Resignations throw Bahrain Islamic Bank into crisis

Bahrain Islamic Bank, the country's first and more than two decades old, is facing a crisis following the resignation of four of its directors who collectively own 35 per cent stake amounting to $45 million.

The four directors said they would sell their stake in the bank as soon as possible.

The directors said they resigned because they did not have an effective role in managing their investment, even though their stake was larger than that of the bank's founding members.

The founding, non-voting shareholders were accused of trying to wrest control of the bank from new shareholders who held voting power and had a larger stake in the institution.

To ensure control, it was alleged, founding, non-voting shareholders had been seeking to amend Article 22 to grant voting rights to all shareholders and to reduce the size of the board from 13 to 10 members.

Founding members have also boycotted five ordinary and extraordinary general meetings, the four directors alleged.

The four directors who resigned are Sheikh Salman Dawood Al Sabah, chairman of Kuwait-based International Investment Group, Rasheed Ali Abdul Jabbar, chairman and managing director of Bahrain-based Gulf Monetary Group, Ahmed Al Janahi, board member and chief executive of Kuwaiti-owned Investors Bank, and private investor Saad Hamad Al Barak.

"The group was frustrated as they failed to reach an amicable solution with the founding members even after long and arduous discussions," said Ahmed Al Janahi.

Sheikh Salman pointed out that "the decision to quit the board was taken after a long battle with the top management, as five general assembly meetings of the bank failed to break the deadlock. Under the circumstances, it is not possible to keep our investors in the dark any more, and our investment strategy will be announced later."

They said this was an investment and there was no point in continuing when they did not feel comfortable as they could take their investment elsewhere.

"We have faith in the overall investment environment in Bahrain. But, unfortunately, this has not been a good experience," they added.