Bahrain's Baraka to buy Indonesian bank in 2011

Bahraini Islamic lender Al Baraka

plans to buy an Indonesian bank this year for around

$100m and has identified up to four possible options, its

chief executive said on Tuesday.

"We sent in early February a delegation...to follow up on

our expansion plans in Indonesia. I think the Indonesian market

is a good market," Adnan Yousif said.

"We want to buy a bank. We have looked into several options

and now we have three or four banks that we are eyeing, from

which we will buy one bank."

"It is a classical bank and we will turn it into an Islamic

bank. Our budget for that is around $100m...it will be

[finalised] in the third quarter of this year," Yousif said.

Indonesia is becoming an increasingly attractive market for

Islamic finance since the government took steps to change laws

to accommodate the nearly $1 trillion industry.

Baraka bank has shown great interest in the Asian market

including Malaysia and Pakistan, where it merged its Pakistan

unit with Emirates Global Islamic Bank last year.

Yousif said his bank was also looking at expanding in Saudi

Arabia and signed an agreement to acquire 60 percent of a Saudi

investment company. He refused to name the company.

"We have signed a deal to acquire 60 percent of a listed

Saudi firm, it is an investment Saudi firm."

"Now we are waiting for the Saudi authorities to finalise

the procedures. We have got the initial approval from Bahraini

and Saudi authorities," he said.

"We expect to get [final approval] within a month. The

acquisition is around $30 million to $40 million. We took it

because we want to expand.. in offering Islamic investment

services."

Yousif said that the bank's Turkish unit is going to issue

Sukuk of $300m in May while Egypt's unit will issue sukuk

of $150m at the end of the year.

"We are doing this to increase our budget, this is

considered customer deposits but a long term deposit," he said.

Albaraka Turk Participation Bank is the largest unit of Al

Baraka and the first bank in Turkey to operate on Islamic

principles.

Yousif also said the bank has postponed a planned $200m to $500m sukuk to the third quarter of the year.

The sale was initially planned for Q1 this year.

Political conflicts and anti-government protests have

rattled financial markets in the Middle East, prompting some

banks and investors to delay corporate activity and fund-raising

plans.

Rating agencies have downgraded Bahrain and several banks,

while retail lender Bahrain Islamic Bank postponed a

planned $143m rights issue.

Bankers also expect a planned $1bn Bahrain sovereign

bond issue to be delayed as the Gulf Arab kingdom grapples with

anti-government protests.