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Friday, 13 July 2007

Albaraka planning to launch 74 branches in global expansion plan

MANAMA: Bahrain's Albaraka Banking Group plans to open 74 branches over the next five years, all but two of them abroad as it seeks to stay ahead of rivals in tapping the growing global appeal of Islamic banking. Albaraka says its network of around 230 branches in 10 countries has already given it the widest international reach of any Islamic bank. Other lenders are scrambling for a foothold in those markets to meet growing demand among the world's 1.2 billion Muslims for investments, chief executive Adnan Yousif said. "We have to expand in the markets that we operate in, because we believe we are in the right places," he said. "Most Middle Eastern banks and even foreign banks want to go there." Albaraka currently has operations in seven Arab countries, Turkey, Pakistan and South Africa. It also has licences to open branches in Syria and Indonesia. Sharia-compliant assets under management are estimated to be worth $800b, according to the Islamic Development bank. The 74 planned branches include seven over two years in Syria, where Albaraka said it plans to raise $100m for its subsidiary in an initial public offering in November or December. It will more than triple the number of branches in Pakistan to 35 and increase units from seven to up to 15 in South Africa, the continent's largest economy and home to 600,000 Muslims. Albaraka had held off on plans to expand in South Africa, although other lenders starting businesses that complied with Islamic law had indicated the market was ready for growth, Yousif said. Albaraka's biggest network is in Turkey, where it will add 17 branches to its 83 by 2012, Yousif said. Albaraka's Turkish subsidiary sold a 20.57pc stake to the public last month. Alabaraka has found branch expansion to be more cost-effective than acquisitions, the path chosen by Gulf rivals such as Kuwait Finance House and Abu Dhabi Islamic Bank to enter market such as Malaysia and Egypt. "We don't mind (expanding via) acquisition, but acquisition is now very expensive ... If you acquire a bank that is not an Islamic bank, it takes time to change the whole set-up, so we prefer to start greenfield," Yousif said. Albaraka is looking to expand in Asia after winning an Indonesian licence and is eyeing Malaysia, the region's Islamic banking hub, as well as China and India, Yousif said. Albaraka will enter one of those markets next year, although the move depends upon the progress made in bedding down the Indonesian and Syrian operations, he said. "I think that Malaysia is closer to Islamic banking, but I prefer India, because it has not been touched by an Islamic institution," Yousif said.

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