Islamic banks need bailout

Islamic banks may require further bailouts if liquidity does not improve, leading bankers have announced...

Sohail Zubairi, Chief Executive of Dar Al Sharia consultancy, said that it is essential the mortgage market condition improve by Q3 if some banks are to survive.

"Anything is possible in this scenario," he told the Reuters Islamic Banking and Finance Summit in Dubai.

Dar Al Sharia was set up in July 2008 by Dubai Islamic Bank to provide financial and legal expertise for the Islamic finance industry. However, the Islamic financial sector, initially thought to be immune to the West's financial turmoil, due to its conservative nature and ban on speculation, is now feeling the pinch.

"There is a real threat to the business of Islamic banking," Zubairi added, referring to the Islamic lending sector overall.

"If the liquidity does not return, we will not be able to continue doing our business."

Yousif Khalaf, Chief Executive of Ajman Bank, said bankers "growth and profitability are no longer important objectives for 2009. What is more important is survival."

The Dubai Government launched a £20 billion bond scheme in March, of which the UAE Central Bank bought £7.5 billion, which it is in the process of handing out to struggling companies and banks.

The second £7.5 billion is on the way to help restore liquidity and provide financing to a cash-strapped economy.

Source: www.homesoverseas.co.uk/news