Monday, May 19, 2014
Dubai: Dubai Islamic Bank (DIB) announced on Monday that it has entered into a relationship to jointly manage and operate PT Bank Panin Syariah Tbk (Bank Panin Syariah), a listed Islamic bank in Indonesia.
The investment in Bank Panin Syariah will involve DIB accumulating around 25 per cent stake in Bank Panin Syariah in the initial phase, with a view to subsequently increasing its shareholding in the bank to 40 per cent upon obtaining the relevant regulatory approval, including from the Financial Services Authority (OJK) in Indonesia.
Earlier this month, following the announcement of DIB’s first quarter results, Dr Adnan Chilwan, the bank’s CEO, told reporters that the bank is in the process of expanding its geographical footprint starting with an acquisition of a significant stake in an Indonesian bank and starting a new bank in Kenya.
The new investment makes DIB a substantial shareholder in Bank Panin Syariah, and Bank Panin will remain as controlling shareholder of Bank Panin Syariah.
Bank Panin Syariah offers Islamic banking services in Indonesia. DIB intends to cooperate with Bank Panin in order to promote the growth of Sharia banking in Indonesia. To achieve this, DIB will provide its well-established expertise in Islamic banking operations to Bank Panin Syariah, which will be bolstered by Bank Panin’s knowledge of the local market.
Bank Panin Syariah is currently controlled by PT Bank Panin and currently operates through a network of 10 branches with its head office located at Panin Life Center Building, Jakarta.
The bank is listed on the Indonesia stock exchange and successfully completed its IPO in January 2014 to raise approximately IDR 475 billion (approximately $42 million) through the issuance of rights shares. The bank has assets of over IDR 4.3trillion (approximately $375 million) whereas its equity base stood at over IDR 998 billion (about $88 million) as at Mar 31, 2014.
After a five-year long consolidation of its business the bank, has charted a plan for strong balance sheet growth within and outside the UAE. In the first quarter of this year DIB reported a 111 per cent increase in net profit to Dh636.6 million while its total assets increased by 6.9 per cent to Dh121.1 billion from the end of 2013.
Outside the UAE, DIB already has operations in countries such as Pakistan, Sudan, Jordan and Bosnia. In Pakistan, Dubai Islamic Bank Pakistan was established in 2006 and DIB fully owns it. In Sudan, the bank has a strategic stake of 28.4 per cent in Bank of Khartoum and in Jordan; DIB is present through Jordan Dubai Islamic Bank in which it owns 20.8 per cent shares. DIB holds 27.3 per cent stake in Bosna Bank International in Bosnia which was established in 2000 as the first bank in Europe to operate on the principles of Islamic banking.
Indonesia offers high growth potential for Islamic banking. The country has a significantly large Muslim population combined with a growing middle class.
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By Babu Das Augustine Deputy Business Editor
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