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Citibank moves assets from Bahrain

The Bahrain Monetary Agency (BMA), the kingdom's central bank, said in a statement that the move led to a sharp drop in assets of offshore banking units (OBUs) operating in Bahrain, the Gulf's financial and banking hub.

OBU assets declined by 33.4 percent to $58.82 billion at end-2002 compared with the previous year, figures released by the BMA showed.

"The drop was due to precautionary measures taken by the New York headquarters of Citibank during the last quarter of 2002, in view of the current uncertainties surrounding the Middle East concerning Iraq," the BMA said in a statement.

"With war conditions looming large in the Gulf region, the bank has moved its assets to another location outside the region."

BMA did not say when Citibank pulled out the funds, but BMA's figures showed that the slump in OBU assets started in October when they dropped to $57.08 billion from $89.16 billion at end-September.

BMA said Citibank "continues to maintain the administration and processing of these assets in Bahrain".

"The precautionary measures taken by the bank are in no way a reflection on Bahrain, and the BMA has been assured by Citibank that there will be a return to status quo as soon as the war situation is resolved," it added.

The United States and Britain are massing troops and equipment in the Gulf in preparations for a possible invasion of Iraq, which they accuse of possessing weapons of mass destruction. Baghdad denies the charge.

Bahrain, a key ally of Washington, is the headquarters of the US Navy's Fifth Fleet and could be a launchpad for any attack against Baghdad.

The BMA said the assets of commercial, Islamic and investment banks continued to grow last year.

"The kingdom's banking and financial sector continues to grow and currently comprises 340 banks, insurance companies and other financial institutions, representing a blend of local, regional and international names," a BMA official said.

The assets of around 20 commercial banks increased to 4.02 billion dinars ($10.66 billion) at end-2002 from 3.88 billion dinars at end-2001, according to BMA figures. There are 1,000 fils to the dinar.

The BMA said assets of around 25 Islamic banks and finance houses climbed to $2.91 billion at end-2002 from $2.46 billion a year earlier, and assets of investment banks grew to $4.48 billion from $4.03 billion.