Bahrain bank's Turkish unit closes in on $100m loan

12 August 2010

Bahraini bank raising cash cash for Turkish unit

Albaraka Turk, the Turkish subsidiary of Bahrain’s Al-Baraka Bank, is set to complete a $100m Islamic loan by early September.

The deal is already oversubscribed, with final responses from several banks still outstanding. Sources close to Al-Baraka say the deal may now be increased in size to take up some of the extra cash on offer.

The loan is structured as a murabaha, which involves the lenders buying a commodity and immediately selling it to the borrower. They then agree to be repaid at a fixed price based on the cost of the commodity plus profit. The deal has a tenor of 12 months and pays an all in margin of around 3 per cent. Banks have been invited to fund the loan in either dollars or euros

Bahrain’s Arab Banking Corporation (ABC), the UAE’s Noor Islamic Bank (NIB) and the UK’s Standard Chartered are leading the transaction. One source close to Al-Baraka says, “There has been a lot of commitments from regional banks and also some European ones because they like the short tenor and the good return.”

The proceeds from the deal will be used to fund lending in Turkey.

A MEED Subscription...

Subscribe or upgrade your current package to support your strategic planning with the MENA region’s best source of business information. Proceed to our online shop below to find out more about the features in each package.

Get Notifications