The rapidly developing Islamic banking sector was stunned by the recent revelation that one of its oldest and most respected commercial institutions, Dubai Islamic Bank, had run into what was described officially as "financial difficulties". The bank only survived because of a capital injection by the central bank of the United Arab Emirates (UAE) and the emirate of Dubai.
The authorities are tight-lipped about the cause and scale of the bank's difficulties. But the Gulf was immediately awash with unconfirmed rumours of fraud, that the losses totalled more than $50 million and the problem had been caused by the actions of one or two figures in Dubai Islamic Bank. There was an immediate run on the bank as depositors started to withdraw deposits. A nervous 24 hours passed before calm returned and it became clear the bank would not fail.
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