THE first signs of recovery will appear on Bahrain's economic landscape in the coming year, with financial activity already beginning to pick up, according to the chairman of the Bahrain Association of Banks (BAB).

Speaking to research firm, Oxford Business Group (OBG), Mayank Malik acknowledged that his views differed from those of some rating agencies, whose 2010 forecasts for the banking sector are less optimistic.

But he voiced his confidence that the coming year will not bring with it any form of retraction in the sector. "Banking will remain stable through 2010 and we are seeing the first signs of growth returning," he said. "Intra-bank lending is beginning to return to normal levels, while companies are gradually testing the water for financing, IPOs and other deals. Things are finally starting to look up."

The interview with Malik, who is also the CEO of Citibank Bahrain, was carried out in conjunction with preparing in The Report: Bahrain 2010, OBG's forthcoming guide on the kingdom's business activity and investment opportunities. The report will offer unrivalled, up-to-date analysis of political, macroeconomic and sectoral developments, including banking, capital markets, energy, infrastructure, industry and insurance.

Malik, however, praised the progress that Bahrain's banking sector had made in expanding offshore operations.

He said the kingdom had taken important steps forward in creating a business-friendly environment which was key to achieving success in this area of business. "Bahrain is doing a good job of encouraging back office operations because we have the general infrastructure and IT resources," he said. "The country is also a very cost-effective place to set up an office."