Lender also plans to expand operations in the Middle East, awaits banking licences in Lebanon and Syria
National Bank of Abu Dhabi
(NBAD) will launch a sharia-compliant repo product in
March to encourage secondary market trading and is in talks with
two unnamed counterparties for the same, an official said on
The Abu Dhabi lender expects the Islamic repo market in the
Middle East and North Africa (MENA) region to be worth about $2bn, said Sameh Al Qubaisi, general manager for NBAD's
institutional and corporate coverage group.
"We have finished the documentation for the repo. The legal
side is also done. It will be the first Islamic repo," Qubaisi
told reporters on the sidelines of a conference.
The shortage of sharia-compliant liquidity instruments is
regarded as a major handicap of Islamic banks, as the religion's
ban on interest rules out most interbank money market tools.
Repurchase agreements, also termed repos, allow banks to grant
extra funds to lend or buy assets, thereby boosting liquidity.
Activity in the Islamic bonds market has been muted after
several high-profile defaults in the last two years.
Dubai's state-owned property firm Nakheel repaid a $4.1bn sukuk in 2009 after a $10bn bailout from oil-rich
neighbour Abu Dhabi.
"After the Nakheel issue, the doubts in the sukuk market
have been the talk of the town," Qubaisi said.
Separately, the bank is also in talks to create an Islamic
Real Estate Investment Trust (REIT), he said without providing
The top UAE lender wants to set up an Islamic banking
business in Malaysia after its conventional bank unit starts
operations there in the third-quarter, its chief executive said
earlier in the day.
"We have a conventional licence. If the authorities allow
us, we would like to have ... an Islamic licence," Michael
Tomalin told reporters. He did not give more details.
The lender, largest by market value in the UAE, also plans to expand operations in the Middle East and
is awaiting banking licences in Lebanon and Syria.
NBAD plans to have 50 branches in Egypt by 2014 from 30
branches currently, he said. Its shares rose 1.8 percent on the
Abu Dhabi bourse as at 0700 GMT.For all the latest banking and finance news from the UAE and Gulf countries, follow us on Twitter and Linkedin, like us on Facebook and subscribe to our YouTube page, which is updated daily.