The UK's Financial Services Authority has given approval for Qatar Holding to buy a controlling stake in Harrods Bank, the private banking arm of the luxury department store, it was reported.
The investment fund of the Gulf state’s royal family has appointed a new board for the lender and plans to expand its operations, the Daily Mail said, citing a spokeswoman for Harrods Bank.
“A new board has been appointed to support this exciting development,” a spokeswoman said.
Harrods Bank posted losses of GBP£1.7m (US$2.7m) in the 12 months ending 30 January 2012 on the back of one bad loan.
“Overheads have increased as the bank begins to make an investment in IT systems and people development to allow for future expansion,’ said the bank at the time.
“The loss has been significantly increased this year as the result of the need for a large provision of GBP£800,000 against an impaired loan,” it added.
Qatar Holding’s acquisition will unwind a trust structure in place since 1991, reportedly established under pressure from the Bank of England following concerns over former owner Mohamed Al Fayed’s ability to run a bank.
The Qatar-based investment fund has spent millions of dollars upgrading the famous Knightsbridge store since purchasing it from Egyptian businessman Al Fayed for GBP£1.5bn in May 2010.
New additions include a watch emporium and a “room of luxury” for designer handbags and accessories. The retailer has also invested in a new head office in central London and a distribution centre.
Qatar Holding in July paid themselves GBP£100m in dividend payments after posting record annual profit.
Harrods saw pre-tax profits increase 15 percent to GBP£125.3m while revenue rose 11 percent to GBP£651.7m in the year ending January 28. Harrods said 2011 had seen a “very significant programme of capital expenditure” of GBP£107.8m, compared with GBP£32.2m in 2011.
Qatar Holding earlier this year announced plans to open a series of Harrods-branded hotels around the world. The first hotel will be a 300-room property in Bukit Bintang in Kuala Lumpur, while other cities will include New York, Paris, London, and locations in China and Italy.
“Qatar Holding ultimately intends to grow Harrods into a global enterprise that defines the luxury retailer and leisure sectors,” the Doha-based firm said in a statement.
Hotels are already planned for London and Italy and Qatar Holding said they are likely to be located in sites it already owns in Chelsea Barracks and Sardinia, the statement added.For all the latest banking and finance news from the UAE and Gulf countries, follow us on Twitter and Linkedin, like us on Facebook and subscribe to our YouTube page, which is updated daily.
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