Qatar Islamic to list foreign subsidiaries

05 September 2008
Bank to float firms on local exchanges as part of plans to develop international Islamic banking hubs.

Qatar Islamic Bank (QIB) is planning to list its growing network of international subsidiaries on their local stock exchanges, as part of a strategy to encourage the development of Islamic banking hubs around the world.

Salah Jaidah, chief executive officer of QIB, says he wants to list each of the bank’s existing foreign subsidiaries in London and Malaysia, as well as planned ventures in North Africa, France and Germany.

The move is a bid to raise the profile of the foreign subsidiaries in their respective markets, and position them as significant local institutions rather than simply foreign-owned banks.

“We are eager to continue to grow our subsidiaries within their markets so they become a key player within those markets,” says Jaidah. “Hopefully, we will go all the way to listing them on their local exchanges.”

The bank’s strategy is to create a “global Islamic banking network” by establishing a series of Islamic banking hubs worldwide, he says.

By listing the subsidiaries in their local markets, Jaidah also hopes to foster their development as independent institutions so that they do not have to rely on decisions being made in a distant head office. “We believe in the separation of these subsidiaries,” he adds.

The timescale for listing the banks is not yet clear and will depend on when the banks reach an appropriate scale.

QIB’s most developed institutions are London-based European Finance House, Malaysia’s Asia Finance Bank, and Arab Finance House in Lebanon.

Once the subsidiaries have successfully listed on the markets, the QIB headquarters in Doha will provide back-office support.

QIB is planning to expand its network in the near future. It has made licence applications in Turkey and is exploring North Africa for suitable markets. Once established, each new foreign venture will in turn be used as a platform for licence applications in neighbouring markets.

Although QIB would like to enter the US market, it says the current regulatory regime makes it uncompetitive for Islamic banks to establish themselves in the country.

Jaidah adds that the London operation, European Finance House, is also exploring tie-ups with retail banks in the UK, to provide Islamic banking services.

“We have talked with leaders in the retail banking sector [in the UK] about verifying an opportunity to become the back-office sharia compliance department, and work on the origination and assist in the distribution of Islamic products,” he says.

However, these negotiations are still at an early stage and Jaidah says it is not yet clear whether such deals will be viable.

QIB’s London operation, which received its licence to operate earlier this year, is already pro-viding corporate banking, private banking and asset management services.

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