DUBAI (Reuters) – Qatar Islamic Bank and Bahrain’s Ithmaar Bank on Monday announced moves into Kazakhstan, an increasingly popular destination for Gulf Islamic lenders eyeing deals outside their crowded home markets.
Qatar Islamic is setting up a unit in the mostly Muslim country of 15 million people, while Ithmaar said it was working with the Kazakh government to set up a $1 billion energy fund for the region, home to significant oil and gas reserves.
“Kazakhstan’s political and social stability, skilled workforce and bright economic outlook enhance the country’s favourable investment climate,” Ithmaar said in a statement.
“Kazakhstan holds 3.3 percent of the world’s proven oil resources,” it said.
Last month, the Kazakh government said Bahraini Islamic lender Gulf Finance House planned to develop a petroleum-related research and education area on Kazakhstan’s Caspian Sea coast at a cost of $10 billion.
Flush with cash from a sixfold increase in oil prices since 2002, Gulf lenders are scrabbling to invest and expand, and are increasingly looking abroad.
Islamic banks in particular are looking to tap booming demand from the world’s 1.3 billion Muslims for investments that comply with their beliefs.
Qatar Islamic has subsidiaries in Malaysia, Lebanon and the United Kingdom. It is seeking an Islamic banking licence in Turkey and considering buying a bank in Egypt in the next year, a company spokesman told Reuters in March.
“The memorandum of understanding (for a unit in Kazakhstan) underlines Qatar Islamic Bank’s intent to consolidate its expansion plan outside Qatar,” Qatar’s fourth-largest lender by market value said in a statement on the bourse website.
The bank gave no further details.
Kazakhstan is central Asia’s biggest economy and oil and mining are its key industries.
The country has experienced a building boom in recent years, but local banks have been hit hard by the global credit crunch and liquidity is scarce, creating a market ripe for cash-rich Gulf lenders.