Asian Finance Bank eyes $500m Malaysia Fund

The bank, the largest part of which is owned by Qatar Islamic Bank (QIB), also plans to set up a fully-fledged Islamic bank in Indonesia by 2010 as part of its effort to build in-roads into Asia.

Faisal Al Showaikh, Chief Executive of Asian Finance Bank, told Reuters in an interview the property market was relatively subdued following the global credit crisis, but he saw potential for a property fund in Malaysia.

"Right now, the property market has suffered from sub-prime, so it is not something I would pursue aggressively," he said, referring to defaults on low-end mortgages in the United States that have rattled markets worldwide.

"But this is something we have in our minds to set up. When you look at Indochina and other countries like Korea, Singapore, Hong Kong, I think the property market is very much undervalued in Malaysia."

The global Islamic finance market is one of the fastest growing in the world. Islamic assets are growing at an annual pace of 20% and are set to hit $2 trillion in 2010 from the current $900bn, largely thanks to a flood of petrodollars, Ernst & Young said in February.

Asian Finance Bank currently has a representative office in Indonesia, a country analysts say has the potential to become a major player in global Islamic finance because around 85 percent of its population is Muslim.

"It is a big market for Islamic banking which needs to be aggressively explored," Al Showaikh said on the sidelines of an Islamic banking conference in Jakarta.

"We have plans to make this representation office into a full-fledged Islamic bank in Indonesia. In this part of the world, with a population at 229 million -- and a relatively small percentage of the market here is Islamic -- I believe we can do more on the retail side and do more on wealth management."

Indonesia's Islamic finance market lags neighbouring countries Malaysia and Singapore because of tax and accounting framework issues.
But analysts expect Sharia financing to take off after Indonesia's parliament passed a long-awaited Sharia finance law last month.

Indonesia's central bank says the Islamic banking industry in the world's most populous Muslim nation is set to meet its target of a 10-15% share of national banking assets by 2015 from less than 5% now.

Asian Finance Bank was incorporated in Malaysia in 2005 and aims to develop a regional Islamic banking network providing a wide range of banking and financial services conforming to Islamic financing principles.

AFB's Chief Executive said the bank would like to establish representation offices in Singapore, Brunei, China, South Korea, Vietnam, Myanmar, Laos and Cambodia, to expand its Asian presence.

Qatar Islamic Bank owns the majority stake, 70% in AFB.

AFB expansion plan in Asia is part of QIB strategy to establish a global Sharia' compliant network to offer alternative Islamic financing solutions to clients in Europe, Middle East and Asia.