Apr 17 2011
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Indonesia becomes hotbed for Islamic banking
Indonesia is rapidly becoming the place to be seen for the Islamic banking community. Most recently Adnan Ahmed Yousif, CEO of Albaraka, Bahrain's largest listed bank said he was interested in buying into the Indonesian market. The price ticket? $100m.
He was not the only one. It has been reported in a number of places that Qatar Islamic Bank - buoyed by the support given by the Qatari government's recent dictate that all of QIB 's non-Islamic domestic competitors shut down their Islamic operations and transfer their assets and customer to the bona fide pure Islamic banks - has declared its intention to increase its influence in Indonesia.
QIB already has a presence in neighboring Malaysia through Asian Finance Bank and has said that it has identified two or three possible acquisitions in the archipelago nation. The banks already in Indonesia, such as Standard Chartered Saadiq, are also keen on expanding their operations in the country.
The reason why these foreign banks are clambering over one another to get a slice of the pie is plain for all to see. To start with Indonesia is home to the world's largest Muslim population, but up until recently it had no Islamic finance industry. Today the sector is worth $11.5bn, according to the country's Central Bank, but this is still less than 10% of total banking assets. The Central Bank has declared it wants to increase Islamic finance assets by 45% this year, so that Indonesia can start to compete with Malaysia, so there is a lot to play for.
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