AlBaraka Emaar Bank IPO AED370bn

[sharewadi]

Al Baraka (BARKA) and other banks plan to set up a mega-Islamic bank - Emaar Islamic Bank, with an eventual IPO worth a staggering AED 370 billion ($100 billion). Reportedly. Now that puts the recent EBI-NBD AED 160 billion merger into a different perspective ...

... and that number for Emirates Bank (EBI) and National Bank of Dubai (NBD) is the Assets, not the Capital. Assets on the Balance Sheet for a bank include customer deposits which are usually way in excess of total Shareholders' Capital. I wonder if I've misunderstood something here, the Al Baraka proposal seems to be an astonishingly large number .

Remember the ICBC bank IPO in China last year - the largest in the world at the time? That was "only" $19 billion - we're talking 5 times that number here. Admittedly not right away, there are three tranches expected in the next seven years - $1 bn, $10 bn, and finally $100 bn.

It doesn't sound like this has any relationship to Emaar Properties (EMAAR) in Dubai. You'd wonder with the name of the new bank though. 'Emaar' is Arabic for 'construction' or something similar, which makes less sense when applied to a bank. Emaar was one of the founding shareholders for Al Salam Bank, another Bahrain based bank, but I'm not aware of any relationship between Emaar in Dubai and Al Baraka Banking Group - ABG (or Albaraka as it's sometimes written).

Reuters 29 March 2007:

Green light for $100b Islamic mega bank Manama: Islamic finance institutions plan to set up an Islamic bank in Bahrain within months with a capital set to rise to $100 billion within seven years, an institution official said. Shaikh Saleh Kamel, head of the General Council for Islamic Banks and Financial Institutions, told reporters that a large Islamic bank was needed to increase liquidity in the sector and improve compliance with Islamic rules. "It is a time for mega-Islamic banks ... we will establish a bank in Bahrain with different kinds of shares," Kamel told a news conference. The Islamic finance industry has an estimated $300-$400 billion in assets, but lacks well-capitalised banks. About a quarter of the roughly 300 Islamic lenders worldwide are reported to have less than $25 million in paid-up capital. "There is a need for this mega-bank to make the tools to increase liquidity in Islamic banks, and move the banking system more towards sharia (Islamic law) goals," he added. Islamic finance complies with Islamic law. A ban on charging interest and investing in prohibited businesses such as trading in alcohol, pork, arms, pornography or gambling, are among features distinguishing it from traditional banking. The bank, named Emaar, will have an initial capital of $1 billion provided by financial institutions. Albaraka Banking Group (BARKA), which Kamel also chairs, will be one of the founding investors. Al Baraka Chief Executive Adnan Yousuf said Emaar would be founded in Bahrain within two months. Shares in the bank will then be offered in two tranches, the first taking the bank's capital to $10 billion, and the second to $100 billion, in a process that will take five to seven years, Kamel said without giving further details. The other Islamic financial institution involved in setting up Emaar is the Islamic Chamber of Commerce and Industry, said Ezzedine Khoja, secretary general of the General Council. Khoja said a timeline for the second and third tranches of investment had not yet been decided, or the how investments will be solicited.

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[sharewadi]

I assume this is the same deal as mentioned in previous news from a month ago. But now it's possibly in Saudi instead of Bahrain? And the spelling of the name has changed to Eamar instead of Emaar. And there's no mention of Al Baraka. But surely there can't be two banks of this size in the pipeline ?

[edit] This may have become the Ummar Bank IPO (June 2008) [/edit]

Arab News 01 May 2007:

New Islamic Bank Eyes $100 Billion Investment - KSA JEDDAH, 1 May 2007 The proposed international Islamic investment bank, which will be established with the support of Islamic banks and businessmen, will have investments worth $100 billion, said Saleh Kamel, a prominent Saudi businessman and president of the Islamic Chamber of Commerce & Industry (ICCI). "The new bank, named Eamar International Bank, will operate in an Islamic way and its main mission will be investment, not financing," Kamel told Asharq Al-Awsat, a sister publication of Arab News. Eamar Bank will start operations early next year. Negotiations have been under way with a number of countries on hosting the bank's headquarters. "It may be based either in Saudi Arabia or the UAE or Bahrain or Malaysia," Kamel said. He hoped that establishment procedures would be completed this year. He also spoke about ICCI's plan to establish a company with a capital of $200 million to explore investment opportunities in the 57-member Organization of the Islamic Conference. "This company is only for exploring investment opportunities. It will not own any investment projects," he said, adding that it would serve as a supplementary wing of the bank. Eamar Bank will begin operations with a capital of $1 billion and an investment of $10 billion. "We'll invest in all projects. Our main criteria will be how many jobs it will create, what will be its product and whether it will increase exports of a member country. Islamic countries must support one another, not compete with each other. This is our main concept. We will also encourage research, technology and innovations in addition to investments in traditional areas of industry, agriculture and trade," he pointed out. Referring to the Makkah visa, Kamel said its name has been changed to visa for businessmen in the OIC countries. "Twenty OIC countries have approved this multiple-entry visa, which will be valid for five years. We are now in the process of signing agreements with the member countries," he said. Kamel said the first agreement on the new visa system would be signed with Saudi Arabia. "Custodian of the Two Holy Mosques King Abdullah has already given his instructions to the interior and foreign ministries and the Saudi Arabian General Investment Authority (SAGIA) in this respect," he added. He said the new visa system would facilitate travel of Muslim businessmen in OIC countries and expand trade exchange and promote investment. Trade between OIC members is only 13 percent of their total trade. Other projects proposed by the ICCI include the establishment of an international commission for the collection and distribution of Zakah. ICCI is also contemplating an investment company for OIC businessmen, an association of Muslim businessmen, a media company, free trade zones between Muslim countries and establishment of manpower recruitment and training companies.

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