DUBAI: Dubai Islamic Bank (DIB) will purchase a 25 percent stake in Indonesian Islamic lender Bank Panin Syariah, it said on Monday, as the United Arab Emirates-based bank looks to expand into the world's most populous Muslim nation.
Under the agreement, DIB - the largest Islamic bank in the UAE - will "jointly manage and operate" Bank Panin Syariah along with parent Bank Pan Indonesia, which will remain a controlling shareholder, it said in a Dubai bourse filing.
DIB Chief Executive Adnan Chilwan this month said that the bank was in talks to buy a 40 percent stake in an Indonesian Islamic bank, adding that it hoped to conclude a deal before the end of the year using its own cash to fund the purchase.
No purchase price was given for the deal, which will be subject to regulatory approval.
The investment "will involve DIB accumulating around a 25 percent stake in Bank Panin Syariah in the initial phase, with a view to subsequently increasing its shareholding in the bank to 40 percent", the statement said.
Under Indonesian regulations, foreign ownership of local lenders is capped at 40 percent.
Indonesia has the world's biggest Muslim population but its Islamic finance market lags behind that of neighbouring Malaysia. Indonesian Islamic lenders hold about 4.8 percent of total banking assets in the country while Malaysia's Islamic banks share of hold more than 20 percent of the banking assets in their market.
Bank Panin Syariah became the first Indonesian Islamic bank to be listed when a 25 percent stake was sold to the public in January.
Bank Panin Syariah has a network of 10 branches and held assets worth 4.3 trillion rupiah ($376.8 million) at March 31, DIB's statement said. (Reuters)