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During the day, Peter Pan meets CXO's of buy side financial institutions and assists their organizations in technology strategy and management information system requirements. He works out of Dubai and manages the asset/ fund management techology solutions vertical for the middle east region, at... More
  • Bahrain – Chugging along not-so-quietly  4 comments
    Jun 22, 2010 3:26 AM
    I was in a conference recently in Bahrain which basically prompted this post and here’s my take on Bahrain. It might be a bit presumptuous to make judgements about a country the moment you land at the airport, but I believe airports are really good barometers of culture. Take an example: If you’ve ever been to Zurich airport what do you see – impeccably pressed uniforms, straight lines, orderly queues, bank and insurance co. adverts and perfectly timed shuttles…almost giving out the message loud and clear ‘Welcome to Switzerland, we have banks, we are very clean, and our clean trains will help you reach our banks on time every time forever and ever’
     
    Touchdown in Bahrain and the first things that always strikes me – Small but right sized airport (unlike the gargantuan waste of Dubai Terminal-3 built by Ol’ Maximus Stupidus), Blue worn out carpets, Super fast on-arrival visa processes for business men, 10 mins from city business district – clearly giving out the message ‘Welcome to Bahrain, If you’re here on business we’ll take good care of you, we may lack style and be a bit austere for your sensibilities, but we’ll make it up in our business friendliness’
     
    And has it been rewarded? Ask me how. The Global financial industry seems to be going through a mid life crisis (what with the government beavers now doing your expense approvals), but Bahrain’s love affair with Financial Institutions has never wavered through all these times. Take a look at these stats which I managed to get from the CBB (Central Bank of Bahrain) website:
     
    Size of Bahrain Financial Industry: The 18 Kms X 55 Kms Island of Bahrain has 406 financial institutions registered and regulated by the central bank of Bahrain. That includes 138 Banks (32 Retail Banks and 78 Wholesale Banks and rest being rep offices). It also has 45 Investment Companies registered there, Typically Holding companies, Family offices. Insurance Companies make another 169 (Out of which 39 locally incorporated) out of this whole list. Apart from this list of 406, you have another whooping 2736 Mutual Funds registered there (139 Local & 2597 Foreign Funds domiciled)
     
    Bahrain & Regulations: What is an even bigger vote of confidence is if you go and check the number of funds which have registered in Bahrain in the last 5 months of Yr 2010. I stopped counting after 20, but if you want to count them you could go to this link . The reasons are pretty straight forward. The CBB Rule book has ‘ Exempt schemes’ which permits Hedge Funds, LBOs & other high risk funds to be registered with ease in Bahrain, with these words being treated by the global regulators as something just above slur words, I’d say Bahrain can expect quite a bit of windfall. This does not mean that Charles Ponzi can register his scheme in Bahrain; anyone who has lived in this region will agree with me that the CBB regulations are far ahead of the rest of the GCC pack.
     
    There’s a lot going in favour of Bahrain and the Financial Industry
     - Bahrain Institute of Banking & Finance – Ranks quite highly in terms of its courses offered and gives you good access to a pool of financial graduates for your operations
     - Accounting and Auditing Organisation for Islamic Financial Institutions (AAOIFI) The Islamic Finance body which defines rules and regulations followed by most of Middle East Islamic Financial Institutions has its hub in Bahrain
     
    Bahrain is not without some worrying black holes either:
     
     - The Dubai imitated buildings of World Trade Centre and Bahrain Financial Harbour, and some other residential real estate companies into which a lot of local Islamic banks have huge exposures is a worry
     - The population of the country is 1 Million. There’s no oil, there’s hardly any other manufacturing companies, its trading hub status has been lost and there’s too much dependence on the financial sector to maintain the economy.
     - The Financial sector employs 14,000 people directly (about 60% local) and indirectly impacts another 100,000 (family, contracted labour etc.) which means over 10% of the population is dependent on the financial industry in some way or the other.
     
    Dubai, Abu Dhabi, Kuwait, Doha, Riyadh and Jeddah are all biting at the heels to grab a pie out of Bahrain. The growth that the Financial Industry has seen in the past 3 years may no longer be seen in Bahrain, but one thing is for sure – Austere, Mouldy, Out-of-fashion, business friendly Bahrain will continue to be the place where those who want to do some serious money management will continue to maintain as a regional hub. You think not? Take a look:
     
     
    ‘aquila non capit muscas’ , the Latin phrase loosely translated into English means ‘an eagle doesn’t catch flies/ an eagle is not interested in catching flies’ – Take a Bow, Bahrain :)


    Disclosure: No Positions
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Comments (4)
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  • Credit Lime
    , contributor
    Comments (26) | Send Message
     
    i don't know if it would be right to say there "no oil" when the largest sector of bahrain's economy is still from petroleum sales. undoubtedly, like dubai, there is no endless pit of oil wealth to sustain the country for future generations the way abu dhabi or saudi arabi have. True, on a "constant price basis" (i.e. taking into account oil price 'inflation'), financial services as a whole group are the most important sector by this adjusted measure of value contribution but on an absolute price basis, the removal of the larger 2 billion bahraini dinar revenue stream (from the last available public figures) from oil would definitely be felt in this country regardless of how important financial services are to the economy.

     

    people can view the official stats here
    www.mof.gov.bh/ShowDat...
    22 Jun 2010, 03:05 PM Reply Like
  • Peter Pan
    , contributor
    Comments (2) | Send Message
     
    Author’s reply » I would agree with you that making a statement of 'no oil in bahrain' is wrong. Thank you, I stand corrected, there's just about enough oil for the 'big daddies' to drive their hummers/RRs around the island: for the next 15 years :)

     

    However the core of what I was conveying in the blackhole paragraph remains unchanged. Bahrain currently has an economy which is highly skewed towards Financial Services, I'll try and get you the latest numbers, but here's what i could source for now - oil and gas contributes 13.1% of GDP (these numbers are of 07-08, at the peak of oil prices), manufacturing contributes 12.4% of GDP and Financial services contribued about 24.2% of GDP.
    23 Jun 2010, 12:24 AM Reply Like
  • Credit Lime
    , contributor
    Comments (26) | Send Message
     
    in addition, bahrain is trying to diversify away from just one sector and has in fact been growing manufacturing, which represents the 2nd or 3rd largest source of gdp (depending on what measure you use). no other major global financial city has succeeded solely on the basis of being only a 'financial' city and bahrain may need another industry, like manufacturing if not something else, to grow in order to support the continued growth of financial services as well. otherwise, it could risk just being an offshore-type office center (i.e. tax haven) in which people are only encouraged to come to avoid taxes and "work" but not necessarily "live" (like an antigua or isle of man, which to some extent it already is).
    22 Jun 2010, 03:06 PM Reply Like
  • TradingHelpDesk
    , contributor
    Comments (538) | Send Message
     
    What a difference a year makes.

     

    However, despite the past few week's turmoil, it is settling down here in Bahrain. I live here and commute to Saudi most days. I think a number of firms that planned to open an office in Bahrain may opt for Dubai instead but Bahrain's long term business environment still looks promising. There is a lot of Saudi money here and that flow won't change.
    27 Mar 2011, 07:12 AM Reply Like
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