Japan's megabanks tap into Islamic finance business

Tokyo - Japanese megabanks are trying to increase their presence in the Islamic finance industry, Japanese media reports said Tuesday.

Bank of Tokyo-Mitsubishi UFJ has invested in Malaysian investment bank CIMB with a 30-per-cent share in the global business of issuing Islamic bonds, or Sukuk.

Another Japanese financial giant Sumitomo Mitsui Banking Corp helped finance construction of oil refineries in Saudi Arabia in 2006 and Kuwait last year as part of its strategies to tap Islamic finance for investments in petrochemical plants and large-scale projects in the Middle East, Jiji Press said.

The banking institutions must break into the Islamic finance industry in order to expand their businesses in the Middle East, where large-scale projects are in progress thanks to rising oil prices, an analyst was quoted as saying.

With the continuing surge in oil prices, the Islamic finance industry is expected to double by 2010 to 1 trillion dollars.