Bahrain’s GFH Proposes Capital Cut, No Dividend For 2014

Bahrain’s Gulf Finance House (GFH) said on Sunday that its shareholders would consider a capital reduction at an annual meeting this month which would allow the firm to pay dividends some time in the future, but it proposed no payout for 2014.

The move disappointed investors, who had been hoping that the Islamic investment bank, which is recovering from a financial crisis, would pay dividends immediately after swinging to profit last year.

The stock tumbled its daily 10 percent limit in Dubai and was down 10.6 per cent in Kuwait, where it is also listed. But Kuwait’s stock exchange subsequently suspended the stock and cancelled all Sunday’s trades, saying this was because GFH had not notified it about the capital reduction plans in advance.

GFH conducted a previous capital rediction in November. This time, it plans to reduce the number of shares by 40 percent instead of cutting their nominal value.

The firm, which was crippled by the global financial crisis and required several debt restructurings, posted a profit of $11 million for 2014 compared with a loss of $18 million for 2013.

GFH on Sunday asked shareholders to allow it to keep the profit as reserves and retained earnings, instead of paying it out as a dividend. It proposed “the elimination of the accumulated losses to allow for distribution of dividends in future”, without giving any further details on when dividends might resume.

GFH last paid a dividend for 2008.