November 1, 2012 / 6:51 AM / 6 years ago

Bahrain's Ithmaar converts Faisal Private Bank into family office

DUBAI, Nov 1 (Reuters) - Faisal Private Bank, a Swiss-based bank which has struggled since the collapse of property schemes in the Gulf and beyond, will be converted into a family office, its parent company said in a statement on Thursday.

A family office manages investments for a single family, with the capital of the firm based upon that family’s own cash. It did not identify the family in a statement to the Bahrain bourse.

The conversion will protect clients’ and shareholders’ interests and allow parent firm Ithmaar Bank to focus on its core retail and commercial business, Ithmaar’s Chief Executive Mohammed Bucheerei said in the statement.

“Ithmaar Bank is committed to maintaining a presence in Switzerland in a format to be approved in due course by the Swiss financial services regulator, Financial Market Supervisory Authority (FINMA),” Bucheerei added.

Geneva-based Faisal Private Bank was put up for sale earlier this year after it failed to raise enough money to meet the Swiss regulator’s minimum capital requirements, its chief executive told Reuters in May.

Faisal was one of a group of institutions that initially thrived on up front payments from investors, building up a 1.1 billion Swiss franc ($1.18 billion) real estate portfolio by 2009. It hit trouble when prices fell and Swiss accounting rules changed in a way that stopped it paying dividends and collecting fees based on expected future earnings.

Parent Ithmaar, itself a victim of the real estate bust, tried in 2009 to raise up to $500 million, in part to help recapitalise Faisal, but only got $100 million. Bahrain’s central bank then blocked Ithmaar from sending funds to Faisal.

FINMA had given the bank until June to meet the minimal capital requirement of 50 million Swiss francs.

Last month, shareholders at Ithmaar approved its merger with an affiliate, First Leasing Bank, through a share swap arrangement to be completed by year-end. ($1 = 0.9312 Swiss francs) (Reporting by David French; Editing by Amran Abocar)

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