Islamic banks aim for the mainstream

Difficulties at one Middle East bank have focused attention on a fast-growing sector of the finance market. Islamic banks used to be simply places for those with strong religious convictions to deposit their money. Now, as Nigel Dudley reports, these institutions want to grow internationally, get into new business areas and compete for non-Moslem customers. International firms such as Citibank think the sector is attractive enough to set up their own specialist operations.

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Key concepts in Islamic banking

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.

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