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Islamic Megabank to Launch in 6-12 Months

A plan to form the world’s largest sharia-compliant lender — which is being promoted by the chairman of Al Baraka Banking Group Sheikh Saleh Abdulla Kamel — has been in the works for some years. Shaikh Saleh said last April the global financial crisis had delayed the project, but that they hoped to launch it by the fourth quarter of 2009.

“The key shareholders I would say are on board and we are looking for an imminent launch, within six months to a year”, Sameer Abdi, head of Islamic finance at Ernst & Young, told the Reuters Islamic Banking and Finance Summit in Bahrain.

Shaikh Saleh said in April the new institution so far had about 10 shareholders, including the Islamic Development Bank, Saudi Investment bank and the Kuwait Real Estate Bank.

Bigger Islamic banks are seen crucial for the industry to realise its growth potential and to compete with Islamic windows or subsidiaries of Western conventional banks that have large market shares in wholesale banking services. Abdi said the bank’s “capital aspirations” were between $3 billion
 and $4 billion.

“It’s progressing very, very quickly, even in such tough market conditions,” Abdi said. Conventional banks, regional as well as international, would likely play a role in the project, but their exact role had yet to be decided.

“Possibly as shareholders, possibly as technical consultants, possibly as operators ... all those options are being explored,” Abdi said. Possible jurisdictions to host the bank include Malaysia and Bahrain, with a third being considered, he said.