Saudi Arabia quits IILM Islamic finance corporation

Saudi Arabia has left the International Islamic Liquidity Management Corp (IILM), which is preparing to launch its first long-delayed sukuk or Islamic bonds since its inception in 2010, the IILM said late on Wednesday.

IILM did not give a reason for Saudi Arabia's exit. The central banks of Qatar and Malaysia bought out Saudi Arabia's share.

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Issuance of the first sukuk has been delayed twice, as IILM faced a major challenge to ensure compliance with laws in all of the 12 member countries situated across Asia and the Middle East. The likely value of the sukuk is between $300 million and to $500 million.

Malaysia's central bank governor said in late March the IILM was in the "final stages" issuing its first sukuk, and was identifying the underlying assets for the issue..

Kuala Lumpur-headquartered IILM, which was formed to issue short-term sukuk to help sharia-compliant banks manage liquidity, will now consist of 10 members after the Saudi Arabian Monetary Agency "relinquished its shareholding", the IILM said in a statement.

IILM members include monetary authorities in Indonesia, Iran, Kuwait, Luxembourg, Malaysia, Mauritius, Nigeria, Qatar, Sudan, Turkey and the United Arab Emirates as well as the Islamic Development Bank and the Islamic Corporation for the Development of the Private Sector.

Sukuk are Islamic bonds issued under sharia or Islamic law, and the charging of interest is prohibited.