Banking hub Bahrain faces grim outlook

Bahrain needs to reinvent itself as a financial centre if it wants to return to growth and remain a destination for the region's oil wealth after the financial crisis clipped the wings of its investment houses.Analysts say the only opportunity for the tiny island kingdom off Saudi Arabia lies in funding the large infrastructure projects planned in the Gulf region, but building up expertise will be a long, hard grind with uncertain outcome.

Bahrain shelled out new banking licences in particular to Islamic investment houses during a five-year regional oil and property boom that ended in 2008, with banks living on upfront fees on money raised for property and private equity projects.Bankers and analysts say the country's financial industry faces years of limited growth as this business model has been swept away by the crisis and retail banking is overcrowded in Bahrain and elsewhere in the region."The outlook is grim if there is no change," said John Sandwick, a consultant on Islamic wealth and asset management.