AL Amanah Islamic Investment Bank of the Philippines, a subsidiary of state-run Development Bank of the Philippines (DBP), inaugurated its newly refurbished Makati branch on Wednesday night which, according to officials, signaled the “rebirth” of the country’s first and only Islamic bank.
Located at the ground floor of the Orient Mansion building, Tordesillas Street, Salcedo Village in Makati City, Al Amanah is looking to become the mainstream Shariah bank in the country, the operations of which fit with Islamic law.
Shariah financing prohibits the collection and payment of interest. Islamic banks make money through profit-sharing agreements with corporate borrowers, or by buying tangible or intangible assets and reselling these to clients for profit, instead of lending money directly to them. They take deposits for “safe-keeping” purposes.
Now with a fresh capital of P1 billion from DBP, Al Amanah is licensed to do both commercial and investment-banking services, similar to a universal bank. It was re-established in 2000 to help in the economic development of the Autonomous Regions in Muslim Mindanao (ARMM).
The bank was formed as the Philippine Al Amanah Bank in 1973 by virtue of Presidential Decree 264. In 1990 Republic Act 6848, otherwise known as the Charter of Al Amanah Islamic Investment Bank of the Philippines, was signed by then-President Corazon Aquino, giving birth to the first Islamic bank in the country.
The bank, however, failed to take off the ground mainly because of its lack of expertise and the lack of public awareness in Islamic banking.
In 2007 DBP completed its buyout of a 70-percent stake in Al Amanah, with the deal raising its stake in the Islamic bank to 80 percent.
DBP, which had acquired shares previously held by other government institutions, including the Social Security System and Government Service Insurance System, now fully owns the bank, which offers deposit products denominated in peso and US dollar.
Al Amanah, headquartered in Zamboanga, is now focused on the banking needs of ARMM governments and intends to offer financing assistance mainly for infrastructure projects, according to chairman and CEO Armando Samia.
“We’ve been allowed by the Bangko Sentral to do conventional banking for the next five years,” he told reporters.
The bank, he added, is looking for a partner from the Middle East or Malaysia that will inject additional capital and help promote Islamic banking in the Philippines.
Another option to beef up the bank’s capital is to negotiate with rich Islamic countries for financial assistance, with Al Amanah acting as a conduit bank for development projects particularly in the ARMM, or issue Sukuk (Islamic) bonds, Samia said.
Samia said his goal was to make the bank profitable by next year, after a projected net loss this year. He did not specify the bank’s projected net loss in 2010, and said it may break even next year.
The bank currently has eight branches in Mindanao, specifically in Cotabato, Cagayan de Oro, Davao, General Santos, Iligan, Jolo, Marawi and Zamboanga.
The bank never stopped operating, but has suffered from sluggish operations, mainly because the general public was not aware of its existence. The bank is open to the public, regardless of religious orientation.
source : business mirror.ph