Gulf Finance House (GFH), a Bahraini Islamic investment bank, has set aside US$300 million (Dh1.1 billion) to account for its exposure to a major project in Dubailand, it says. The bank in 2004 agreed to join a consortium of architecture and construction firms to build the Arabian Legends Theme Park Resorts on almost 230 hectares of land near Sheikh Zayed Road. The $3.8bn development is to include theme parks, a nature park and a golf course.
GFH said its move to set aside $300m in assets to account for its exposure to Dubai was prudent, given the fallout from the financial crisis and recent troubles at Dubai World, the Government-owned conglomerate that is in talks with creditors to restructure $22bn of debt. An executive at the bank recently said GFH was not owed money by Dubai World, but he cast doubt on its continued participation in the Dubailand project, which he said was "on freeze".
The executive said that GFH continued to make scheduled payments on its Dubailand project, but was in talks with authorities in Dubai to renegotiate the agreement after the freeze. Yesterday's move, GFH said, was part of a larger effort to shore up the bank's balance sheet and raise cash by selling off "non-core assets". "All our work over the past few months has been focused on shoring up our balance sheet and revising the business model to more efficiently serve the needs of the investment community, and we've been very successful in this," said Ted Pretty, the acting chief executive of GFH.
"Following today's announcement, GFH has set aside sufficient provisions against its entire Dubai exposure." @Email:firstname.lastname@example.org