Southeast Asia's biggest lender DBS Bank and 22 prominent investors from the Middle East Gulf region on Monday launched Singapore's first Islamic bank. The Islamic Bank of Asia (IB Asia) will have an initial paid up capital of 418 million US dollars, with DBS contributing 60 percent of the amount, the lender said in a statement.
Investors plan to raise the new Islamic bank's paid up capital in the next few weeks to 500 million dollars, with DBS, which is also Singapore's biggest bank by assets, continuing to hold a majority stake.
Islamic banking, which fuses principles of Shariah or Islamic law and modern banking, is a global business worth about 400 billion dollars annually and growing, said DBS chief executive Jackson Tai.
Islamic funds are banned from investing in companies associated with tobacco, alcohol or gambling considered taboo by Muslims. "IB Asia will focus on commercial banking, corporate finance, capital market and private banking," the DBS statement said.
It described DBS' partners as coming from "prominent families and industrial groups from Gulf Cooperation Council (GCC) countries." The GCC comprises the oil-rich nations of Saudi Arabia, Bahrain, Kuwait, Oman, Qatar, and the United Arab Emirates. The new bank, a subsidiary of DBS, will have a nine-member board of directors, chaired by Abdulla Hasan Saif, the advisor for economic affairs to Bahrain's prime minister.
Vince Cook, 45, a veteran British banker with more than 20 years experience in the Middle East, has been named chief executive. Tai of DBS said IB Asia will develop and distribute Shariah-compliant financial instruments for corporate and private banking clients in the Middle East and Asia. He noted that there is an increasing interest in the Middle East among global firms, including many from Asia, resulting in 20 billion dollars in foreign direct investments in Gulf countries in 2005, up 60 percent over 2004.