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Bank Islami plans capital-boosting sukuk

ISLAMABAD: Bank Islami Pakistan, the country’s second largest full-fledged Islamic bank, plans to raise 3.5 billion rupees ($34.8 million) via subordinated sukuk, a bank official said.

With Basel III global banking standards being phased in around the globe, several Islamic banks have issued such capital-boosting instruments, including those in Turkey, Malaysia, Saudi Arabia and the United Arab Emirates.

Last week, Bank Islami’s board of directors approved a plan to raise Tier 2 capital in tranches of 500 million rupees to help fund its expansion, the Karachi-based lender said in a bourse filing.

The issuance of the first sukuk tranche, which still requires regulatory approval, could be as early as this quarter, chief financial officer Zahid Jamall said via telephone.

The bank is also in the process of issuing shares worth 4.3 billion rupees, which would help it to meet central bank regulatory requirements and keep pace with double-digit growth in its financing book.

The bank has a network of 213 branches and plans to open another 24 this year.

In October, the Pakistani unit of Bahrain’s Al Baraka Banking Group raised 2 billion rupees via the country’s first issue of subordinated sukuk. -Reuters

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