Emerging markets rating agency Capital Intelligence had downgraded the long-term foreign currency rating of BMB Investment Bank to B+ from BB. The bank was previously downgraded to BB in May 2001. The short-term rating remains at B.
BMB was established in 1982 as a Bahrain-incorporated offshore banking unit. BMB focuses on investment banking activities and developing structured products for distribution in the Gulf. Management is also developing asset management activities.
Following the heavy loss in 2000, 2001 was a year of restructuring with the bank scaling back its trading risk exposures, enhancing risk management discipline, and adopting an aggressive cost management program.
BMB recorded another loss of $15.6 million in 2001, albeit lower than the substantial loss in 2000. The majority of the loss in 2001 was generated in the first quarter as management reduced its risk investment exposure in the areas of equity trading and foreign exchange. Internal risk management policies have been restructured and strengthened.
No new investments were made in 2001. Much needed capital was achieved in June 2001 through two subordinated loans; a $10 million five and a half year medium term loan from an institutional provider, and a $20 million fourteen year long-term loan.
The overall funding and liquidity position tightened further in 2001 and leverage increased. Over recent time, BMB has diversified its private equity portfolio by making a higher number of smaller investments.
Global financial markets remain very difficult which will continue to impact BMB’s activities although the bank expects to make a profit in 2002 due to a number of private equity exits. Two important, and profitable, exits have already been made this year. The outlook was lifted to stable from negative. — (menareport.com)
© 2002 Mena Report (www.menareport.com)
