Several UAE-based Islamic banks are already implanted in the Northern Emirates. Sector leaders such as Emirates Islamic Bank (formerly known as Middle East Bank until it became sharia-compliant in 2004), Dubai Islamic Bank and Abu Dhabi Islamic Bank, all have branches in each of the Northern Emirates and provide fully sharia-compliant retail, business and corporate banking services. Murabaha (mortgage) and car finance are among their most popular products.
Many conventional banks – both local and international – operating in the Northern Emirates have also started offering similar products.
The Sharjah Islamic Bank (formerly known as the National Bank of Sharjah until it became a shariah-compliant operation in 2002) currently is the only fully sharia-compliant bank to be based in the Northern Emirates. It posted an AED 200m ($54m) profit for 2006, and its assets increased 44% to AED 7.6bn ($2.07bn) over the previous year.
The emirate is already using this expertise to tap into opportunities abroad. The Emirates Investment Group, chaired by Sheikh Tariq Bin Faisal Al Qassimi, a member of the Sharjah ruling family, has teamed up with Al Rajhi Bank of Saudi Arabia to set up the Emirates Global Islamic Bank (EGIB) in Pakistan. It started operations in February 2007 by opening six branches in the country. EGIB aims to become one of the main players in Pakistan’s emerging Islamic banking sector.
The other Northern Emirates are set to follow Sharjah’s example and establish their own Islamic finance institutions. In March 2007, the Emirate of Ajman received the UAE Central Bank’s approval to launch its own operation – tentatively called Ajman Islamic Bank – with a paid-up capital that will exceed $540m. Ajman authorities will raise 25% of its capital, with private investors and citizens providing the rest.
Big-name companies based in the Northern Emirates are also increasingly relying on Islamic finance, especially sukuk, for their financing needs. On June 6, Sharjah-based energy company Dana Gas announced that it was seeking to issue AED3.67bn ($1bn) worth of convertible sukuk to finance several new plans and buy-out projects. Similarly, the government-backed Ras Al Khaimah Investment Authority (RAKIA) announced in March that it would raise AED1.47bn ($400m) through a sukuk issuance in order to finance the initial phase of the construction of the man-made Marjan Island. RAKIA is reportedly in talks with Credit Suisse to arrange the issuance of these bonds.
