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Bahrain firm allays fears of homes seizure

Manama, February 2, 2014

A Bahrain company that went into voluntary liquidation has reassured its customers that there will be no home seizures or foreclosures.

Sakana Holistic Housing Solutions last week confirmed it was shutting down because its business was no longer viable, said a report in the Gulf Daily News (GDN), our sister publication.

It has a customer base of more than 150 people with loans totalling BD12 million ($31.3 million), leaving many fearing their homes could be at risk.

But the Islamic mortgage firm's chief executive R Lakshmanan said going into liquidation simply meant it would not take on new business and existing agreements with customers would be honoured.

He revealed the decision was taken because its shareholders thought the business was no longer viable in the long term.

They are Ithmaar Bank, an Islamic retail bank, and BBK, each holding a 50 per cent stake. BBK assumed the stake of its Islamic investment banking arm, Capinnova Investment Bank, which went into liquidation last year.

"Our capital is BD20 million, we are still profitable, liquid and have positive cash flows," Lakshmanan told the GDN in an exclusive interview.

"Over the last few years, we realised that we were not getting enough new business due partly to the global economic downturn and the regional political unrest."

The firm's business model meant that it had to keep getting new business at a rate faster than early settlements.

"As we are not a deposit-taking institution like a bank, we need to mobilise funds from other lenders like banks and then make them available to home buyers after adding a margin," said Lakshmanan.

He stated this meant that the firm's prices were higher than other mortgage lenders, which was not much of an issue during the boom time when people did not mind paying one to two per cent more than what was available elsewhere just to get their hands on the funds faster.

"With the recent entry and aggressive push by many commercials banks into the mortgage business, we found that the two to three per cent price differential made it difficult for us to get new business," he said.

The chief executive added Sakana still has the option of selling its loan portfolio at any time in the future if there was an interested buyer.

During liquidation, a branch of the company will remain operational and the seven people it employs will cater to existing customers.

Each of the remaining staff, including four Bahrainis, have been given incentives to stay on.

Sakana earlier gave severance packages to employees that were let go of over the last year.

The company has been offering its services to Bahrainis, expatriates living here, GCC residents and non-residents.

These included loans of up to BD350,000 to buy land or a home, or to construct one, to fund extensions, refinance a property or release equity.

One of Sakana's last known developments, announced in November 2012, was a deal to provide property consulting services and home financing to Tubli Homes, a residential project consisting of 12 villas. - TradeArabia News Service




Tags: Bahrain | Sakana | Home | liquidation | seizure |

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