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It is unsurprising that the Gulf’s first sukuk default case is in Kuwait, where conventional and Islamic investment companies are under severe strain. The risk is systemic given that investment companies

ICs – whose numbers almost doubled to 99 in 2005-08 – have on- and off-balance sheet assets equivalent to more than 100% of the banking system’s assets. This makes the ICs “systemically important” – posing a systemic risk if their solvency deteriorated further.

Moody’s Investors Service on 9 June applied a ‘negative’ ratings outlook to Kuwait’s Aa2 sovereign ratings – a downgrade from the previous ‘stable’ – adding to investor discomfort during a period when Kuwait-based financial institutions have come under intense scrutiny.

Nasser Al-Shaikh, head of the Dubai government's finance department, has been removed from his post, reportedly after a dispute with a senior

Cayman Islands-registered BMB Group, set up in 2004 by 31-year-old Rayo Withanage, is emerging as a player in Brunei Dar Al-Salam, until now not the most active of Islamic financial markets. BMB started by offering financial services to members of the Brunei royal family, and apparently to Gulf royals too.

A number of heavyweight regional players are setting up a $10bn Bahrain-based wholesale bank, to be called Al-Istikhlaf. The bank has so far secured $3.5bn from government and private regional investors,

Aabar invests in European subsidiary of AIG, Mubadala posts Dh11.8bn loss for 2008, Brunei investment fund, German automotive industry attracts Qatar,

After eight months in the doldrums triggered by the global credit crisis, Middle East project finance has bounced back to life with the stunning commitment of $3bn from commercial banks to refinance the Dolphin pipeline. With liquidity still very tight, a boost was necessary to bring banks back into the international syndications market.

The Jubail export refinery is scheduled to hit the financing market in June, “but will probably come a little later,” a leading regional project finance banker, who wished not to be identified, told GSN. The Jubail facility was estimated initially to cost a massive $12bn, but Saudi Aramco is seeking a reduction to below $10bn for the proposed

Oman and Uzbekistan signed an MoU in early April for a 75%/25% joint investment company …….

ADIC eyes MENA private equity deals; Bahrain banks consolidate their positions; Kuwait enters Palestine telecoms sector; Vodafone Qatar to sell a 40% stake in April IPO

Former boss Sir Fred Goodwin is vilified in the British press, and the UK government effectively controls 68% of its equity, but credit crunch victim Royal Bank of Scotland retains some significant businesses, notably a project finance arm which has acted as advisor to major GCC project sponsors including Qatar Petroleum, Saudi Aramco, Total, ConocoPhillips, ExxonMobil and Occidental Petroleum Corp (Oxy). Rumour has it that, as it refocuses its investment banking operations, a contrite RBS is set to exit project, leveraged and real estate lending.

New administration but same pressures: new US sanctions against Iran’s largest state bank have underscored Washington’s determination to eviscerate Tehran’s trading capabilities.

it is not immune to the impacts of the global financial crisis, but scholars and financiers argue that this is a ‘golden opportunity’ to promote the Islamic finance industry as a more responsible alternative to conventional banking.

GCC-based bankers are piecing together simpler project finance structures to work their way around the decimation of international debt capacity in the past few months. Market players canvassed by GSN agreed that the Saudi market had emerged in far better shape than other regional economies.