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IIB eyes $500m Saudi housing project

MANAMA: Saudi Arabia, with a shortage of 100 million housing units and a monthly demand of 150,000 and 200,000 units, is seen as the most promising realty sector market in the region, a top banker at International Investment Bank (IIB) said. " IIB will participate in one of the major housing projects in Saudi Arabia this year and the expected total size of the project will be $500 million," said Aabed Al-Zeera, board member and Chief Executive of Bahrain-based IIB .

"Though we have decided to remain liquid with 70 percent of the assets in liquid form during this year, the growth prospects for the realty sector in Saudi Arabia are very bright and IIB will definitely invest there. For most of 2009, as part of our strategy, we will remain cautious unless the markets are back to normal," he said.

" IIB will also offer 5.1 million shares for sale by the second or third quarter of 2009 subject to the regulatory approvals," he said.

Earlier, the shareholders of IIB approved the $13.5 million net profit and payment of the cash dividend of seven percent for the year 2008 at the annual general meeting. "The impact of the global financial crisis on IIB has been minimal because of IIB 's adherence to conservatism in sourcing and structuring investments, sound liquidity management and capital preservation strategies," Ahmed Salem Bughsan, the chairman of the general assembly and vice chairman of the bank, said.

"The bank generated 12.3 percent returns on paid up capital (RoC) and posted $13.5 million net income for 2008. The capital adequacy ratio at Dec. 31 of 86 percent is over seven times of 12 percent required by the Central Bank of Bahrain . The bank's asset position demonstrates core strength with 55 percent of total assets represented by cash and short dated murabaha placements with financially sound banks and a further 15 percent invested in regional listed equities, for a total 70 percent liquidity position," he said.

"The bank's liquidity position and nil borrowings or risky off balance sheet exposures further bolsters the bank's ability to withstand further market turbulence expected during 2009," said Bughsan.

"During 2009, the bank will structure and place only very selective investment opportunities that meet IIB 's stringent and rigorous investing criteria, underscoring IIB 's heightened commitment to accord priority to protection of shareholders value over profitability, especially in a market environment continually deluged with adverse economic and market news," added Al-Zeera.

"Nevertheless our management team, will closely and actively monitor the market to identify attractive acquisitions targets with a balanced risk. Therefore, we will invest, but selectivity will be of fundamental significance."

IIB was incorporated in Bahrain in October 2003 as an Islamic investment bank, with an authorized capital of $200 million and a paid up capital of $43 million. In December 2007, IIB concluded a combined rights issue and private placement offering that has increased the issued share capital to $110 million and total shareholders' equity in excess of $200 million. It has been involved in investments worth more than $2.5 billion since its inception.

By Mahmood Rafique

© Arab News 2009

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