New $10 billion Islamic bank planned for Bahrain: Market Watch

By Tahani Karrar

Of ZAWYA DOW JONES

DUBAI (Zawya Dow Jones) -- Persian Gulf investors plan to launch a new $10 billion Islamic bank by year-end in Bahrain, Adnan Ahmed Yousif, Chairman of Union of Arab Banks said Sunday.

The institution will be called "Istikhlaf Bank" and its shares will be listed on the Bahrain Stock Exchange and Nasdaq Dubai via an initial public offering, he said.

"We call it the godfather of Islamic banks," Yousif told reporters on the sidelines of a banking conference in Dubai, United Arab Emirates.

The creation of the new bank comes amid a severe downturn in Islamic banking in the region. Global issuance of Islamic bonds, or sukuks, tumbled 37% in the first quarter of the year to $1.8 billion, according to the latest data compiled by the Zawya Sukuk Monitor.

It may also struggle to compete with larger more established rivals such as Saudi Arabia's Al Rajhi

the Middle East's largest-traded Islamic bank with a market value of $25.2 billion, according to Zawya.com.

Still, Islamic banks, which comply with Sharia laws that prohibit the charging of interest, are on the rise in the Middle East where conventional banking practices are being held partly responsible for the global economic downturn.

The bank "will be established with a $10 billion capital and right now we are at a stage of forming the shareholders, there will be a private placement of $6.5 billion and we plan a $3.5 billion initial public offering for the bank," he added.

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