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Mon 7 Mar 2011 03:10 PM

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Bahrain Islamic Bank postpones capital hike

Retail bank delays $143.2m rights issue citing unstable market conditions amid uprisings

Bahrain Islamic Bank postpones capital hike
ISLAMIC BANK: Bahrain Islamic Bank postponed a planned $143m rights issue on Monday citing market conditions (ITP Images)

Bahrain Islamic Bank postponed a planned $143m rights issue on Monday citing market conditions, after Bahrain was hit by clashes between its Shi'ite population and the Sunni-led government.

Bahrain Islamic is a small retail bank that said last July it planned to raise about BHD54m ($143.2m) in additional capital.

It posted a 2010 net loss of BHD39m as it wrote down some property investments and booked impairment provisions.

"Due to market conditions that are beyond the bank's control...the bank's board of directors has resolved in its meeting on Sunday 6 March 2011 to postpone the rights issue," it said in the statement.

It said the issue that was scheduled to take place between March 9-23 would be completed before the end of June.

Last month, Kuwait's Investment Dar, owner of half of luxury carmaker Aston Martin, proposed to creditors a sale of its 40-percent stake in Bahrain Islamic as part of its restructuring plan.

Bahrain has been gripped by the worst unrest since the 1990s after mostly Shi'ites youth took to the streets last month and seven were killed in clashes with police forces and the military.

The island kingdom is ruled by a Sunni royal family and its majority Shi'ite population complains of discrimination in jobs and services, a charge the government denies.

Bahrain Islamic made no direct reference to the unrest in its statement, but bankers and analysts say the political trouble will make it more difficult for Bahraini banks and companies to raise capital.

Ratings agencies have downgraded Bahrain, citing the unrest, and its tourism sector has been badly hit.