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Qatar’s Masraf al Rayan unveils Shariah-compliant brokerage

From Middle East Jul 31 2012 BY: Helen Burggraf , Contributing Editor , International Adviser

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Masraf al Rayan, Qatar’s largest Islamic bank and its fourth-largest bank by market value, has set up an independent brokerage subsidiary that it says will buy and sell “various Shariah-compliant financial instruments for all types of investors”.

The bank’s introduction of a Shariah-compliant brokerage comes about 18 months after Qatar’s central bank told conventional banks operating in the country that they must shut their Islamic operations by the end of 2011, which boosted interest in the country’s Islamic banks, including Masraf al Rayan.

As reported, “worries of overlap” between the two types of banking were cited as the reason behind the surprise announcement, which came in February 2011.

Al Rayan Financial Brokerage Company, or ARB, will be fully-owned by Masraf Al Rayan bank, but operate as a “completely independent subsidiary” under the Qatar Financial Market Authority, and the Qatar Exchange, the bank said in a statement, adding that it had obtained the necessary licences from both bodies.

Masraf al Rayan said it had installed a team of investment professionals to oversee and run the new operation, which, it noted, “has its own structure, building, employees and board of directors", in order to comply with regulatory requirements to separate the two entities.  

In the first phase of its roll-out, the Al Rayan brokerage will offer clients the ability to buy and sell shares by visiting its new main office, in the Al Emadi Financial Square in Doha, or by working through its call centre or a new online “E-trade system”.

Eventually, it will offer such other options as iPhone and iPad apps, the bank said in its statement.

In March, Hussain Al al-Abdullah, Masraf Al Rayan's chairman and managing director, told the bank's AGM that the institution was eyeing rival institutions in the Gulf as possible acquisition targets, as it sought to expand its reach beyond its Qatar base. In June, the bank unveiled a plan to acquire a majority stake in the Islamic Bank of Britain (IBB), through a deal which would see the other 30% of the UK entity being acquired by the Government of Qatar.  

The IBB, Britain's first stand alone, Shariah-compliant lender, was established in 2004, but failed to take off, in spite of having been backed by such well-known figures in Islamic finance as Abdul Rahman Abdul Malik, the chief executive of Abu Dhabi Islamic Bank at the time.

Shares in Masraf Al Rayan closed yesterday on the Qatar Exchange at QAR27 (£4.73, €6.04, $7.41), a gain of around 12.2% from a year ago, when they traded at QAR24.06.

A statement on the Qatar Exchange's website says that trading in the stock will be suspended tomorrow, owing "to the company’s the extraordinary general meetings being held on that day".

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