State Bank of Pakistan provides in-principle license to DIB Pakistan Limited

Dubai, March 18, 2005: Dubai Islamic Bank (DIB) delegation led by Dr. Mohamed Khalfan bin Khirbash, UAE Minister of State for Finance and Industry and Chairman of DIB announced yesterday the establishment of DIB Pakistan Limited, a wholly owned subsidiary of DIB, at a ceremony hosted by Pakistan Prime Minister Shaukat Aziz in the capital city of Islamabad.

The announcement marks a first step in the bank's ambitious plans to roll out its operations into regional and international markets as part of its overall strategic plan. The move will consolidate DIB's position as one of the leading Islamic finance organisations in the world and pave the way for its strategic deployment in Pakistan.

On the occasion, Mr. Aziz welcomed the delegation and stressed that the visit reflects the strong economic ties between Pakistan and UAE. He said that the step would also pave the way for enhancing the economic ties between both countries in the future. He said: "DIB's primary experience in Islamic banking would be an added value to boost the financial and banking services in the Pakistani market."

Dr. Khirbash said: "DIB's new partnership is the result of the historic and age-old ties between Pakistan and the UAE. This means far more to us than just a commercial agreement."

State Bank of Pakistan (SBP) Governor Dr Ishrat Hussain also welcomed the initiative at the announcement which is the first step in DIB's deployment of an Islamic bank in Pakistan to target corporate, retail, commercial and SME business segments and investment banking opportunities.

The bank would also introduce Shari'a compliant home mortgage financing, real estate development financing, and other innovative financing schemes using high level technology. 

SBP has granted an in-principle approval to DIB Pakistan, which is expected to lead off operations with a range of Islamic banking activities and an extensive portfolio of Shari'a-compliant products through a large branch network spread across the country.

Dr. Kharbash said: "What we are seeing today is recognition of the rapid growth of Islamic banking in financial markets all over the world. Growth rates for the sector have generally been around the 20 per cent mark, compared to the 5 per cent seen by conventional banking," he said.

DIB is looking for a rapid expansion of its investment to take maximum advantage of the opportunities in the market. Dr. Khirbash added: "DIB plans to deploy a new bank in Pakistan, which will have a full range of products and services to cater to the demand for Islamic banking products and services in Pakistan.

"Potentially there is a strong market in Pakistan, where there has been a growing awareness of the benefits of Islamic banking, which has been supported by the central bank," he added.

Dr. Khirbash said DIB Pakistan will be an active player on the investment banking needs. He said: "The value addition DIB brings to the Pakistani market is significant. Being the first Islamic bank in the world, DIB has developed a substantial track record built on innovation. The expertise of the bank may also be utilised by the Central Bank, which is in the process of developing and refining the regulatory environment. DIB has an important role in assisting SBP to develop a secondary market for Islamic commercial paper."

DIB played an active role in developing the market of Islamic commercial paper in Pakistan when the bank participated as a co-manager of the Sovereign Islamic Sukuk issue. The success of the issue consolidated the status of DIB as an Islamic Sukuk powerhouse as it follows the bank's single largest Sukuk issue in the world in 2004, which successfully closed the US$1 billion Dubai Civil Aviation transaction to fund the expansion of Dubai International Airport.

DIB will leverage the expertise and experience of its Shari'a board to play a significant role in the development of sophisticated Islamic banking products and Shariah compliant services in Pakistan.

Dr Khirbash said: "Pakistan's economy has seen a turnaround and continues to maintain a growth trajectory buoyed by falling debt and continued economic reform. Investors are impressed by the track record of reform and the performance of the Pakistani economy over the last five years."

Dr. Hussain said: "The initiative comes in line with the government's plans to develop and promote Islamic banking services in the Pakistani market. The banking sector in Pakistan has evolved rapidly over the past years. Its operations have grown significantly after the upgrading of the legal and regulatory frame work."

SBP has, meanwhile, upgraded the banking sector's regulatory system, which has become one of the most progressive and comprehensive. Taken together with government measures to strengthen the country's economic and legal framework, the establishment of DIB Pakistan could not have come at a better time in the country's economic cycle.

-Ends-

Note to editors
Established on 1975, Dubai Islamic Bank is considered to be the first Islamic bank in the world that has implemented the principles of Islam in all its practices. It was founded with the active assistance of the UAE Government, the Central Bank and the people of the UAE. The economic and business philosophy of Islam encourages generation and sharing of profits. However, it forbids giving or taking of interest. Leveraging the strengths of Islamic business and economic concepts on one hand and state-of-the-art banking technology on the other, DIB creates partnerships with its customers to generate profits, which are then shared with them. DIB has created a vast array of Islamic banking and finance products to suit every conceivable need of its customer

For further information, please contact:
Sameh Hamtini/ Khaled Abdulla
ASDA'A Public Relations
Dubai,
UAE
Tel: +971-4-3344550
Fax: +971-4-3344556
E-mail: info@asdaa.com

© Press Release 2005