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S&P acts on Bahrain, South Africa; Kuwait values bourse for potential IPO

MIDDLE EAST AND NORTH AFRICA

* Saudi Arabia, Bahrain, Egypt and the United Arab Emirates are severing their diplomatic relations with Qatar, accusing their Gulf neighbor of backing terrorist groups and undermining regional stability, news outlets including the Financial Times reported. The move followed the publication of alleged comments by Qatari Emir Tamim bin Hamad al-Thani expressing support for Iran and Islamist movements. Qatar said the statements were a result of a hacking incident.

* S&P Global Ratings revised its outlook on Bahrain to negative from stable, reflecting its view that the country's net external asset position could weaken to a level insufficient to mitigate the effects of oil price volatility or that the country's already low foreign exchange reserves could drop further. The rating agency also highlighted increasing instances of violence and street protests, saying the overall security environment in Bahrain is tense.

* White & Case, the legal firm working on Saudi Aramco's flotation, and others offering informal counsel have advised Saudi Arabia that a New York listing of the company poses the highest litigation risk of any jurisdiction, citing the U.S.'s litigious culture, insiders told the Financial Times. Saudi Arabia Deputy Crown Prince Mohammed bin Salman, who is the head of the country's oil affairs, is expected to make a final decision on Aramco's IPO within weeks.

* Kuwait's Capital Markets Authority has mandated accounting firm Ernst & Young to conduct a valuation of Boursa Kuwait's assets and outline a timetable for a listing, insiders told Reuters. A listing of the stock market has been under consideration for years, but political infighting and entrenched bureaucracy have stalled the process.

* A new insurance firm in Kuwait called Zamzam Takaful Insurance was launched in the country with a capital of 5 million Kuwaiti dinars distributed through 50 million shares, Al-Seyassah reported. The paid-up capital was 1.25 million dinars, with the remaining to be paid over the next five years.

* A statement on the Bahrain Stock Exchange's website saying that GFH Financial Group B.S.C has pulled out of talks to acquire Dubai-based SHUAA Capital PSC has been removed, The National reported. The statement, which was attributed to GFH Financial Group, was published Sunday morning and quoted Nabeel Mirza, senior director of compliance, as saying that the group has withdrawn from the discussions.

* Goldman Sachs Group Inc. has filed an application to Saudi Arabia's Capital Market Authority for an equities trading license as it seeks to further expand in the country, insiders told Reuters. The Wall Street lender has operated in the Middle Eastern nation as an agent and underwriter since 2009, and has been authorized to arrange, advise and manage investment funds and portfolios since 2014.

* UAE central bank Governor Mubarak Rashed Khamis al-Mansoori said a decline in the number of local banks' branches was mainly due to the lenders' cost-cutting plans, Al Bayan reported. His comments came as 15 branches were closed in April, bringing the total bank branches across the UAE to 819 branches.

* Dubai Islamic Insurance & Reinsurance Co. CEO Jihad Faitrouni said the company is assessing opportunities to acquire and sell assets and is working on slashing accumulative loses, Al Bayan reported.

* AL Ahlia Insurance Co. BSC named Jawad Mohammed as its general manager.

* Direct insurance premiums in Oman grew 3% to 134 million Omani rials in the first quarter, compared to 131 million rials in the same period in 2016, backed by health and life insurance products, Al-Watan reported.

* The Central Bank of Egypt has ordered banks to separate microfinance from retail loans and to classify them based on the gender of the borrower in addition to the type of the individual's economic activity, Daily News Egypt wrote. It comes as the regulator recently launched an initiative aimed at creating a unified assessment model for microfinance institutions seeking credit facilities from banks.

* The IMF has recommended Algeria implement a crisis resolution mechanism for its banking sector to take account of increasing risks posed to bank by oil shocks, El Watan said.

EAST AND WEST AFRICA

* The Bank of Ghana suspended the issuance of licenses to firms seeking to operate as microfinance institutions, Graphic Online wrote. Joseph Amoah-Awuah, head of the central bank's financial institutions supervisory department, said the regulator will now focus on supporting existing microfinance institutions.

* The Central Bank of Nigeria is expected to sustain its dollar injection in the foreign exchange market this week, ThisDay wrote. Isaac Okorafor, acting director for the central bank's corporate communications division, confirmed that the regulator plans to make necessary interventions in the forex market, in line with its earlier decision to attain forex rates convergence and liquidity in the market.

* Kenya Reinsurance Corp. Ltd. has joined the list of Co-operative Bank of Kenya Ltd.'s shareholders with a 0.31% stake, Business Daily Africa wrote. The reinsurer has so far accumulated 15.3 million shares of the lender worth 261.4 million Kenyan shillings.

* Benin's president, Patrice Talon, told Financial Afrik that the African Development Bank fills a vacuum left by commercial banks in offering his country long-term financing.

CENTRAL AND SOUTHERN AFRICA

* South Africa has dodged another downgrade after S&P Global Ratings affirmed its long- and short-term BB+/B foreign currency and BBB-/A-3 local currency sovereign credit ratings, citing the weak pace of the country's economic growth. The outlook on the ratings remains negative, reflecting the agency's belief that political risks in South Africa will remain elevated this year.

* South Africa's ruling African National Congress party urged the government to open a probe into thousands of leaked emails that purportedly indicate corrupt links between members of the wealthy Gupta family and President Jacob Zuma, Bloomberg News and BBC News reported. Meanwhile, the country's main opposition party, the Democratic Alliance, suspended its former leader Helen Zille from all party activities pending the outcome of a disciplinary hearing following her controversial tweets about colonialism, Bloomberg wrote.

* Barclays Bank Plc confirmed that it agreed to sell its majority stake in Barclays Bank of Zimbabwe Ltd. to First Merchant Bank Ltd., and said it aims to complete the transaction by the end of the third quarter. As part of the agreement, Barclays Bank will sell shares in Afcarme Zimbabwe Holdings (Pvt) Ltd., the holding company of Barclays Bank of Zimbabwe.

* The Bank of China Ltd., one of China's largest commercial banks, is set to open a branch in the Angolan capital today, marking the start of its operations in the southern African country, state news agency Angop and newspaper Jornal de Angola.

* Angola's BDA development bank has signed a cooperation accord with the Czech Export Bank in order to foment trade between the two countries as well as train Angolan officials, state news agency Angop reported.

* Mozambique's metical currency, which was battered last year by a scandal over hidden public debts and a slump in commodities, has stabilized, underscoring renewed optimism in the local economy, news website Zitamar reported. It quoted the IMF's representative to the country as saying that the foreign exchange market had "rebalanced."

* Opposition Union Nationale budget spokesman Jean Gaspard Ntoutoume Ayi has criticized Gabon's government following the adoption of its draft finance bill by the Council of Ministers, saying it increases Gabon's debts, relies on unrealistic projections and fails to meet IMF requirements, Gabon Eco reported.

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S&P Global Ratings and S&P Global Market Intelligence are owned by S&P Global Inc.

Sheryl Obejera, Henni Abdelghani, Pádraig Belton, and Helen Popper contributed to this report.

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