Noor Islamic may spend $2 bln on single buy

By Alexander Smith and James Cordahi


DUBAI - Dubai's Noor Islamic Bank could spend as much as $2 billion on a single acquisition if it can find the right opportunity as it seeks to expand abroad, the bank's chief executive Hussain al-Qemzi said.

Only a month ago, Qemzi said the bank would spend as much as $1 billion on an individual purchase if necessary.

"We are highly capitalized," he told the Reuters Islamic Finance Summit on Tuesday, adding that there were various ways in which Noor Islamic Bank could finance its growth plans.

Qemzi reiterated his desire to enter the UK market, which he sees as essential in Noor Islamic Bank's drive to create the world's largest Islamic bank, but acquisition targets were few and far between, and prices were high.

If Noor Islamic Bank is unable to buy into the UK, it will seek a banking license and build a presence there, Qemzi said.

Noor Islamic Bank has embarked on an international advertising campaign to raise its global profile in banking.

"We wanted to be known to other financial institutions," he said, adding that this drive would continue.

The bank, which is 25 percent owned by the government of Dubai and 25 percent by the emirate's ruler, formally started operating last month and now has more than 400 staff.

Wage costs had risen sharply since the project to develop a global Islamic bank was begun, but the biggest challenge facing it was a lack of technical skills in areas such as risk management and specialist credit.

But the bank's Islamic focus had attracted Muslims who found its business model more acceptable than others, Qemzi added.

Qemzi expects Noor Islamic Bank to reach breakeven at the operating level by 2009, but reiterated that an initial public offering was not on the cards until the bank had shown three consecutive years of profit.

Dubai bank targets UK in bid to become world's largest Sharia lender

Dubai's newest Islamic is to go on a shopping spree for British financial institutions in an effort to become the world's largest Sharia lender within five years.

Noor Islamic Bank hopes to acquire controlling stakes in British banks to gain a foothold in European markets, where demand for Sharia-compliant services is growing.

“We would like to take the Noor brand outside the UAE by acquiring other financial institutions,” Hussain al-Qemzi, its chief executive, told The Times. “Our interest is in not just getting that 5 per cent. We'd like to get our brand there so we can look at more of a controlling stake.”

Noor is 25 per cent-owned by the Government of Dubai and 25 per cent by Sheikh Ahmed bin Saeed al-Maktoum, the emirate's ruler and the bank's chairman.

It plans to spend up to $1billion (£507million) on each acquisition in Europe, Asia and North Africa. It promises a “modern, tolerant and progressive” approach and cheaper premiums than its rivals.

British banks are at the top of its wishlist, with the UK considered the world's leading centre for Islamic finance outside the Middle East. “I think moving to the UK makes a lot of sense for us,” said Mr Al Qemzi, who helped to establish the Dubai International Financial Centre.

Noor Islamic is the first of the Gulf's seven Sharia banks to pursue overseas expansion. It opened a month ago with ten branches across the UAE and plans to make its first international purchase by the end of the year through an investment-banking unit to be launched this month.

Mr al-Qemzi said that targets would not be limited to Sharia-compliant banks. “If we find a good opportunity for us to move into one of these interesting markets, we will move,” he said.

He rejected criticism that Islamic finance structures lacked transparency. Noor - it means “light” in Arabic - is required by UAE law to go public within a few years. Mr al-Qemzi said that Islamic banking was less risky than Western finance, which has been battered by the sub-prime crisis. “One of the things we don't do is sub-prime ... because it's prohibited for us,” he said.

“These [partnerships] are not meant with any political agenda or anything. More or less, it's just investing and creating a return.”

Noor Islamic to offer financial services at Dubai Airport Free Zone

Noor Islamic Bank PJSC (“Noor”) has signed an agreement with the Dubai Airport Free Zone Authority (DAFZA) to establish a financial services centre in the free zone.

The bank will provide tailored products and services to meet the specific needs of small and medium enterprises (SMEs) located in the free zone. Identified and designed by Noor Islamic Bank in association with DAFZA, the products will offer complete financial solutions for all industry sectors.

Hussain Al Qemzi, Group CEO, Noor Islamic Bank, said: “The needs of small and medium businesses are often ignored by major financial service providers. This initiative with DAFZA is aimed at giving SMEs the leverage they need to compete effectively in today’s markets.”

Dr Mohammed Al Zarouni, Director General, DAFZA said: “The new innovative financial products to be offered to small and medium enterprises operating in the Free Zone is a value–added service that complements the services we provide to our customers.”

“In a globally dynamic economy, international investors and companies of different sizes look at financing opportunities to expand their business,” said Al Zarouni.

“We are quite pleased to be associated with Noor Islamic Bank and we are optimistic that the new banking and financial services on offer will benefit our potential customers and help us to attract many more looking for financial solutions,” he added.

“The ultimate goal of the deal is to provide the best financial facilities, the matter the new NIB will generously be prepared to do,” concluded Dr Zarouni.

DAFZA focuses on trade, industry and value added service activities. It provides one-stop-shop services and facilities for investors keen on setting up a base in this region. The free zone primarily accommodates all companies in freight forwarding and logistics, aviation, telecommunication, jewellery, as well as pharmaceuticals and cosmetics.

As part of its services to DAFZA tenants, Noor Islamic Bank and DAFZA would set-up a commercial centre within the free zone. The objective of these centers would be to offer commercial banking services to the tenants inclusive of;

* Access to RMs who would provide consultancy services to the customers in relations to their business related queries.

* An executive lobby designed to facilitate personal and Business banking requirement.

* Availability of service personnel required to execute the documentation and transactions, and

* One window operations for the DAFZA tenants to conduct their banking & DAFZA related transactions & payments.

Banking products and services that Noor Islamic Bank would be offering under this partnership would include: cash management services, asset financing, working capital finances, Islamic covered drawing, business finance, commercial mortgage finance, commercial vehicle financing, supply chain financing, trade services and treasury related products at competitive profit rates.

The small and medium enterprises segment is an important component of the UAE economy, fuelling the national GDP and representing more than 60 per cent of total businesses in the country. Small and medium sized enterprises are active in key sectors such as trade, construction, tourism, facility management, manufacturing, and professional services.

The bank’s SME unit has been working to create alliances with a number of government and semi-government agencies, targeted towards the development of an entrepreneurial culture in the country.

Headquartered in Dubai, Noor Islamic Bank aims to provide progressive, state-of-the-art, visionary banking services and the experience of Islamic banking to meet the needs of the discerning consumer.