United Bank Signs First Two Islamic Finance Contracts
The United Bank of Egypt signed the first two sharia-compliant syndicated loan contracts, said Mohamed Ashmawy, the Chairman of the bank.
Firstly, the United Bank contributed with EGP 25 million to a Mudaraba finance amounting to EGP 620 million for the East Delta Electricity Production Company. The National Bank for Development (NBD), Banque Misr, Al Baraka Bank Egypt, Bank Audi and the Egyptian Gulf Bank have also contributed to the five-year term loan. The value of finances offered by the United Bank for electricity production projects reached EGP 120 million.
Secondly, the United Bank contributed with US$ 10 million to a Murabaha finance amounting to US$ 200 million for the Egyptian General Petroleum Corporation. The International Islamic Trade Finance Corporation (ITFC) also contributed to the loan. The total value of Murabaha finance offered by the bank to the Egyptian General Petroleum Corporation reached EGP 250 million in one year.
The United Bank has set a clear strategy to provide sharia-compliant corporate syndicated loans in line with the international standards. The main risk of Islamic finance is the exchange rate risks, but the fluctuated rates are studied and there are methods to avoid such risks, Ashmawy affirmed.
Ashmawy stressed on the importance of cooperation in order to encourage local and foreign businessmen to invest in Egypt. Egypt is in an urgent need for higher growth rates in order to achieve the economic development rates needed for improve the living standards.
Ashmawy demanded implementing sukuk (Islamic bonds) in financing infrastructure and housing projects so as to boost the national economy.
The United Bank studies launching sukuk for financing developmental projects to be offered firstly for the residents of the governorate in which the project is built, to be part of the bank’s social responsibility program.
The value of global Islamic finance rose highly to US$ 1.200 trillion, after the global financial crisis which made many institutions turned to Islamic finance. The budgets of some Islamic banks in the world exceeded US$ 200 billion. Experts expected the volume of Islamic transactions to highly increase especially in Britain and Germany.
