Venture eyes paid-up capital of $3bn, is still in discussions with Qatar to obtain licence
A long-touted Islamic megabank has received approval from Bahrain and a preliminary green light from Malaysia to begin operations, an organiser said.
Saudi Arabia's Sheikh Saleh Kamel — who is founder and chairman of Bahrain-based Islamic bank Al Baraka and spearheaded the megabank initiative — said the venture is still in discussions with Qatar to obtain a licence.
The entity will likely have an authorised capital of $3bn, a third of which will be raised in a private placement.
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.
In November, Kamel said he expected the megabank to launch in 2011.
A step in the right direction. this shall increase liquidity, transparency and boost capital market activities.
Its the need of the hour that strong islamic financing institution should be established to target over 1/3 population of the world. The bank should have innovative islamic products which should cater the needs of individual as well commercials. The fees and charges should comparatively be lower than conventional banks so that low income people can get benefits. It should be at par or better in developing products so that society should be less dependent on conventional banking for their needs. The staff appointed for the jobs should be well versed with the concept and the purpose so that they should present real essence of Islam and be example for others to follow. I hope that the bank will be a symbol of islamic financing and quickly be recognised best institution in the banking industry.