Gulf Arab investors plan to set up a US$2bn Islamic bank that would help develop Islamic capital markets.
“This will contribute towards enhancing the economies of Islamic countries and enhance the activities of the primary and secondary market,” says Saleh Kamel, chairman of General Council for Islamic Banks and Financial Institutions.
He says the new bank would capitalise assets of companies and projects through securitisation and innovative Islamic products and play the role of clearing house for Islamic banks.
“The absence of an Islamic capital market is a big obstacle in the face of Islamic banks, because unlike conventional banks, they cannot invest in products not compliant with Islamic regulations,” adds Kamel.
Islamic banks do not pay or charge interest, considered usury by many Muslims. Money is made instead by using a system of profit-sharing from returns on approved investments.
Kamel says Jeddah-based Islamic Development Bank was a leading participant in the planned bank, which is expected to be established in 2005. The bank’s location is yet to be decided.
He does not give details about the other investors.
Kamel claims there are 270 Islamic banks around the world with total assets of more than US$260bn and deposits of more than US$200bn.