Currencies

[thepennyking]

New Islamic bank to be proposed
By ERIC S. BORAS, Reporter
A group of investors is planning to set up a medium-sized bank that would cater to the Muslim market in the country.

An industry source said the new Islamic bank, which would be put up through the rehabilitation of an existing thrift bank, would take advantage of the Muslim funds that were fleeing from the United States and Europe.

It also plans to become a major vehicle in channeling foreign aid from Middle East countries to the Philippines particularly to war-torn Mindanao where majority of Muslim Filipinos reside.

"Muslim businessmen were now looking for a place to put their money because the tightened financial examinations in Europe and America after all these bombings had made them uncomfortable with their investments," the source said.

The group of investors had already tapped the services of veteran muslim banker Ebrahim Mama-o, who is offering consultancy services for the Saudi Arabian Embassy in the country with specialization in the Filipino Financial Affairs program.

Mr. Mama-o, together with prospective owners of the new Islamic bank, will present its proposal to the Bangko Sentral ng Pilipinas next week, the source said.

"This new Islamic bank will hit the ground running and ably serve the needs of the country's muslim community as soon as the [central bank] approves its operation," said the source.

The idea for a new Islamic bank emerged after the country's existing muslim bank--Al-Amanah Islamic Bank of the Philippines--failed to reach out to the vast majority of Muslim Filipinos.

Burdened with high nonperforming assets, which limits income and curtails operation, Amanah Bank could not address many of the financial needs of Muslim businessmen, the industry source said.

Under the plan, the new Islamic bank would use muslim concepts such as "No Riba" and "Mudaraba" where the bank would not pay a fixed interest on deposits but rather give out a return based on profits, the source said.

The owners of a leading chain of fine-dining restaurants is said to be interested in investing in the proposed Islamic bank.