KUALA LUMPUR – Mizuho Bank has become the second Japanese commercial bank to sign a “murabaha” credit facility agreement with Islamic Corporation for the Development of the Private Sector, an arm of the multinational Islamic Development Bank group.
Under the deal concluded in Kuala Lumpur with Mizuho Bank (Malaysia) Bhd. last week, the Saudi Arabian-based corporation, known as ICD, will receive $300 million — covering 25 percent of its financing needs this year — in a fund transfer through investment in a commodity futures market, a mode of financing adopted by Islamic banks to preclude interest payment banned under Shariah or Islamic law.
“We are proud of this partnership and hope to strengthen our relationships with other partners in the region,” said ICD’s chief executive officer, Khaled M. Al Aboodi, during a signing ceremony on the deal on April 10.
“ICD is also supporting Japan as the country works toward further developing the Islamic finance capabilities of its well established financial institutions,” he said. “It also noted the continued commitment of ICD to increase the ability of Islamic financial institutions in the region.”
Shinichi Nishiyama, deputy chief executive officer of Mizuho’s Malaysian arm, said the bank is proud of partnership with ICD “to play a role in supporting ICD’s good work in its member countries.”
“Indeed, this groundbreaking transaction marks yet another milestone for Mizuho Bank (Malaysia) and further strengthens our capacity to develop our Shariah-compliant business,” he added.
Nishiyama also said the Malaysian unit’s financial capacity has doubled from $350 million to $700 million since it was founded in 2011.
The lender has a portfolio of Islamic finance worth $450 million compared with $680 million in total lending in the country, he added.
The Bank of Tokyo-Mitsubishi UFJ was the first commercial bank to tap the market.
Originally published on www.japantimes.co.jp