Albert I Kittaneh

For the year 2000 BMB posted a loss of $57 million due to heavy losses on equity trading and foreign exchange. This was a far cry from the $30 million profit announced for 1999 by this niche investment bank for Arabian financial institutions and high net worth individuals.

Total assets fell by $35 million to close at $621 million at the end of 2000, probably the bank's worst year on record.

'From 1993 to 1999 we had a very good run,' says Mr Kittaneh sitting in the boardroom of his headquarters in Manama, Bahrain. 'The NASDAQ crash hit us particularly hard as we are involved in private equity deals in this sector. Everyone has been hurt'.

Will it be any better in 2001? 'This year there is still a lot of negative sentiment around', he comments. 'We are expecting the Fed to lower interest rates, but it all depends how negative psychology feeds through to the consumer.

'We still believe in the Tech sector and think it is at the beginning of a long-term growth in demand. We still recommend that investors keep a portion of their funds allocated to high technology, although 70-80% of our funds are invested in traditional companies'.

The Bahrain Stock Exchange listed Bahrain Middle East Bank was founded in 1982, and operates primarily as an intermediary between GCC investors and the markets of the US, UK and Europe. It has around $150 million under its management at present, and 14,000 GCC shareholders, although Al Fawares Construction and Development has a 17.8% stake. The minimum investment required is $250,000 for high net worth individuals.

Things have not been all bad recently. The BMB Alternative Strategies Fund showed growth of over 15% last year, and was listed on the Bahrain Stock Exchange twelve months ago.

But what about the regional stock markets. Does BMB Investment Bank have any plans to promote investment at home to its clients? Could this be the time to invest in the GCC rather than foreign markets?

'No, we remain focused on overseas markets', says Mr Kittaneh. 'The GCC markets fell last year in parallel with overseas markets, due partly to the fact that overseas investors had to liquidate holdings at home to meet margin calls abroad. We are not sure whether this will continue this year.

'The local markets are very small when compared to the US or Europe. One US company like Cisco Systems has a higher market capitalisation than all the stock markets of the GCC, so the investment opportunities can not really be compared. But we do see the GCC opening up to foreign investment, and that will be very healthy for these economies'.