Reuters/Dubai/Jeddah
Adnan: ... no dates have been finalised to launch the entity
A long-touted $3bn Islamic megabank is more likely to be established in Bahrain although a final decision has not yet been made, the chief executive of Al Baraka Bank, who also serves as an advisor for the project, said yesterday.
Adnan Ahmed Yousif said discussions are still on about whether the bank will be domiciled in Bahrain or Qatar and no dates have been finalised to launch the entity.
“While the location of the bank is still under discussion, in all probability it will be based in Bahrain,” Yousif said in an email to Reuters yesterday.
The proposed entity will be named Istikhlaf Bank and will be incorporated with an authorised capital of $10bn and paid up capital of $3bn, Yousif said.
His remarks came after a Bahraini newspaper report last week that said the Islamic megabank will be set up in Manama.
The report said the announcement would be made formally during the Organisation of Islamic Conference meeting to be held in Qatar in December and the bank would be launched in January.
Bahrain, where the US Fifth Fleet is also based, was rocked by mass pro-democracy protests earlier this year, forcing the government to declare martial law. That was lifted at the start of June.
“It’s all speculation,” said a second source close to the project. “There is no firm date yet however work is in progress on deciding the location and management of the bank.”
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 $1tn 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.