Bahrain Central Bank Puts Bank, Insurer Into administration

Bahrain’s central bank said it has placed two Iran-linked companies, Future Bank and Iran Insurance Co, into administration to protect the rights of depositors and policyholders.

In a brief statement, the central bank did not elaborate on why it took the action or give any information about the two companies.

It said it wished “to reassure both the local and international financial community that this measure is an isolated incident and will not impact any other bank or insurance company in the Kingdom.

“Indeed Bahrain’s banking and insurance sectors remain sound, well-capitalised, well-regulated and continue to develop and grow with confidence.”

Calls to the two companies offices in Bahrain on Thursday evening were not answered.

Future Bank, based in Manama, is a commercial bank which was founded in 2004 as a joint venture between two Iranian banks – Bank Saderat and Bank Melli – and Bahrain’s Ahli United Bank , according to its website.

Its assets totalled BD597.2 million ($1.58 billion) last year, when it made a profit of BD17.9 million, according to its latest financial statement.

Iran Insurance Co is the Bahrain branch of an Iranian government-owned insurer, according to its website, which said the parent company had a network of branches in Iran and paid-up capital of $236 million.

In the last three years, Iranian institutions have largely been frozen out of the global financial system by international sanctions imposed over Iran’s disputed nuclear programme. It was not immediately known whether the action against the two companies in Bahrain was related to the sanctions.

Bahrain has been caught up in a region-wide tussle for influence between Sunni Muslim Saudi Arabia and Shi’ite Iran. Bahraini authorities have blamed Shi’ite groups for social unrest and accused them of having links to Iran.

The Bahraini banking system has been hurt by the unrest and by low oil prices; bank lending to the private sector has been shrinking. In an effort to strengthen the banking industry, the central bank has been encouraging mergers and consolidation for several years.

Bahrain’s central bank governor Rasheed al-Maraj said in February there were too many banks in Bahrain, saying: “I need to see stronger and bigger banks.”