from The Daily Star (Lebanon)..
February 22, 2013 12:45 AM By David French
An anti-government protester calls for afternoon prayers at the junction of Bahrain Financial Harbor in Manama.
MANAMA: When Ahli United Bank, Bahrain’s largest lender by market value, announced this week a rise in profits for 2012, it was more than good news for the bank alone. It was a sign that the island kingdom is surviving as a regional financial center.
Two years after pro-democracy protesters inspired by the Arab Spring uprisings blockaded Bahrain’s financial district, political tensions still weigh on its banking industry. This is deterring some investment and inflows of money, and making it harder for Bahrain to compete with other centers such as Dubai.
But contrary to fears at the time, a mass exodus of financial firms from Bahrain has not happened and local banks are proving resilient, allowing the island to remain a hub for financial services in the Gulf.
Bahraini authorities have mounted an active campaign to persuade financial institutions to stay in the country. Economic support to Bahrain from Saudi Arabia and other Gulf states, which are politically allied to the Bahraini government, has helped that campaign.
“Though Bahrain’s 2011 political crisis weakened growth potential and damaged the country’s reputation as a business services hub, we believe a post-crisis status quo has been established,” Standard & Poor’s ratings firm said in late January as it upgraded the outlook for Bahrain’s credit rating, a low-investment grade BBB, to stable from negative.
The survival of Bahrain’s financial industry is important to the country of about 1.3 million people; its oil resources are not as lavish as those of some of its Gulf neighbors.
Bahrain’s financial sector makes up 17.1 percent of its economy, which had an output of $29 billion in 2011, according to the latest central bank figures. The industry is a major employer of local citizens, with Bahrainis accounting for 66 percent of the sector’s workforce.