Ajman Bank starts with 'clean slate'

Starting a business in the current economic environment offers more opportunities than disadvantages, according to Ajman Bank, a new Islamic commercial bank that intends to become fully operational next week. "We are not carrying any baggage. We are starting from a clean slate," said Said Wafai, the head of the bank's strategic corporate affairs. The absence of past investing sins will better position the bank to succeed than many of its local peers, who are heavily exposed to a declining property market, Mr Wafai said. In addition, faltering local banks could offer good acquisition targets. The bank, which has founders including the ruling family of the emirate of Ajman, has paid-up capital of Dh1 billion (US$272 million), about 65 per cent of which it raised in an IPO early last year. It will open its first flagship branch in Ajman on Feb 2. The emirate owns about 25 per cent of the bank and local businessmen hold up to 40 per cent, Mr Wafai said. The timing of the bank's official opening coincides with a virtual standstill in bank lending. In addition, the country is considered "overbanked" and ripe for consolidation. Last year's merger of Emirates NBD is seen as a blueprint for future mergers. Mr Wafai said the bank would look to acquire others that could not survive the current turmoil without outside help. "Our key model is to acquire and grow, not organic growth. Asking about future acquisitions is the right question to ask, but not the right time," he said, noting that the bank was not yet ready to reveal its strategy. "We are positioning ourselves. Some players are not in the same strong position to continue as they were. It is a place for well-placed banks to pick up others." Mr Wafai said demand for Islamic banking was still growing. UAE bank assets that comply with Islamic law, including a ban on the receipt of interest, account for about 20 per cent of the total. Some see this percentage surpassing 50 per cent in 10 years. Last year, Noor Islamic Bank, partly owned by Sheikh Mohammed bin Rashid, Vice President of the UAE and Ruler of Dubai, was launched. Abu Dhabi also opened its Shariah-compliant Al Hilal Bank. Following next week's official opening, Ajman Bank plans to begin operations in branches in Dubai, Abu Dhabi, Sharjah and the Ajman Free Zone within a year. "We plan to open one branch per quarter," Mr Wafai said. [e-mail]