Dubai Bank to buy stake in Pakistan's BankIslami
Pakistan Times Business & Commerce Desk

KARACHI: Dubai Bank, a subsidiary of Emaar Properties of the United Arab Emirates, plans to buy an 18.75 percent stake in BankIslami Pakistan Ltd, a spokeswoman for the Pakistani bank said.

BankIslami was granted a licence to operate as a fully fledged Islamic bank in March this year, and plans to open seven branches this year. It has authorised capital of 2.1 billion rupees ($35 million).

Other shareholders in BankIslami are Jahangir Siddiqui and Co. Ltd. of Pakistan and the U.K.-based DCD group. They each hold 18.75 percent, with the remainder in the hands of private investors.

"Dubai Bank has decided to buy the equity stake to the tune of 375 million rupees ($6.28 million), or 18.75 percent," said Sheba Matin Khan, a spokeswoman for the BankIslami.

After raising $3.9 billion through a rights issue on Tuesday, Emaar Properties, the leading property company in the United Arab Emirates, said it planned to expand in the Arab world and South Asia.

Meezan Bank and Al-Baraka Bank are the two Islamic banks operating in Pakistan.

Pervez Said, director of the Islamic Banking Department at the State Bank of Pakistan said some six Islamic banks would be operating in the country by mid-2006.

"We have already given a fourth Islamic banking licence to the Dubai Islamic Bank, while the applications of Emirates Global International Ltd and First Dawood Islamic Bank have been approved in principle," he told Reuters.

He said nine conventional banks were currently operating around 47 Islamic banking branches in Pakistan, and that three more banks would start such branches by next year.

Islamic banking is gaining popularity among those in Muslim-majority Pakistan who consider conventional interest-based banking to be against Islamic tenets.

According to officials, the total assets of Islamic banking institutions grew by 244 percent in 2004 to 44 billion rupees, while deposits registered growth of 263 percent to 30.5 billion rupees.

Islamic law forbids fixed-interest returns on investments, and account holders at Islamic banks get profits from approved investments only.●