Business | Banking
European Islamic bank tries to tap market driven by oil wealth
European Islamic Investment Bank, (EIIB) which offers Sharia-compliant financial products, plans to raise up to $600 million of funds to tap the thriving niche market driven by rising petrodollar wealth.
- rEUTERS
- Published: 00:00 June 16, 2007
London: European Islamic Investment Bank, (EIIB) which offers Sharia-compliant financial products, plans to raise up to $600 million of funds to tap the thriving niche market driven by rising petrodollar wealth.
Industry watchers estimate the total liquid assets of high-net-worth Muslim individuals, with financial assets over $1 million, are worth more than $700 billion, and will grow at roughly 10 per cent a year for the next few years.
However, financial institutions need to make extra efforts to structure products that comply with Sharia, the Islamic legal code that prohibits interest payments, speculation on future risks and investments in sectors such as alcohol or weapons.
To meet the strong demand among high net worth private client needs in the Middle East, Asia and Europe, EIIB is launching five different funds to raise as much as $600 million.
"Middle Eastern investors have been very focused on local real estate markets, local equity markets. Our funds provide geographic diversification," said John Weguelin, managing director of EIIB.
The Alternative Investment Market-listed bank rolled out a pan-European real estate fund in February, and will launch three equity funds and a private equity fund focusing on the health care and medical sector in September.
EIIB is also advising the British government in exploring the Islamic bond market, the sukuk, which took off five years ago.
Including subsidiaries of conventional banks, there are roughly 270 Islamic banks around the world, holding assets estimated at $270 million, according to consulting firm McKinsey.
Countries from Bahrain to Malaysia are racing to create Islamic banking hubs to serve the 1.2 billion Muslims around the world.
HSBC and UBS, for example, have created separate brands, Amanah and Noriba, respectively, for their Islamic offerings. And Maybank in Malaysia and Samba Financial in Saudi Arabia have opened special branches that sell products that comply with Sharia.
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