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Last Updated: Jun 25th, 2007 - 17:07:26 |
Green light for $100b Islamic mega bank
Reuters
Manama: Islamic finance institutions plan to set up an Islamic bank in Bahrain within months with a capital set to rise to $100 billion within seven years, an institution official said.
Shaikh Saleh Kamel, head of the General Council for Islamic Banks and Financial Institutions, told reporters that a large Islamic bank was needed to increase liquidity in the sector and improve compliance with Islamic rules.
"It is a time for mega-Islamic banks ... we will establish a bank in Bahrain with different kinds of shares," Kamel told a news conference.
The Islamic finance industry has an estimated $300-$400 billion in assets, but lacks well-capitalised banks.
About a quarter of the roughly 300 Islamic lenders worldwide are reported to have less than $25 million in paid-up capital.
"There is a need for this mega-bank to make the tools to increase liquidity in Islamic banks, and move the banking system more towards sharia (Islamic law) goals," he added.
Islamic finance complies with Islamic law. A ban on charging interest and investing in prohibited businesses such as trading in alcohol, pork, arms, pornography or gambling, are among features distinguishing it from traditional banking.
The bank, named Emaar, will have an initial capital of $1 billion provided by financial institutions. Albaraka Banking Group, which Kamel also chairs, will be one of the founding investors. Al Baraka Chief Executive Adnan Yousuf said Emaar would be founded in Bahrain within two months.
Shares in the bank will then be offered in two tranches, the first taking the bank's capital to $10 billion, and the second to $100 billion, in a process that will take five to seven years, Kamel said without giving further details.
The other Islamic financial institution involved in setting up Emaar is the Islamic Chamber of Commerce and Industry, said Ezzedine Khoja, secretary general of the General Council.
Khoja said a timeline for the second and third tranches of investment had not yet been decided, or the how investments will be solicited.
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