Saudi Arabia’s Sheikh Saleh Kamel, founder and chairman of Bahrain-based Islamic bank Al Baraka, has spearheaded an initiative to establish a global Islamic mega bank but the plan has been touted for years.
He said the next steps would be discussed in December at a meeting with the Islamic Development Bank (IDB), the Saudi-based organization that is trying to develop an international Islamic capital market through regular issues of Islamic bonds.
The emerging Islamic finance industry is fragmented and its banks lack sufficient capital to compete with the Islamic units of Western banks on mandates to syndicate loans, arrange Islamic bonds and supply project finance in the Gulf Arab region.
The absence of a lender of last resort is also seen as one of the industry’s weaknesses, as few central banks issue liquidity instruments compliant with Islamic law, forcing Islamic banks to place their liquidity with large conventional banks.
Adnan Yousif, chief executive of Al Baraka and an advisor to the project, told Reuters that the bank will likely have an authorized capital of $3 billion, a third of which will be raised in a private placement.
He said the remainder could be raised in an initial public offering (IPO) at a later stage.
The group setting up the bank is seen as a candidate to win one of two licenses for Islamic banks with capital of at least $1 billion by the Malaysian central bank.
The country plans to boost its financial services sector by allowing more foreign investments.
source: Daily Star