Bahrain-based Bank Alkhair, the rebranded entity formerly known as Unicorn Investment Bank, appears determined for its new look to run deeper than face value. After making a swift recovery following the recent Middle East financial crisis, the bank has embarked on a transformation plan that is expected to see it spread its wings further into the global markets.
Ikbal Daredia, its acting CEO and the head of capital markets and institutional banking, revealed to Islamic Finance news that the bank is eyeing an expansion into Qatar, while it is also working on three potential benchmark-sized Islamic capital market deals.
In expansion mode
“We have refocused our strategy to focus on our core markets in the GCC, Southeast Asia and Turkey. In the GCC region, we are looking to expand into Qatar, which we feel is a market with enormous potential for growth and one where Bank Alkhair could successfully introduce its products and services.
“We are also working on the submission of our application to the Qatar Financial Center and anticipate that the process will take approximately six months,” Ikbal told Islamic Finance news in a recent interview.
A move into Qatar will mark an expansion of the bank’s global footprint, from where it is already present in Malaysia, Saudi Arabia and Turkey.
Apart from growing its presence in the Middle East, the bank is also looking to expand its operations in Southeast Asia via its Malaysian unit, Alkhair International Islamic Bank Malaysia. According to Ikbal, who is the Malaysian unit’s CEO, it is currently seeking approval from the central bank, Bank Negara Malaysia, to begin discussions with potential acquisition targets in the country.
Its search for takeover targets is spurred by the bank’s interest in tapping the local currency business, as under its current license from the Malaysia International Islamic Financial Centre, it is only allowed to undertake foreign currency transactions.
Ikbal said that the bank is eyeing local, small-sized ‘boutique’ banks to fit in with its strategic vision for Malaysia, acknowledging that it had targeted Bank Islam Malaysia at one time, although this fell through as the target was eventually acquired by the Dubai Group.
“Today we do not believe that we are looking for a bank of that size. We are looking for a small institution that will provide synergy for our strategic vision in Malaysia,” he said, although he could not disclose which of the country’s banks are appearing on its radar.
He added that while in the short-term the bank has no strategy to expand elsewhere in Southeast Asia, this is not something it is ruling out over the medium-term.
Brisk business
Bank Alkhair is also keeping busy with its investment banking and advisory deals, after a lull in deal flow in 2010 saw the bank record its first annual net loss that year.
According to Ikbal, the bank is currently working on three potential Sukuk issuances which it hopes to bring to the market by the end of this year or in 2012, depending on market conditions. One of the potential issuances involves a US dollar deal in Asia, another in Southeast Asia could involve a dual currency and dual tranche transaction and one transaction in the GCC is also on the cards, which will be denominated in US dollars.
“They will be benchmark sizes,” said Ikbal.
The bank is also advising its shareholder, Dar Al-Arkan Real Estate Development Company, as it targets the acquisition of real estate assets in Malaysia.
With Malaysia positioned as the bank’s gateway into Southeast Asia, the Alkhair group is also considering diversifying its operations with the establishment of a Waqf business in the country. Ikbal said that that the bank is formulating its plans and talking to investors to launch the venture, which could be set up in the form of a bank or another type of structure.
Out with the old
While making a concrete change, the bank’s transformation is also definitely symbolic of a new chapter. The news of its founder and ex-CEO allegedly committing criminal offences against the bank, including the misappropriation of bank funds, emerged just last month, although it is understood that investigations into the matter commenced around 18 months ago. Ikbal himself was appointed interim CEO of the bank in August last year, following Majid’s departure.
Apart from turning the page on that particular chapter of its history, Bank Alkhair also appears to have reached more stable ground since its shakeup last year. In the three months to the 30th June this year, it reported a profit of US$1.11 million against a loss of US$160.54 million a year earlier, helped by a recovery in investment banking income. However, its profit for the period was mainly boosted by one-off gains in the form of a US$5.55 million reversal in impairments and provisions, compared to impairment and provisions of US$97.42 million in the previous corresponding period. It also booked a US$1.99 million profit from assets held-for-sale and discontinued operations.
The recovery in Bank Alkhair’s core investment banking business may be slow yet steady, but with its eye on a wider global footprint and an active pipeline of deals, the bank looks set to re-emerge with a fresher, stronger future ahead. — EB