Adib debuts cap-prot Euroxtoxx Islamic 50 play

Abu Dhabi Islamic Bank (Adib) has launched a capital-protected structured note that gives investors exposure to European equities via the Euro Stoxx Islamic 50 (SXISLBE) Index.

The two-year shariah-compliant note is being marketed as suitable for risk-averse investors looking for modest returns. The note is linked to the performance of the Eurostoxx Islamic 50 Index, which includes 50 stocks in nine different markets in the Euro Zone, and guarantees that the full investment is repaid at the end of two years.

“Having suffered in the wake of the global economic crisis, European equities are trading below their historical average price-to-book multiple of 1.9 times,” said Adib. “They are therefore offering relatively high dividend yields with the prospect of capital gain as the eurozone economies gradually recover.”

The Euro Stoxx Islamic 50 Index includes large-cap European companies such as oil and gas giant Total, industrial goods manufacturer Philips and automobile maker Porsche. The index has delivered a return of nearly 40% over the last three years, and nearly 80% over the last five years.

The note is part of a series of investment solutions offered by the Islamic bank to allow investors to diversify their portfolios. The notes are screened by an independent supervisory board to ensure they meet the Islamic investment criteria, including on ethical grounds and on levels of a company’s debt.

In September the bank issued a similar capital-protected structure offering exposure to global shariah-compliant stocks via the Dow Jones Islamic Market Titans 100 index.

Barclays acquisition
Adib reached an agreement in early September for the formal completion of the sale of Barclays’ UAE retail banking business which includes the transition of more than 110,000 customers onto the Adib banking platform.

The largest shariah-compliant lender in the UAE agreed a AED650m ($177m) deal with the British bank in April following a tender process in which both local and international players showed interest.

Adib received regulatory approval from the UAE central bank in May for its purchase of Barclays’ retail operations. The UK bank was in the process of restructuring its operations which also included the offloading in September of its retail banking, wealth and investment management and corporate banking businesses in Spain to CaixaBank (formerly La Caixa).