CBI to raise capital, start Islamic finance company

DUBAI — Commercial Bank International (CBI), a Ras Al Khaimah-based bank, will start an Islamic Finance company and increase its share capital from the current Dh404.7 million to Dh1 billion through a rights issue, said Khamis Mohamed Buharoon, chief executive officer of CBI.

By Babu Das Augustine (Assistant Editor)

  • Follow us on
  • google-news
  • whatsapp
  • telegram

Published: Tue 12 Sep 2006, 9:40 AM

Last updated: Sat 4 Apr 2015, 4:20 PM

The bank had plans to convert itself into a full-fledged Islamic bank. However, earlier this year the annual general meeting of the shareholders rejected the proposal.

“In the context of shareholders rejecting the idea of converting the bank to an Islamic bank, the management has come up with the idea of an Islamic finance company. We are looking for a regional or foreign partner to launch the new venture,” he said.

CBI plans to launch the IFC with an initial capital of $500 million. Out of this 40 per cent will come from the bank while the remaining 60 per cent is expected from one or more strategic partners. The bank has appointed Ernst & Young to look for potential partners from around the world.

In reply to a question, Buharoon said the bank will soon apply for a licence and did not think it will be difficult as several UAE banks have obtained permission to open Islamic finance subsidiaries recently.

As part of its new expansion strategy in the conventional retail banking, the bank has plans to more than double its branch network from the current 8 to 20 in 2007 and increase the number of ATMs to 50. The bank also plans to open competitive Islamic products through its Islamic window.

To fund the upcoming expansion plans, the bank is set to more than double its capital by March 2007. CBI paid a bonus share dividend for 2005 which raised the paid-up capital to Dh408.7 million. The bank is now seeking to raise its capital to Dh1 billion through rights issue in three equal instalments of $271 million each in September, December and March 2007. The first tranche of the rights issue will open on September 17. Each share will be priced at Dh10.

Reflecting its new strategy CBI unveiled its new corporate identity yesterday, “CBI has charted aggressive action plans to revamp its existing business units and introduce new divisions to make banking solutions within everyone’s reach. CBI has a host of innovative ideas in the pipeline, and will soon be introducing customised products to suit today’s evolving customer needs extending towards real estate, Islamic banking and brokerage services,” Buharoon said at the launch.

CBI, which reported more than 200 per cent increase in profits in 2005 has been hit by the stock market slump. “Markets are on a recovery path, we expect to recover some of the losses,” he said.

More news from