Is Gulf Finance House poised for fresh growth?

After a rather torrid start to 2009 for Bahraini Islamic investment bank Gulf Finance House, the appointment of a new chief executive with a reputation as a turnaround specialist could spark a change of fortunes. But is it really likely to result in a fresh expansion?

Ahmed Fahour has been unveiled as GFH's new chief executive today and is due to move out to Bahrain from Australia next month. He was previously at National Australia Bank and was responsible for doubling the profits in his five years at the helm of its Australian banking and wealth management operations.

Such a track record is needed at GFH. Having reported a $37.7m loss for the first quarter of 2009 in May, it's since battled rumours of a potential merger and denied accusations of laying off expat staff.

GFH says that Fahour's appointment marks a step towards a fresh expansion - "to become a truly global Islamic financial institution".

The problem is, this a line that's been used before. In the second quarter of last year it spent $75.8m on staff - nearly double that of the same period in 2007 - as it took on a raft of international talent. Staff numbers swelled by 18% to 262 in 2008.

But in the first quarter of 2009, it spent just $16.3m on employees, down from $34.7m in the same period of 2008, which is not surprising as it saw investment banking revenues shrink year on year from $150m to $46.8m.

Bahrain has a reputation as being a hub for Islamic banking, a sector which has shown it's not entirely bullet-proof from the machinations of global markets recently.

Rory Adamson, director of Bahrain-based executive search firm Azrek, says: "The recruitment frenzy last year was mainly the result of new banks setting up and competition for a relatively small pool of talent. There's still some appetite to hire, but banks in the kingdom are facing the same issues, whether Islamic or non-Islamic."