Japan’s Mega Bank Arranges USD 750 Million Islamic Loan For Saudi Project

Japan’s Sumitomo Mitsui Banking Corp. has arranged a syndicated loan of USD 750 million for an airport project in Saudi Arabia that meets Islamic financing principles, a top-selling business daily here reported Monday.

The deal is believed to be the largest-ever Islamic financing facility arranged by a Japanese bank, the Nikkei Shimbun said.

With European banks having become cautious about lending, Japan’s second-biggest banking group hopes to enhance its presence in the Middle East through Islamic financing, which prohibits interest, the report said.

The syndicated loan of USD 750 million will finance the Madinah Airport expansion project, which will allow the airport to double its annual passenger capacity to 8 million within the next several years, the newspaper said.

The project has been assessed at USD 1.2 billion. As the project operator’s financial adviser, Sumitomo Mitsui arranged the syndicated loan, which involves three Saudi banks, the report said.

The loan was arranged through the so-called Istisna’a, a Shariah mode of financing widely used by Islamic banks and financial institutions. Madinah is one of Islam’s holiest sites and has been attracting a growing number of pilgrims as the economies of predominantly Muslim countries grow.

 Zawya