Huge mandate for planned new Islamic bank
Written by Reuters, Tuesday, 10 April 2012
The Islamic Development Bank (IDB), a Jeddah-based multilateral institution, signed a memorandum of understanding with the Qatari government and Saudi Arabia's Dallah Albaraka Group on Tuesday to launch an Islamic bank based in Doha.
The bank will aim to facilitate Islamic interbank trade, develop liquidity-management solutions and launch an Islamic securities market, IDB president Ahmad Mohamed Ali said in a statement, Reuters reports.
It will address "the dearth of senior financiers" and "the absence of market liquidity between Islamic banks", he said without giving a timeline for the bank's launch. The bank would also become involved in infrastructure projects and standardising Islamic financial products.
The bank's ambitions address some of the main weaknesses of the Islamic finance industry. Liquidity is a major issue.
Last month, for example, the Bahrain-based International Islamic Financial Market and the International Swaps and Derivatives Association launched a contract template for Islamic profit rate swaps, to help Islamic financial institutions better hedge risk. But banks will find it hard to use the swaps without a liquid market; by becoming a major player in swaps, the new bank could accelerate growth of the market.
But the breadth of the bank's mandate means it may struggle, initially at least, to focus effectively on a single area. Interbank trading, infrastructure financing, product design and standard-setting are different skills which the bank will need to build from scratch - possibly setting off a bidding war for some of the top Islamic finance talent in the Gulf.
It is unclear if the bank's resources will be sufficient for the tasks. The three founders said the bank would have $1 billion of capital - not a massive amount for a bank - and that they had agreed to provide $500 million of that amount. They did not specify where the rest of the capital would be obtained.
There has been market talk in the past that institutions might be set up elsewhere to help develop the Islamic finance industry, for example in Bahrain. One such plan which has come to fruition is the Malaysia-based International Islamic Liquidity Management Corp, established in November to issue short-term instruments compliant with Islamic law. Its mandate is narrower than that of the IDB's proposed bank.
US-Africa Summit 2014: Africa on the agenda or too little too late?
by Paramount Group, 20 August 2014
A revitalised viewpoint on Africa, and its challenges and opportunities for investors, should take centre stage at US-Africa Summit 2014, says Paramount Group.
Airbus Defence and Space improves air surveillance capabilities of Indonesian Air Force
by AIRBUS Defence & Space, 19 August 2014
The company has provided the Indonesian Air Force with the latest aircraft identification and air surveillance equipment.
Sustained revenue growth, strong order book drive Denel's new growth era
by Denel Corporate, 18 August 2014
The company's financial results show revenue growth of 17%, improved profit and the largest multi-year order book in its history.
Atlantis Aviation offers air-land integration, close air support, airborne ISTAR training to Africa
by Atlantis Corporation, 14 August 2014
Close Air Solutions is a single source for international training services in all aspects of close air support.
Reutech Group to exhibit at Africa Aerospace 2014
by Reutech, 14 August 2014
Products on display at the show will include Reutech's new Tactical Communications network suite and the Ngada border surveillance radar.
Nautic Africa celebrates ISO milestone
by Nautic Africa, 14 August 2014
The South African maritime company has successfully been recommended for ISO 9001:2008 certification after its first attempt.