ABN Amro is planning to open an Islamic banking department as part of its Bahrain offshore banking unit by early 1996. The new department will become the centre for all ABN Amro's Islamic banking activities, which will be offered through its network of offices throughout the Islamic world.

The new department aims to develop a range of services to offer its clients including correspondent banking, Islamic products and structured Islamic financing deals. The bank is now moving ahead with recruitment. The bank has been involved in Islamic transactions in the past, but the move to set up a full department will offer customers a more structured service, says Shahid Mohammed, vice-president of ABN Amro in Bahrain. 'Now we will approach the market in a more systematic fashion,' he says.

Tom van de Ham, country manager in Bahrain, says the decision reflects a long-term commitment to the region. 'The bank has a long-term presence in the Middle East region and in most other Islamic countries. Therefore this move is a logical one for us as we have deal sourcing capability in these countries as well as a client base which is becoming increasingly interested in this mode of investment.' he says. 'We will be a serious player in this market.'

ABN Amro has branches throughout the Islamic world, including Indonesia, Malaysia, Pakistan, UAE, Lebanon, Turkey and Morocco, and the Central Asian republics. The bank also has a 40 per cent stake in the Riyadh-based Saudi Hollandi Bank, which already offers its own range of Islamic products.