Arab Banking Corporation (ABC) aims to invite Islamic financial institutions to become shareholders in its new Islamic banking subsidiary, which is due to start operations this year.
‘The idea is to try to get some institutional investors on board – if possible, Islamic institutions,’ said Abdel-Hak Elkafsi, executive director of ABC Investment Services Company.
‘We expect to start operations this year.’ The new bank, which will have paid up capital of $35 million and authorised capital of $100 million, will be a separate legal entity from ABC. One of its main tasks will be to extend the work of two existing ABC vehicles that offer short-term liquidity instruments to Islamic banks, which cannot borrow on the conventional interbank market where interest is paid (MEED 15:12:95).
The two vehicles, ABC Islamic Fund and ABC Clearing Company, will be taken over by the new Bahrain-registered bank.
At least two international institutions have announced plans to set up Islamic banking subsidiaries in Bahrain. One is Citibank, which has yet to announce details of its plans (MEED 15:12:95). ABN AMRO also intends to set up an Islamic banking department as part of its offshore banking unit (MEED 24:11:95). ‘No target date has been set. We are still at the recruiting stage,’ a bank official said.