Japan’s Bank of Tokyo-Mitsubishi UFJ (BTMU) said it had obtained permission from the Dubai Financial Services Authority to operate a so-called Islamic window, underlining growing Japanese interest in sharia-compliant banking.
Islamic windows allow conventional banks to conduct Islamic finance by segregating assets from conventional interest-bearing funds. Industry sources said it was the first time that a bank from Japan was operating an Islamic window in the Middle East.
BTMU decided to take the step after Japan’s Financial Services Agency changed its supervisory guidelines, the bank said in a statement seen on Sunday. Japanese institutions have become increasingly interested in Islamic finance as a way to tap large pools of liquidity in southeast Asia and the Gulf.
Last September, BTMU became the first Japanese commercial bank to issue Islamic bonds; last month, a Malaysian affiliate of Toyota Motor said it planned to set up a funding scheme that would include Islamic debt. The Japan International Cooperation Agency has signed an agreement with the private sector arm of the Jeddah-based Islamic Development Bank to develop sharia-compliant transactions.
Originally published on www.reuters.com