Subprime woes hit Arab Banking

Bahrain-based Arab Banking Corp (ABC) said it aims to raise $1 billion by selling shares to existing stakeholders, after reporting its second quarterly loss on exposure to the US subprime mortgage crisis.

ABC posted a loss of $587 million in the first quarter ended March 31, compared to a profit attributable to shareholders of $70 million a year earlier, the bank said in a statement late on Wednesday.

"The loss was almost entirely driven by significant exposure to structured investment vehicles and collateralised debt obligations," the bank said, referring to financial instruments in which US subprime loans were packaged.

Gulf Arab officials, including central bankers, have repeatedly said the region's banks are largely shielded from the crisis triggered by defaults on US subprime mortgages, or home loans for people with poor credit history.

ABC said it would double its paid up capital to $2 billion through a rights issue in which existing shareholders would have priority. The lender gave no timeline.

The bank's total income fell 8% compared to a year earlier to $127 million.

Few Gulf lenders have reported heavy losses from subprime credit exposure, but among those that have ABC is among the most severely affected.

Global banks including Citigroup and Merrill Lynch have written down at least $75 billion in credit market losses. (Reuters)

Print | Email | Discuss this article

| Share |

READERS' COMMENTS

Click here to post a comment

Add your Comment All posts are sent to the administrator for review and are published only after approval. ArabianBusiness.com reserves the right to remove any comment at any time for any reason. Please keep your responses appropriate and on topic. Arabian Business would like to point out that only comments relevant to the story will be published. Any containing personal insults or inappropriate language will not be approved.
Name *
Remember me on this computer
Email *	(Your email address will not be published)
City
Country
Subject *
Comment *
Notify me of further comments
Enter the words above *
Please click post only once - your comment will not be published immediately.

MORE FROM ARABIANBUSINESS.COM