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Sunday, 25 November 2007

Asian Finance Bank targets Indonesia

KUALA LUMPUR: Asian Finance Bank should next week get the licence to set up a representative office in Jakarta, in a first step to setting up a fully fledged bank there in 2009 or 2010, a top executive at the Kuala Lumpur-based bank said. “We see Indonesia with its big Muslim population as a big market for us,” chief executive officer Faisal Alshowaikh told Dow Jones Newswires in an interview on Friday. The operation in Indonesia will initially target government and quasi-government projects. Then it will look to work with selected corporates and only later on, retail customers. “We believe there are going to be a lot of projects: infrastructure, agriculture ... that will come on stream in the next five years and we want to get ahead of the curve,” he said. Asian Finance Bank – a joint venture between Qatar Islamic Bank, RUSD Investment Bank of Saudi Arabia and Kuwait-based Global Investment House – officially opened for business in Malaysia in March and is concentrating primarily on corporate rather than retail Islamic banking. It is one of only three foreign Islamic banks in Malaysia. The bank had hoped to break even in the current financial year ending December 31 but may now not do so because some transactions that it had expected to emerge this year may be delayed until 2008. “There are a lot of transactions in the pipeline, we might still do it (break even),” Alshowaikh said. “We are looking at a positive return in 2008.” In the nine months to end-September, the bank made a pre-tax loss of 2.7mn ringgits. Asian Finance Bank aims to set up representative offices in Brunei and Singapore too. It is also looking at doing business in China, which is a focal point for Middle Eastern investors. China also needs funds to finance numerous infrastructure projects, he said. Among new products in the pipeline are several funds. The bank is looking to launch a 1bn ringgits Islamic shipping fund by the end of the year, the first such fund in southeast Asia. It has already identified 700mn ringgits in vessels that it will buy next month and in early 2008. The fund is based 30% on equity and 70% on debt. Asian Finance Bank and its fund partner, Malaysia’s AmanahRaya Investment Bank Ltd, will take half of the equity stake with the other half coming from Gulf and Malaysia-based investors. Asian Finance Bank is also talking to three banks, Singapore’s Islamic Bank of Asia and two Malaysian Islamic banks, to take up some of the debt portion of the fund. The bank is also working with AmanahRaya on a 1bn ringgits so-called “green fund” that will focus on environmentally friendly assets, also the first in the Islamic finance world. “We are going to set this fund up in the second quarter of 2008,” Alshowaikh said. Asian Finance Bank will open a new branch in Johor Bahru, in southern Malaysia, in March next year and two more elsewhere in the country in 2008 - bringing its branch number to four. – Dow Jones Newswires

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