RABAT: Moroccan state-owned bank Credit Agricole (CAM) has won the backing of the finance ministry to create an Islamic subsidiary with The Islamic Development Bank (IDB), according to a government decree.
Morocco's central bank is in the final stages of launching an Islamic finance industry. It has said it will start issuing approvals for Islamic banks this year, with the aim of allowing them to begin business in early 2017.
The North African kingdom adopted legislation allowing Islamic banks and insurers in the domestic market, and the central bank has set up a central sharia board with the country's body of Islamic scholars to oversee the new industry.
The government decree allows CAM to create a subsidiary with the Islamic Corporation for the Development of the Private Sector (ICD), a subsidiary of the Saudi-based IDB, in which the Moroccan bank will hold 51 percent stake. The two partners will inject 200 million dirhams ($20.55 million) of capital into the offshoot before doubling it to 400 million later.
Islamic finance has been growing rapidly over the past decade as it broadens its investor base across the Middle East, North Africa and southeast Asia.
Sensitive of Islamist movements, Morocco has long rejected the idea. But the country's financial market lacks liquidity and foreign investors, and Islamic finance could attract both.
"Credit Agricole of Morocco aims to position this bank as a major actor in the Moroccan participative banking sector, mainly in the rural areas where a large part of the population does not deal with conventional banks," the decree published in the official bulletin said. CAM, which is not linked to France's Credit Agricole, will take advantage of its partner's expertise, it said.
Islamic banks are called participative banks under the Moroccan legislation.
Foreign banks look likely to play an important role in developing the market, though Moroccan authorities have guided them towards partnering local banks rather than establishing fully owned Islamic subsidiaries, bankers say.
The central bank said earlier this year it had received seven requests to open Islamic banks and three to open windows selling Islamic finance products.
Two Gulf banks want to establish fully-owned subsidiaries while four others are partnering with local banks.
Comments
Comments are closed.