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Banking

Complications at TID

What is causing delays to the central bank’s approval of The Investment Dar’s restructuring? One theory is that some of the roughly 15% that did not approve the plan were non-financial institutions hoping to be paid first, particularly those with claims against money-market funds and Investment Dar Bank in Bahrain.

Kuwaiti money-market funds often financed investment companies and had about $3.5 billion under management before the crisis, according to investment firm Kamco. Their valuations have since fallen by 30% or more.

Another factor might be TID’s criminal and civil allegations against Commercial Bank of Kuwait over a 19.2% stake, worth about $450 million, in Kuwaiti Islamic bank Boubyan. CBK says it acquired the right to the shares after TID failed to exercise a buy-back option.

TID’s investment in artificial islands off Dubai has turned sour. TID perhaps lacks government connections, too, although, like Global Investment House, it is partly owned by the Public Institution for Social Security.

TID’s compliance with Shariah law has also been tested. In July a London court dismissed an appeal by TID against its obligation to return a deposit to Lebanese bank Blom. TID argued that the deposit was not Shariah-compliant.

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