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CBN Grants Provisional Approval for Islamic Bank

Category: Islamic Finance

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CBN Grants Provisional Approval for Islamic Bank

May 31, 2005/source ThisDay


Central Bank of Nigeria (CBN) may have issued a no objection response to the proposal by a group of Nigerian investors to promote the nations premier Islamic bank, Jaiz Bank.

This indication emerged at the weekend just as sources close to Jaiz International Plc, the lead corporate investors for the proposed bank, said it has concluded arrangements to raise the bank?s share capital to N25 billion in line with the banking reform minimum capital requirements prescribed by CBN.

The proposal to establish the nations first Islamic bank last week polarised the House of Representatives as members argued along religious lines for and against the proposal.

It was learnt however that CBN in giving a no objection response last week in a letter dated May 18 and signed by CBN Director, Banking Supervision, Dr. Ignatius Imala, gave a proviso that the N25 billion minimum capital for banks be met by the promoters.

Checks revealed that ahead of CBNs initial approval, Jaiz International Plc has initiated moves to meet the minimum new minimum capital base for banks. The company is said to have contacted a number of foreign investors to invest in the bank.

One of the investors, Islamic Bank of Bangadesh(IBBL) is said to have signed a memorandum of Understanding with the promoters to invest in Jaiz Bank and also bring along other off-shore investors.

In addition, IBBL will provide technical management service with emphasis on skills development as soon approval is obtained from the CBN.

The IBBL with over 20 years experience in Islamic banking is said to have an asset base of over $2billion and is rated the best bank in Bangladesh in terms of capital, management and assets.

Jaiz International PLc also hopes to raise further capital from local investors to compliment the contribution from IBBL, the aim being to surpass the minimum capital base.

Application for Jaiz bank was first submitted to the CBN in 1999 when the capital base was N1billion before it was later raised to N2billion.

As at March 2004, the minimum capital then of N2billion and other requirements for issuance of licence had already been submitted to the apex bank.

The N2billion was raisd at an initial public offering (IPO) of the bak at the Nigeria Stock Exchange(NSE), which offer was oversubscribed by 120 per cent.

The prposed bank has as directors Dr. Umaru Abdul Mutallab, Chairman, Dr. Rilwanu Lukman, Dr Abdullateef Adegbite and Prof Tajudeen Adepemi Adebiyi as directors.

Group Managing Director of Jaiz International Plc, promoters of the Islamic bank, Mallam Mustapha M. Bintube confimed to THISDAY, the receipt of the CBN leter saying the he would vigourously forge ahead with processes for establishment of the bank.

The promoters of the proposed Jaiz bank plan to position it as a national bank and welcome all genuine customers and investors irrespective of race or religion. The bank plans to establish branches in key commercial centres of the country,? he stated.

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