First energy bank is born

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Janahi believes the energy sector will provide attractive returns to investors in the coming years.

Central Bank of Bahrain grants license to bank devoted entirely to the energy sector.

First Energy Bank (FEB), which claims to be the world's first investment bank focused exclusively on the energy sector, has received a wholesale banking license from Central Bank of Bahrain.

At its first shareholders meeting, held at the end of June, the bank appointed its Sharia Supervisory Board, KPMG as external auditor and its initial board of directors.

Esam Janahi, FEB chairman, said: "The huge and growing capital needs of the energy sector are best met by a bank that understands the industry as well as the world's producing regions."

"FEB will be the first of its kind globally to offer both specific value-added advice and intelligent finance targeted to the energy sector. We look forward to serving the needs of a booming energy sector in the MENA region and in Asia and indeed across the world."

Janahi claimed that there is a clear market need for a bank like First Energy. He cited the oversubscription to the bank's capital raising exercise. The issue was closed at US $1 billion, as opposed to the initial $750 million, and was several times oversubscribed.

He claimed that the bank has already had several "serious inquiries" from regional firms seeking its expertise. "In the planning for this venture, we saw there was a huge opening for an institution to serve the needs of the MENA energy industry," he said. "The enthusiastic initial reaction provides strong confirmation," noted Janahi.

The bank has shareholders from Bahrain, Saudi Arabia, Kuwait, Libya and the UAE. Institutions represented on the board include Abu Dhabi Water and Electricity Authority, Dubai Investments, Emirates Islamic Bank, KSA's Al Jabr Trading Co, Libyan Investment Authority, Bahrain Islamic Bank, Gulf Finance House, and Khaleeji Commercial Bank.

Newly appointed members of the Sharia Advisory Board are Shaikh Nidham Mohammed Saleh Yaquby and Dr. Mohammad Akram Laldin.

The management's confidence is based on predictions of future energy growth. According to the International Energy Agency (IEA), world oil demand will grow from around 84 million barrels per day now to 116.3 million in 2030.

"Without significant additional investment, the energy industry will be unable to meet this demand and the world will face an acute supply shortage," said Janahi.

He quoted US $8.2 trillion as the amount of money that would need to invest in the oil and gas sector between now and 2030. He is also confident that higher prices are here to stay, meaning investors can expect to earn superior long term returns from investments in the energy sector.

First Energy Bank will be headquartered in Bahrain Financial Harbour. The bank has an initial paid-up capital of US $1 billion raised through a private placement by its founding shareholder, Gulf Finance House (GFH).

FEB's is targeting investments in exploration, production, processing, transportation, storage and refining, as well as oilfield services, electric power and alternative energy. It will work in accordance with Islamic investment principles and will act as an investor, financial partner and advisor. The bank's geographical focus will primarily be on the MENA region.

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