Islamic Banking plan returned to the backburner

Islamic Banking plan returned to the backburner

THE Metrobank group, which had wanted to foray into Islamic banking through investment arm First Metro Investment Corp., is shelving this plan for now due to certain restrictions in the charter of state-controlled Al-Amanah Bank, the only bank with the Congressional franchise to engage in Islamic banking in the country.

Industry sources said that FMIC had enlisted a big foreign Islamic institution to back up a potential bid to acquire Al-Amanah, if and when the Development Bank of the Philippines was ready to bid out the bank. FMIC would have been willing to cede majority control to the foreign partner, which has the expertise to engage in this type of banking that shuns charging or accepting interest payments for the use of money.

But alas, the charter of Al-Amanah has a 40-percent foreign equity ceiling, which was not palatable to FMIC’s potential partner. So unless FMIC gets a new foreign partner that’s willing to settle for a significant minority stake—or Al-Amanah’s charter gets amended (which is a more tedious process)—the Islamic banking dream is on the backburner for now.—Doris C. Dumlao

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