First Islamic rating agency being set up

The first Islamic rating agency is being set up by Jeddah-based Islamic Development Bank (IDB), Abu Dhabi Islamic Bank (ADIB) and several other Islamic banks, a top Adib official said.

The International Islamic Rating Agency, to be based in Bahrain, is being set up with an initial paid-up capital of $2 million. Adib's equity share is 5 per cent or $100,000, Abdul Rahman Abdul Malik, CEO of ADIB, said.

"The bank participated as a founding shareholder in the capital of the International Islamic Rating Agency, an organisation that is being established with the Islamic Development Bank and other Islamic banks," he said.

The primary aim of this new rating agency will be to rate companies and establishments according to the tenets of Sharia and determine their financial position and the risks that they may face in the future.

He said more Islamic banks are likely to join as equity partners in this venture.
"IDB and ADIB have taken the initiative and we are now extending to other Islamic banks and some rating agencies to come in," he said.

ADIB also has a 10 per cent equity in Bosnia Bank International, which got off to a soft opening in late March. The other shareholders are IDB, Dubai Islamic Bank and Bank Islam Malaysia Berhad. Banks from Saudi Arabia and Kuwait are likely to join as equity partners.