Saudi-based Islamic Development Bank (IDB) said it has signed an agreement with the Kingdom's top lender Dallah Albaraka Group and Qatar to set up an Islamic bank in Doha with a paid up capital of $1 billion.

The deal for the Mega Islamic Bank was signed in the presence of Sudan President Omar Hassan Ahmad Al Bashir at the inaugural session of the 37th annual meeting of IDB’s Board of Governors in Khartoum on Tuesday.

The total underwriting of the three founders will be up to $500 million, said a senior official.

“The Mega Islamic Bank comes as an initiative of the IDB in its efforts to address the dearth of senior financiers, the absence of the Islamic tools of stock exchange and the absence of market liquidity between Islamic banks,” remarked Dr Ahmad Mohamed Ali, president of IDB Group.

The new bank will target establishment and funding of infrastructure projects, along with a program for standardization of products compatible with the rules of Islamic law, Dr Ali said.

The proposed bank is expected to provide attractive return to shareholders, he added.

According to him, the objective of the institution was to facilitate the establishment of a financial market amongst the Islamic banks and provide innovative solutions to manage liquidity through generation of assets and launching of an Islamic securities market.

Dr Abdul Aziz Al Hinai, the IDB vice president, clarified that the new bank is in response to the need for a financial institution that is able to lead the development processes such as the requirements of liquidity management in accordance with Islamic law; the provision of stable funding and the generation of assets of high-quality.
 
Dr Hinai also praised efforts of Qatar and its interest in developing the Islamic banking sector.-TradeArabia News Service