Abu Dhabi Commercial Bank to finance Dubai freezone

24 August 2009

Institution set to provide Islamic loan to Dubai Silicon Oasis

Abu Dhabi Commercial Bank (ADCB) will provide a AED300m ($81.7m) Islamic loan to Dubai Silicon Oasis Authority to build a freezone on the outskirts of Dubai for companies in the technology sector.

The bank has structured the facility as a Mudarabah loan through its Islamic finance division ADCB Meethaq.

In a Mudarabah loan, the bank lends money to a third party for investment in a commercial enterprise.

The money is repaid with the addition of pre-determined profits from the enterprise.

In July, the commercial bank reported a 5 per cent fall in profits during the second quarter, largely because it wrote down AED613m for future loan defaults, bringing total writedowns for the first half of 2009 to AED890m.

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