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Monday, 17 September 2007

Malaysia's Bank Islam, EIIB to jointly sell products in Europe

KUALA LUMPUR, Sept 17 (Reuters) - Bank Islam Malaysia Bhd, Malaysia's oldest Islamic lender, has agreed with European Islamic Investment Bank (EIIB) on Monday to jointly offer sharia-compliant financial products in Europe. To meet strong demand among high net worth private clients in the Middle East, Asia and Europe, EIIB is launching five different funds to raise as much as $600 million. "From now on, as far as possible, Bank Islam and EIIB will jointly originate, structure and distribute a range of innovative Islamic products, in particular in fee-income generating areas such as capital markets, treasury and wealth management," Bank Islam Managing Director Zukri Samat said. "In tandem with our strategy to boost fee-based income to sustain earnings growth in the long run, we are also keen to tap EIIB's expertise and capabilities in corporate finance and advisory services," he said in a statement. Malaysia is a gateway to Asia and offers the infrastructure for Islamic finance, EIIB Managing Director John Weguelin said. "EIIB gains a footprint in Malaysia with access to the infrastructure to originate and distribute in this market and Bank Islam conversely gains the access we can provide to Islamic finance markets in Europe and the Gulf, as well as our structuring and capital markets skills," Weguelin said. Islamic finance caters to devout Muslims by banning interest and generally avoid investments in alcohol, gambling and other activities barred in the Muslim faith. Countries from Bahrain to Malaysia are racing to create Islamic banking hubs to serve the world's 1.2 billion Muslims. Including subsidiaries of conventional banks, there are roughly 270 Islamic banks worldwide, holding assets estimated at roughly $270 million, according to consulting firm McKinsey. Bank Islam said it was not seeking equity from joint venture partner EIIB, but was looking for one or two more joint venture partners in its Middle East expansion plans. "We already have a big foreign shareholder, so we are not thinking of having any new foreign shareholders for the time being. This is more of a strategic collaboration rather than equity participation," Zukri said. Bank Islam, 40 percent owned by Dubai Investment Group, planned to sell around 2 billion ringgit ($573.5 million) in non-performing loans, he added. "Bank Islam faces a legacy of non-performing loans and when I came on board one of the initiatives that I took on was to carve out these non-performing loans. "We've been talking to some parties and we have selected one which is currently doing a due diligence on the books." ($1=3.487 Malaysian Ringgit) - (Reuters, 17 Sep 07)
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