Dubai plans to create the world’s largest Islamic bank within five years – spending as much as $1 billion (Dh3.67bn) on individual acquisitions in countries as far apart as Indonesia, Egypt and Britain, Noor Islamic Bank said.
Noor, which is 25 per cent owned by Dubai Group, a unit of Dubai Holding, and 25 per cent by Investment Corporation of Dubai, plans to spend between $500 million and $1bn each time on a “few” acquisitions in Europe, Asia and North Africa, the bank’s Chief Executive Officer Hussain Al Qemzi said on Tuesday.
“We aim to be the largest Islamic bank within five years,” Qemzi said, two days after the lender officially started operations. “Acquisitions will be the main way because there is no time to grow organically,” he said.
The lender may start considering acquisitions by the end of March, with a view to making its first move outside the country before year-end, Qemzi said.
Demand for investments and financial services that comply with Islamic law – which includes a ban on the receipt of interest – is growing among the world’s 1.3 billion Muslims. Islamic lenders controlled assets worth about $750bn at the end of 2006, a figure which may rise above $1 trillion by 2010 as the industry expands, according to US management consultants McKinsey & Co.
Saudi Arabia’s Al Rajhi Ban, the world’s largest Islamic lender, had assets worth $33bn at the end of September.
In its acquisition strategy, “it would be better to do a few of a good size rather than many small ones”, Qemzi said, with Egypt, and North African nations such as Morocco and Algeria at the top of the wish-list. Noor aims to be the world’s biggest Islamic bank by assets and countries of operation, with a focus on the largest Muslim nations such as Turkey, Egypt, Pakistan and Indonesia, Qemzi said.
“We also want to be in mature markets, such as in Europe, were Muslim populations are growing,” Qemzi said, pointing to Britain, France and Germany.
Unlike in conventional banking, where lenders such as Citigroup Inc, and HSBC Holdings Plc dominate, there are no global Islamic banks.
However, due to the increasing popularity of this form of banking, a number of conventional banks have set up Islamic banking arms. HSBC, for instance, offers Shariah-compliant services through its Amanah unit, and Gulf lenders such as Kuwait Finance House and Al Rajhi Bank have expanded into countries such as Malaysia, where Muslims form a majority.
Noor, which plans to double its branches in the UAE to at least 20 by the end of next year, aims to mirror HSBC’s global brand in the Islamic field, Qemzi said. “We were built to be global,” Qemzi said. Dubai has benefited from the oil revenue windfall to the Gulf, the world’s biggest oil-exporting region.
In 2006, it bought British port operator P&O for $6.8bn, creating the world’s fourth-largest container port handler.
Last year, it offered $5bn to buy Nordic and Baltic stock exchange company OMX AG, for which it is seeking regulatory approval. Dubai plans to build two of the world’s 10 largest financial institutions by 2015. It has already bought stakes in Standard Chartered Plc, HSBC and Deutsche Bank AG for about $4bn. (Reuters)
Noor to be world’s biggest Islamic bank in five years