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 21 Apr 2009

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Indonesia lender Muamalat to raise capital

Indonesian Islamic lender PT Bank Muamalat said on Monday it had received offers from three foreign investors to buy a stake worth around 250 billion rupiah ($23.34 million), or 50 percent of its capital, reported Reuters.

President director Riawan Amin declined to name the firms, but said local investors were also interested and that having a bigger capital base would help the country's first Islamic bank to expand its business.

Bank Muamalat, 28 percent owned by the Islamic Development Bank (IDB), has 500 billion rupiah of capital and estimated total assets rose 20 percent to 13.19 trillion rupiah as of February from the same period last year.

The bank's capital adequacy ratio, a key indicator of a bank's financial health, was currently about 9 percent, above the central bank's minimum requirement of 8 percent, Amin said.

Bank Muamalat said on Jan 12 it was planning a rights issue in the second half of 2009 to raise its capital adequacy ratio.

Indonesia, which has lagged neighbours such as Singapore and Malaysia in Islamic banking despite having the world's biggest Muslim population, has been trying to develop the Islamic financial market with various sharia-compliant products.

Under Islamic law, interest is banned and income must be derived from a fundamental economic transactions such as trade in goods and services, direct investment in business, or renting out property.







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