property investments, including Energy City projects in Qatar, Libya and Kazakhstan and India, as well as Financial Harbour projects in Bahrain and Tunisia.
It is also behind a multibillion-dollar economic development zone in Mumbai and the Legends project in Dubailand. The company wrote off $300m on its Dubailand investment late last year, accounting for a large portion of its losses. Khaleeji Commercial Bank was formed in 2004 by GFH as a vehicle to help finance its property ventures. Originally named Gulf Finance House Commercial Bank, the lender played a role in financing the Bahrain Financial Harbour, the $1bn Royal Metropolis project in Jordan and numerous other property projects in Bahrain. The bank's shares were listed on the Bahrain Stock Exchange in July 2008.
As GFH sells assets and cuts costs to cope with losses and dwindling investment banking business during the economic downturn, the company is also restructuring its debts. GFH announced last week that it had reached an agreement with 32 creditor banks to repay two-thirds of a $300m Islamic loan on its February 10 due date, refinancing the remainder for another six months. At the weekend, the company said it was looking at a similar deal on a separate $100m loan in two tranches that mature this year and next.
The turmoil at GFH has resulted in a downgrade of its ratings by Standard & Poor's to "selective default", one of the ratings ageny's lowest rankings. Mr Janahi, meanwhile, is embroiled in a $125m lawsuit in Bahrain over GFH's Energy City Qatar project. firstname.lastname@example.org