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Monday, 19 November 2007

Dubai’s Noor buying EU, Asian banks from 2008

DUBAI (RTRS): Noor Islamic Bank, set up by Dubai’s government, plans to buy lenders in Europe and Asia from next year to tap demand among Muslims for financial services that comply with their beliefs, its chief executive said. Dubai created Noor last year with a capital of 4 billion dirhams ($1.1 billion) and says the bank could be part of its plan to create two of the world’s 10 largest financial institutions by 2015. The government owns half its stock. The fifth Islamic bank in the United Arab Emirates starts operations on Jan 2 with 10 branches, Chief Executive Officer Hussain al-Qemzi told Reuters on Sunday.

“We aim to be global in nature,” he said. “We will be on the look out for mergers and acquisitions overseas.” Noor intends to make its first acquisitions next year, he said, declining to say how much he was looking to spend. “We will be opportunistic in our approach, looking to expand quickly.” Noor’s initial investments will come from its capital and the bank could sell shares to the public in three years, Qemzi said. Acquisition targets could be either Islamic banks or conventional lenders, which would be converted into operations that comply with sharia, or Islamic law, he said. Sharia bans lending on interest and investments in prohibited industries such as alcohol, gambling and pork. Islamic banks give depositors a share of profits. With demand for such services growing among the world’s 1.2 billion Muslims, assets managed by Islamic financial institutions were worth $800 billion by the end of 2006, according to the Islamic Development Bank.

In the United Arab Emirates and its oil-exporting Gulf neighbours, the growth of Islamic banking has been driven by a five-fold increase in crude prices since 2002. Noor could consider expansion into Kuwait and Saudi Arabia, although growing competition made regional markets less attractive, Qemzi said. “There are limited opportunities in the Gulf,” he said. Other Gulf banks are expanding abroad as competition from overseas lenders intensifies. Dubai’s government combined two of its banks to create Emirates NBD, the Gulf’s largest bank by assets, to help it compete with foreign rivals.

Noor would target foreign markets including western Europe, eastern Europe and southeast Asia, Qemzi said. Saudi Arabia’s Al-Rajhi Bank, the world’s largest sharia-compliant lender by market value, has operations in the Asian Islamic finance hub of Malaysia, while Kuwait Finance House, the Gulf’s second-largest Islamic bank, is in talks to buy branches from a bank there. Other Gulf Islamic banks are looking to cater to the more than 12 million Muslims living in western Europe. Qatar Islamic Bank and Investment Dar, the Kuwaiti investor that bought into sports car maker Aston Martin, have said they want operations in Britain, which plans to turn London into global centre for Islamic finance. Dubai’s government has similar ambitions for its Dubai International Financial Centre (DIFC), a self-regulating zone set up to capture the financial services business in the world’s biggest oil-exporting region.

Dubai, which has bought into Deutsche Bank AG and HSBC Holding Plc this year, intends to build two of the world’s 10 largest financial institutions by 2015, DIFC Governor Omar bin Sulaiman said in March. Noor could be part of that plan, said Sulaiman, who leads the financial services strategy of the emirate, which has turned state-owned companies into the world’s eighth largest airline, Emirates, and fourth largest container port business, DP World. - (AT, 19 Nov 07)

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