Bahrain-based Ithmaar Bank is to convert its wholly-owned subsidiary Faisal Private Bank into a family office.

The decision to convert Geneva-based Faisal, has been made so that Ithmaar can focus on its core retail and commercial banking operations, and to protect clients' and shareholders' interests, Mohammed Bucheerei, chief executive of Ithmaar, said in a statement. The identity of the family for whom Faisal will be running money has yet to emerge.

"Ithmaar Bank is committed to maintaining a presence in Switzerland in a format to be approved in due course by the Swiss financial services regulator, the Financial Market Supervisory Authority," Bucheerei’s statement said.

Reports emerged in May this year that Faisal was to be sold owing to having failed to raise enough money to meet the Swiss regulator's minimum capital requirements of SFr50 million (around $54 million).

Faisal hit the headlines after the financial crisis because of problems with its real estate portfolio; in 2009 reports emerged that parts of the portfolio faced foreclosure yet investors refused to meet requests for cash amid concerns that the funds' portfolio values had not been written down sufficiently since 2006. Clients were also reportedly worried that, before an accounting change prompted by the Swiss regulator came into effect in 2008, payouts to clients may have been bleeding the funds of capital as they were not fully covered by income.

Ithmaar tried in 2009 to drum up some $500 million in additional funding, in part to help recapitalise Faisal, but reportedly only managed to raise $100 million. Bahrain's central bank went on to bar Ithmaar from sending funds to Faisal.

Ithmaar has in fact been engaged on a wide-reaching restructuring for the past few years as part of its evolution from an investment bank to an Islamic retail bank. This month Ithmaar’s shareholders approved plans for it to merge with one of its domestic associates, First Leasing Bank.