Ithmaar Bank and AUB sign $167million Morabaha deal

Bahrain-based Ithmaar Bank, an Islamic retail and commercial bank, and Ahli United Bank (AUB), a full commercial banking institution signed a $167million five-year secured Morabaha facility. The secured Morabaha facility, Sharia-compliant Islamic finance, is fully underwritten by AUB.

The agreement was signed by Ithmaar Bank Chief Executive and Member of the Board, Mohammed Bucheerei and AUB Group Chief Executive Officer and Managing Director, Adel A. El-Labban, at a ceremony held at the Ithmaar Bank headquarters in Bahrain’s Al-Seef District.

“The transaction marks the return of Ithmaar Bank to the credit markets after its reorganisation and transformation into an Islamic retail-focused bank earlier this year,” Ithmaar Bank in a statement said.

Ithmaar Bank is listed on the Bahrain and Kuwait Stock Exchanges and holds a full Islamic Retail banking license issued by the Central Bank of Bahrain. The Bank has an established leading position in the Islamic banking industry. The Bank’s activities include retail banking, commercial banking, asset management and private banking.

“We are pleased to have engaged in this significant Morabaha financing deal with Ahli United Bank,” said Bucheerei. “It clearly reflects our counterpart’s confidence in Ithmaar Bank’s improving financial position, and our ability to maintain a strong balance sheet and shareholders’ equity which, at the end of the nine month period ended 30 September 2010, stand at $5.5 billion and $796 million respectively. The bank also reported a strong financial performance for the third consecutive quarter this year,” he said.

“We have focused on further diversifying our liquidity base by strengthening our interbank and institutional relationships, and on growing our customer accounts by launching new customer-focused products and services,” said Bucheerei. “This transaction strengthens the longstanding relationship between AUB and Ithmaar Bank and further emphasises AUB’s long-term business commitment in the region,” he said.

“The $167 million facility will be used to improve the maturity matching of assets and liabilities as part of the Bank’s overall liquidity management,” he added.

AUB is a regional banking group based in Bahrain with subsidiary and associate banks in Kuwait, Qatar, Oman, Egypt, Iraq, Libya and the UK The Group provides retail, corporate, private banking and wealth management services, both conventional and Sharia-compliant to its customers.

“We are pleased to have provided this five-year Morabaha facility to Ithmaar Bank,” said El-Labban. “This is in line with our strategy to provide the necessary means of funding for companies and institutions, enabling them to better adjust and respond to the current economic cycle. With its reorganisation as a retail bank, we expect Ithmaar Bank to continue to perform well and generate profits going forward,” he said.

“Corporate banking is one of the main focus areas in AUB,” said El-Labban. “As confidence returns to international markets and governments in the region focus on infrastructure development, we expect opportunities for corporate financing, especially Sharia-compliant corporate financing, to increase,” he said.

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