Arab Bank says it is setting up an Islamic bank in Jordan, using the licence of a defunct local institution, Amman Bank for Investment. The new bank, which will target the local and international markets, will have a capital of JD 40 million ($56.5 million). It will become the latest bank intended to enter the growing Islamic banking market (MEED 16:5:97)

‘At the request of the central bank to buy the troubled bank…Arab Bank has agreed to buy its licence and set up the Arab Islamic International Bank,’ Arab Bank chairman Abdul-Majid Shoman told Reuters in an interview on 20 May. Bank officials declined to release details of the project to MEED ahead of a forthcoming public announcement.

Amman Bank for Investment was taken over by the Jordanian central bank in March after failing to raise its capital to the required level of JD 20 million ($28.2 million). Shoman said that the central bank will assume all of the former bank’s liabilities, leaving Arab Bank its deposits and assets. The central bank rarely issues new banking licences, so the deal will give Arab Bank the use of a licence for its Islamic banking project.

Arab Bank, one of the largest of the Arab world’s banks, had assets of $20,787 million at the end of 1996. The bank has a network of branches and subsidiaries across the Middle East and is also represented in Europe, the US, Latin America and East Asia.