Citibank will launch a new Islamic banking subsidiary in Bahrain in July, capitalised at $20 million. The new bank, which received formal approval from the Bahrain Monetary Agency last month, will be called Citi Islamic Investment Bank.

'We believe this new venture represents the first Islamic bank to be launched on a standalone basis by a major international bank,' Citibank's vice-chairman William Rhodes said in a statement. The new bank will be wholly owned by Citicorp Banking Corporation and its board chairman will be Citibank's Gulf and Levant regional director Mohammed Al-Shroogi. Its managing director will be Shafqat Ali Memon.

'Citibank has been providing Islamic banking services.. .since the 1980s through its offices in Bahrain and London,'the statement said. 'With the creation of the Islamic bank, it will now formalise the range of products and services available and continue to tailor them to the specific needs of customers.' The bank will seek new customers in the Muslim world and 'anywhere else where a market exists.' Citibank has branches in 98 countries worldwide.

Citibank's move reflects a growing interest among international institutions in setting up regional subsidiaries to take advantage of growing volumes of business in the Islamic banking sector. Two other international banks also plan to set up Gulf-based Islamic banking subsidiaries - Arab Banking Corporation (ABC) and ABN-AMRO. Of the two, ABC's plans appear to be more advanced with a launch expected this year (MEED 5:4:96).