Gulf lenders plan Islamic bank and exchange

Dubai: Gulf banks and individual investors are planning to set up a $3 billion Islamic investment bank and an Islamic stock exchange in Bahrain by 2009, the chief executive of Al Baraka Banking Group said. « It will be the largest bank in the region for the issuance of sukuk and will create a secondary market for sukuk, » Adnan Yousuf said yesterday. The bank, which is aiming to be a global player, would also take projects from a conceptual stage to financing and eventually flotations, Yousuf said. Al Baraka is one of the lenders that is looking to invest in the new bank, which will have a paid-up capital of $3 billion and plans to start operations in 2009. The bank will have a targeted capital of $11 billion, Yousuf said. Other banks that have shown an interest include Saudi Investment Bank and Bahrain Islamic Bank. « We are in discussions with the central bank of Bahrain and regulators and hope to finalise the details by year-end, » he said. Advisors Ernst & Young has been appointed to advise on the bank’s establishment. The project is being promoted by the chairman of the General Council of Islamic Banks, Shaikh Saleh Abdullah Kamel, Yousuf said. Value of assets under management in Islamic institutions has been growing at over 20 per cent a year and reached $900 billion in 2007 and is set to hit $2 trillion by 2010, Ernst & Young said in February. Yousuf said Bahrain also planned to set up a secondary stock market in Bahrain complying with Islamic law to encourage regional investment. Source: Reuters