Capinnova Investment Bank sees the last of its days (By IFN)

Capinnova Investment Bank sees the last of its days

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BAHRAIN: Capinnova Investment Bank, a wholly-owned Shariah compliant investment subsidiary of the Bank of Bahrain and Kuwait (BBK), will be shuttering its operations in the next few months, sources have told Islamic Finance news. The bank, which was incorporated in January 2009 with a paid-up capital of US$125 million and has an authorized capital of US$500 million, will be absorbed back into its parent company. As a result, the current team of 32 people will be reduced to four, with 28 individuals slated for the chopping block. The source added that the four retained staff will be hired by BBK. Bahrain’s Islamic banking and finance sector took a blow following the 2009 credit crisis, with most banks still unable to recover fully. Arcapita, one of the largest investment banks in Bahrain was recently granted an exit from Chapter 11 bankruptcy by the US courts, and was granted a US$350 million Shariah compliant financing facility by Goldman Sachs as a boost to the bank. Since late 2011, industry players have been calling for more mergers within the Bahraini banking sector, citing boutique investment firms and family businesses as “irrelevant” to the Bahraini financial climate. An industry player told Islamic Finance news: “There really is no place for boutique banks right now. Family businesses are also not suitable in Bahrain anymore, given the difficulty in acquiring funding. It really is not as easy as it used to be.” Although market sentiment in Bahrain has improved over the years, with the government providing the necessary support to its financial system through an increase in infrastructure financing and increased focus by the Central Bank of Bahrain to support local entities; the kingdom is still not out of the woods just yet.