Gulf banks and individual investors are planning to set up a $3 billion Islamic investment bank and an Islamic stock exchange in Bahrain by 2009, the chief executive of Al Baraka Banking Group said.

"It will be the largest bank in the region for the issuance of sukuk [Islamic bonds] and will create a secondary market for sukuk," Adnan Yousuf said yesterday.

The bank, which is aiming to be a global player, would also take projects from a conceptual stage to financing and eventually flotation, Yousuf said.

Al Baraka is one of the lenders that [are] looking to invest in the new bank, which will have a paid-up capital of $3 billion and plans to start operations in 2009. The bank will have a targeted capital of $11 billion.

Other banks that have shown an interest include Saudi Investment Bank and Bahrain Islamic Bank. Ernst & Young has been appointed to advise on the bank's establishment.

The value of assets under management in Islamic institutions has been growing at over 20% a year and reached $900 billion in 2007 and is set to hit $2 trillion by 2010, Ernst & Young said in February.

Gulfnews.com, March 27, 2008