long-touted Islamic megabank has received approval from Bahrain and a preliminary green light from Malaysia to begin operations, an organiser said. Saudi Arabia's Sheikh Saleh Kamel — who is founder and chairman of Bahrain-based Islamic bank Al Baraka and spearheaded the megabank initiative — said the venture is still in discussions with Qatar to obtain a licence.
The entity will likely have an authorised capital of $3bn, a third of which will be raised in a private placement.
The fragmented Islamic finance industry lacks 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 lack of a lender of last resort is seen as one of the nearly $1 trillion industry's greatest weaknesses, as few central banks issue liquidity instruments compliant with Islamic law, forcing Islamic banks to place their liquidity with large conventional banks.
In November, Kamel said he expected the megabank to launch in 2011.