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Gulf banking: Shake-up for GIB’s shareholders after bailout

Gulf International Bank is finalizing a reallocation of shares in the light of a $4.8 billion bailout by its shareholders.

The bank’s chief executive, Yahya Alyahya, tells Euromoney the new structure will be announced in the next two months.

Shareholders of GIB, which are the six governments of the Gulf Cooperation Council (Bahrain, Kuwait, Oman, Qatar, Saudi Arabia and UAE), bought $4.8 billion of international securities from the bank, including its entire CDO and ABS portfolio in late March.

"The shareholders have agreed on a reallocation of shares between those who do not participate in the purchase and those who do," says Alyahya.

After a $1 billion capital injection in February 2008, the Saudi government became the bank’s majority shareholder. The Saudi Arabian Monetary Agency’s stake rose from 27.5% to 37.6% while the Saudi Public Investment Fund’s stake rose from 12% to 16.5%.

"It is expected as a result of the sale of assets that the structure will change further," says Alyahya. "The board of directors had been engaged in an evaluation exercise. Afterwards the shareholders themselves made an agreement. We are now in the process of documentation. There are some regulatory requirements to satisfy in order to finalize the share reallocation."

GIB does not have a retail network but Alyahya, who became chief executive on January 1, says the bank plans to grow in that area, although on a gradual basis.