DUBAI (Reuters) - Bahrain-based Al Baraka Banking Group said it is considering issuing subordinated Islamic bonds through its South African and Pakistani units to boost their regulatory capital.
The Islamic bank's plans come at a time when sovereign sukuk are expected from both countries later this year. [ID:nL5N0JA34X] [ID:nL6N0NK1WR]
The lender has operations in 15 countries across the Middle East, Asia and Africa.
Al Baraka is working with the authorities in South Africa and Pakistan over launching Islamic bonds there, said Chief Executive Adnan Ahmed Yousif.
While details have not been finalised, the prospective deals could mirror the $200 million capital-boosting sukuk issued by Al Baraka's Turkish unit last year, Yousif said. That deal enhanced the bank's Tier 2, or supplementary, capital.
"We will try to do it as a subordinated, to raise capital adequacy ratios," he said.
Islamic banks typically obtain their funding from retail deposits and short-term syndicated Islamic loans, but subordinated deals are increasingly being used as Basel III global banking standards are phased-in across the globe.
In Pakistan, for instance, Islamic banks must maintain a minimum paid-up capital of 6 billion rupees ($60.9 million), a requirement that will be raised to 10 billion rupees by the end of 2016.
Unlike most other Islamic banks, Al Baraka has built the bulk of its business outside the Gulf and southeast Asia. In South Africa, it operates the only full-fledged Islamic bank in the country, with seven retail branches.
Its franchise in Tunisia switched this year from an offshore bank license to a full commercial banking permit, with plans to open 25 branches there in the next three years.($1 = 98.4650 Pakistani rupees)
(Reuters Africa / 19 May 2014)
---Alfalah Consulting - Kuala Lumpur: www.alfalahconsulting.com
Islamic Investment Malaysia: www.islamic-invest-malaysia.com
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