Almaty, 12 September 2011. The Eurasian Development Bank (EDB) has taken part in a transaction arranging one-year syndicated Islamic finance for Russia’s AK BARS Bank.
The syndicated facility provided totals US $60 million, including the EDB’s share of US $20 million. The EDB acted as a mandated lead arranger for the project. The transaction was arranged with the participation of Citibank N.A., London, and the Islamic Corporation for the Development of the Private Sector as joint lead arrangers and bookrunners.
The specifics of Islamic finance are that it must be consistent with Sharia laws, in accordance with which money cannot and should not be made out of money. In particular, this principle prohibits interest-bearing loans. For this reason, the transaction was structured in accordance with the Murabaha Agreement, a product of Islamic finance that provides for the purchase and sale of Sharia-consistent goods. According to Dmitry Krasilnikov, Member of the EDB Executive Board and Managing Director of Corporate Finance, “the Bank’s significant contribution to arranging this facility for AK BARS Bank is definitely beneficial from the commercial point of view, but even more important to us is that it gives us an opportunity to better understand all the peculiarities of this structure. We hope we will very soon be able to apply this valuable experience on our own, not only in Russia, but in other EDB member states as well.”
