The Central Bank of the UAE has approved plans by Commercial Bank International (CBI) to establish an Islamic subsidiary. The decision follows the rejection by shareholders of plans for the bank to convert to an entirely sharia-compliant institution.The subsidiary, set to be called Al-Dawlee International Bank, will be capitalised at AED 400 million ($109 million). CBI is taking a 40 per cent share while talks are under way with potential strategic partners including Islamic banks from Malaysia, Qatar and Saudi Arabia and an investment company from Bahrain each to invest 5 per cent. ‘Our shareholders felt that with five Islamic banks in the federation, the competition would be too tough,’ says CBI chief executive officer Khamis Buharoon. ‘So instead we will build up the Islamic arm’s customer base first and then within four years decide either to wholly convert or if the central bank is granting new licences create an entirely new Islamic bank out of the subsidiary.’ CBI raised its capital to AED 476 million ($129.7 million) from AED 298 million ($81.2 million) in May, and a further increase in capital to AED 1,000 million ($272.5 million) was approved in September. The bank has also created a wholly-owned real estate subsidiary and is in the final stages of establishing a AED 400 million ($109 million) investment company to undertake asset management across the Middle East and North Africa: CBI will take a 25 per cent share in the company; Naeem Holding which focuses on investment in Egypt and Saudi Arabia will hold 49 per cent; and Emirates Holdings will take 20 per cent.