September 22, 2010 / 3:19 PM / 8 years ago

UK top Islamic bank sets up capital markets desk

* Eyes real estate companies, equipment operators

* Targets deals of 50 mln pounds

LONDON, Sept 22 (Reuters) - The largest Islamic bank in the UK has set up a capital markets desk to advise on Islamic bond issuance as firms look to attract more investors from Asia and the Middle East, the head of the division said.

The Bank of London and the Middle East (BLME) launched the unit on Wednesday, promoting Massoud Janekeh, currently head of trade and business finance, to be its head.

Janekeh said the bank is aiming to win business from European companies able to pledge assets to issue Islamic bonds, known as sukuk.

“These clients may be in the property sector or equipment operators. If you owned trains, for example, these could be used for a sale and lease-back,” Janekeh said.

Sukuk are generally certificates of ownership of either an asset or a project or a business venture.

Janekeh sees the lease and buy-back structure, known as Ijara, as the one likely to be most popular and was expecting to close the first deal within a year.

The bank has targeted a number of potential issuers in the UK — ideally for transactions in the region of 50 million pounds ($78.35 million).

Before the credit crisis, Islamic finance was touted as a more reliable source of capital for companies because of its use of tangible assets, but the sector suffered a dent in the wake of the Dubai debt crisis. [ID:NLDE66L01N]

Britain is viewed as the most advanced Islamic finance centre in Europe, having changed its legislative and tax frameworks to accommodate the tenets of Islamic law. It has hosted sukuk listings for foreign issuers, and last month an English milling machines maker became the first company in Europe to issue sukuk [ID:NLDE67F0UD].

BLME’s largest shareholder is Kuwait’s Boubyan Bank (BOUK.KW), which holds a 15 percent stake. ($1=.6382 pound) (Reporting by Cecilia Valente; Editing by Jon Loades-Carter)

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