RABAT (Reuters) - Two of Morocco’s biggest banks, BMCE BMCE.CS and BCP (BCP.CS) are preparing to launch Islamic subsidiaries as the Moroccan parliament discusses a bill regulating Islamic banks and sukuk issues, banking sources said.
Parliament’s approval will be the last step before fully-fledged Islamic banks can be established in Morocco, whether they are subsidiaries of domestic banks or foreign owned, a measure which could attract more Gulf Arab investment.
Morocco’s central bank has also started talks with a body of Islamic scholars on establishing a central sharia board to oversee the country’s developing Islamic finance industry.
Sources from the two banks said initial investments in the new subsidiaries would be at a minimum pending market reaction, regulation, and foreign investor interest.
“Even though analysts don’t really expect a huge rush for Islamic products after the bill’s approval, we should take part in the battle. We never know,” one senior bank source told Reuters. “We have to prepare ourselves.”
The sources declined to be named as they said official announcements will come later when the bill regulating Islamic finances is approved.
Islamic finance, which follows the principles of Sharia law such as a ban on interest payments, is a growing sector in the Middle East, North Africa and Southeast Asia, but also in European countries with large Muslim communities.
Islamic finance banks are called participative banks under Moroccan legislation.
BMCE Bank and BCP are following in the footsteps of Attijariwafa bank (ATW.CS), controlled by the royal family’s investment holding company SNI, which has been the first Moroccan bank to create an Islamic subsidiary in Morocco.
In 2010, Morocco began allowing conventional banks to offer a limited set of Islamic financial services.
But the country’s Islamic finance drive accelerated after a moderate Islamist-led government took power through elections in late 2011, and as the government has struggled with a big budget deficit. Sukuk, or Islamic bond, issues could attract money from wealthy Islamic funds in the Gulf.
Editing by Patrick Markey and Keiron Henderson