Bahrain plans to invest £1 billion in the UK and will strengthen ties related to financial services as part of a potential new trade deal.
Talks over a free-trade agreement between the UK and the Gulf Cooperation Council have “covered a lot of ground in all sectors,” and particularly finance, Central Bank of Bahrain Governor Rasheed Al Maraj said in an interview with Bloomberg News on Tuesday. “I’m hopeful we have now reached a stage where we are about to conclude this agreement.”
The UK is negotiating a trade deal with the six-country bloc of Gulf oil producers that includes Bahrain, part of its bid to strengthen ties around the world following the split with the European Union.
Al Maraj’s comments came after Bahrain announced the £1 billion UK investment plan during the Crown Prince’s visit to Britain. The spending is expected to be facilitated via private-sector entities and channeled through Bahrain’s sovereign wealth fund Mumtalakat, alternative asset manager Investcorp Holdings BSC, and GFH Financial and Osool Asset Management, according to a twitter post.
Al Maraj said the investments will include funding for the manufacturing, real estate and financial-services sectors.
A trade deal with the GCC bloc is expected to add at least £1.6 billion ($2 billion) a year to its economy, according to the UK government. A fourth round of talks will begin later this year, and a draft treaty text is “advanced across the majority of chapters,” it said.
However, the negotiations have raised concerns in the UK Parliament, including over human-rights abuses in the region.
“It will open up a lot of business opportunities for both,” Al Maraj said. “The idea of this kind of trade is to remove all the friction points, to make it easier for accessing the market — harmonizing of regulatory requirements.”
Al Maraj said he expects consolidation in Bahrain’s banking sector, creating larger lenders that will allow them to better compete in the region.
“For big-ticket projects, project finance, you need a bigger bank and this is why we are encouraging the mergers with the local banks,” he said. “We expect more because we think consolidation is good for the health of the industry.”
