May 8 London-based European Islamic Investment
Bank will propose a capital reduction plan next month
to enhance returns for its shareholders, after the firm swung
back into profit in the 2013 financial year.
EIIB will seek shareholder approval for the plan, which
could potentially take the shape of a share buyback or a tender
offer, during its annual general meeting in June, chief
executive Zulfi Hydari told Reuters in a telephone interview.
"What we are planing to do is some form of shareholder
distribution. We will do something over the year to enhance
The firm posted a pre-tax operating profit of 1.5 million
pounds ($2.5 million) in 2013, compared to a 10.1 million pounds
loss a year earlier. Total operating income rose to 10.2 million
pounds, from 3.9 million pounds in 2012.
EIIB is one of Britain's six full-fledged Islamic banks and
among 20 institutions in the country that offer sharia-compliant
financial services, which follow religious principles such as a
ban on interest and gambling.
Under its 2012-2016 strategy, EIIB is restructuring its
business by exiting higher-risk private equity investments,
seeking more stable income streams such as asset management and
advisory services under its EIIB-Rasmala brand.
The firm has used its 2012 acquisition of Dubai-based
investment bank Rasmala to focus efforts on building its asset
It said assets under management grew by more than a quarter
in 2013, reaching $1.2 billion from $922 million a year earlier,
adding clients such as Egypt's Social Insurance Fund and
mandates from several Omani government institutions.
"2014 is a revenue year for us, growing topline revenue,
adding headcount. We are now targeting Oman and Saudi Arabia,"
The firm is targeting $3 billion in assets under management
by the end of 2016, which would come from organic growth as well
as through tie-ups and acquisitions, Hydari said, speaking from
"We are now on the lookout for potential opportunities. We
are aiming for product line expansion - growing our product menu
in particular - and geographic expansion."
In the past two years, EIIB has launched an Islamic leasing
fund, an Islamic trade finance fund and a sukuk (Islamic bond)
fund seeded with $25 million of the company's own capital.
It has now re-domiciled the majority of its open-ended funds
from the Cayman Islands into Luxembourg UCITS funds, a regime
that would help ease the regulatory approval process for
distribution in the Gulf region, Hydari said.
In the United Arab Emirates, the firm is exploring
distribution of packaged Islamic insurance (takaful) and savings
products, which it sees as a fast-growing segment.
"These pools of institutional capital are growing. They have
a client base but across the board there is not enough quality
product," Hydari said.
Last year, EIIB sold its remaining exposure in Bahraini
lender Arcapita for $8.1 million to Barclays, also
selling property in Cairo related to its discontinued Egyptian
brokerage for $6.2 million.
($1 = 0.5894 British pounds)
(Editing by Ruth Pitchford)