The remaining capital will be subscribed by local sovereign wealth funds and other financial institutions and investors, said Adnan Youssef, chairman of the Beirut-based Union of Arab Banks (UAB).
Youssef, also CEO of the Manama-based Al Baraka Banking Group, had first said the bank would have a capital of $10 billion and would be a joint venture between regional Islamic banks and other investors.
“This bank will have a paid up capital of $one billion, of which $600 million will be subscribed by Islamic banks in the region and the rest by other financial institutions, including SWFs,” he told the UAB’s magazine.
“In order for us to enter the market with this project, we must first get the $600 subscription, which we expect before the end of 2012..…the remaining shares will also be floated before the end of the year.”
Demand for Islamic banking soared after the 2008 crisis and default problems and this has prompted several banks to set up Shariah-compliant units. Some banks have expanded existing units while others plan to launch such services.
Islam bans interest, investing in prohibited sectors and stipulates that risk and reward be shared among all those in the business venture.
Saudi Arabian businessman Sheikh Saleh Kamel, who owns Al Baraka, is behind the plan to create a giant Islamic bank to be owned by many Shariah-compliant.
Saudi Arabia’s Al-Rajhi group was the world’s largest Islamic bank at the end of 2010, controlled $49.2 billion in assets, nearly a fifth of the combined assets of the Arab region’s Islamic banks, according to UAB.
The Kuwait Finance House (KFH) came second by assets, which stood at $43.7 billion at the end of 2010 compared with $39 billion at the end of 2009.
Dubai Islamic Bank (DIB) was ranked third, with assets of about $24.5 billion, followed by Abu Dhabi Islamic Bank (ADIB), with around $20.5 billion.
Al-Baraka Group came fifth, with nearly $15.8 billion while Qatar Islamic Bank (QIB) controlled the sixth largest assets of $14.2 billion.
The report showed Al-Rajhi also had the largest capital of around $8.08 billion at the end of 2010. KFH came second with around $4.3 billion, followed by DIB with nearly $2.6 billion, QIB with $2.5 billion and ADIB with $2.2 billion.
Source : emirates247.com