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 on Tuesday.
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 Tuesday.
The proposed entity will be named Istikhlaf Bank and will be
incorporated with an authorized 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 $1 trillion 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
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