STATE-owned Development Bank of the Philippines (DBP) will put in an additional P1 billion for the expansion of an Islamic bank in the country.
This, as DBP is poised to take full ownership of the Al-Amanah Islamic Investment Bank of the Philippines (AIIBP) in two weeks.
AIIB chairman Jaime Panganiban said Cebu is one of sites of the bank’s future branches, with the branch’s opening being targeted for the first quarter of 2009.
“We are just finalizing the sale of shares from the SSS (Social Security System) and the GSIS (Government Services Insurance System),” said Panganiban.
AIIBP, a charter bank, was first established in 1973 by virtue of Presidential Decree 264 issued by then President Ferdinand Marcos.
It is the first universal bank approved by the Bangko Sentral ng Pilipinas (BSP) with a capitalization of only P1 billion.
Traditionally, capital investment for universal banks is P6 billion.
New branches
With the initial takeover of AIIB by DBP last July, the bank’s new board of directors applied to open up 20 additional branches nationwide in the next 12 months.
AIIBP has not yet identified the final location for the Cebu branch yet Panganiban said it would be in areas where there are many Muslim traders.
At present, AIIBP has nine branches—one in Luzon and the rest in Mindanao. Ninety percent of its depositors are Muslims.
But even when AIIBP will operate under the principles of Sharia banking, Panganiban said non-Muslims are also welcome to do business with them.
“The Sharia principle combines Muslim religious beliefs and finance,” he said.
Profit share
Based on Muslim religious beliefs, imposition of interest rates is not allowed. Instead, the bank’s customers will offer profit sharing to its clients.
“It’s a fair-for-all concept,” said Panganiban, adding that the bank will also offer Sharia-compliant products for insurance and investment.
Panganiban also disclosed that the BSP has given AIIBP a five-year window to initially operate as a conventional bank until it will fully operate as an Islamic bank on the fifth year. But on its third year, AIIBP will offer 40 percent of its shares to foreign Islamic investors, as a prelude to its full Islamic banking operations.
“We are looking at getting sovereign fund investors from Saudi Arabia and Dubai, which will put value to the bank,” Panganiban said. (DME)
