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Malaysia Asian Finance plans aviation, property funds

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Points of Essence:

  • An aviation and property fund worth RM 1.5 billion will be created by the Malaysian based Asian Finance Bank to provide for alternative assets given the global financial crisis. The funds will be denominated in dirham or euro currencies.

KUALA LUMPUR, Oct 24 (Reuters) – Malaysian Islamic lender Asian Finance Bank will set up aviation and property funds with over 1.5 billion ringgit ($420 million), aiming to capitalise on demand for alternative assets amid the global financial crisis.

The bank, which is backed by Middle Eastern shareholders, is planning a Gulf aviation fund which could be denominated in the euro or dirham currency, Asian Finance chief executive Mohamed Azahari Kamil said in an interview.

It is also working with two companies to create a 500 million ringgit fund to develop properties around Kuala Lumpur, he said.

Demand for Islamic products would hold up as the global financial crisis drives investors into the safe haven of Islamic banking, Azahari said.

‘In this very difficult financial meltdown, the conventional system has shown to the public that it has failed,’ Azahari said in an interview.

‘It has failed not only because of corporate governance or transparency but it has failed because of the structure where there is no equitable distribution of wealth between the bank and the customers.’

Islamic finance is widely seen as the banking world’s conservative alternative, as it forbids speculative activity and excessive risk and demands that partners share the profits and losses of a venture.

Qatar Islamic Bank and its associates have a 70 percent share in Asian Finance. RUSD Investment Bank Inc of Saudi Arabia has 20 percent and Global Investment House of Kuwait has 10 percent.

($1=3.571 Malaysian Ringgit)

(Reporting by Liau Y-Sing; Editing by Neil Fullick) . lw

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Written by Suapi Shaffaii

October 24, 2008 at 2:59 pm

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