Restructuring and re-engineering at BMB Investment Bank has resulted in major strides towards the bank's new vision, a bank spokesman has said.

While the global financial markets meltdown continues to impact financial institutions across the world, the pace of the deterioration has slowed in the second quarter and the overall global economy is showing slow but encouraging signs of recovery, he said.

'BMB embarked on an ambitious re-engineering and restructuring plan aimed at developing BMB into a niche investment bank with multiple business lines which will secure a more diversified and sustainable income stream going forward,' he added.

'Part of this restructuring includes creating a leaner and more efficient institution and to this end the bank has implemented measures that will achieve cost savings of almost 40 per cent. These savings will be reflected in the bank's financials starting in the third quarter.'

The bank has taken additional provisions on its private equity portfolio of $12.7 million in the second quarter of this year resulting in a net loss of $19.7 million for the first six months of the year as compared to a profit of $4.2 million in the same period last year.

The second quarter, however, has seen the bank's trading investment portfolio recover as income from trading investments produced a profit of $2 million in the second quarter as compared to a loss of $2 million in the first quarter of the year.

Income from operations therefore came in at $1.1 million as compared to a loss of $1.6 million in the first quarter and after expenses and impairment provisions, net loss for the quarter came in at $14 million as compared to a loss of $5.7 million in the first quarter.

The bank's Basel II capital adequacy ratio remains at a healthy 17.37 per cent at the end of the quarter as compared to 22.8 per cent at the end of last year.

'The second quarter of the year has seen us make excellent strides towards our new strategic vision,' said chairman Wilson Benjamin.

'The bank's restructuring and re-engineering process has made very good progress resulting in a much more efficient and effective organisation.

'We now begin the second phase of our strategy in building the platforms necessary for our various new business initiatives.

'Most importantly our capital raising campaign is progressing well and gaining strong momentum as several potential new investors have been identified who will provide a strategic and synergistic fit for the bank.'

'The bank's performance continues to suffer the effects of its legacy portfolio, and impairment provisions on the private equity funds continue unabated as a result of the cleaning up process of all aspects of the bank's operations and the reclassification of the private equity portfolio,' said chief executive officer Akbar Habib.

'A more positive global economic outlook, as well as feedback from some of the world's leading private equity fund managers, lead us to believe that the worst is over as far as the private equity market is concerned and we expect to begin seeing a material improvement within six to nine months.

'We do not anticipate any further significant markdowns on our investment portfolio and in all likelihood an improved economic outlook should have a positive contribution on the bank's overall performance.'

'Our focus going forward is to kick start the required initiatives to begin generating revenue from other business lines and provide the bank with a diversified revenue stream in a measured and sustainable manner in years to come.'-TradeArabia News Service