Deutsche Bank yesterday closed an Islamic Profit Rate Collar structure with Dubai Islamic Bank (DIB). The transaction was over USD 500m in notional, and is the largest such structure done in the Islamic Markets.
The hedging structure required more flexibility than a vanilla Islamic Profit Rate Swap. Deutsche Bank and DIB, along with their Shari’a teams, structured an off-balance sheet solution based on an Islamic Profit Rate Swap with caps and floors.
Mohammed Saleem, SVP & Treasurer of DIB said “As DIB’s business has expanded in terms of customers and their sophistication, our need for risk management products has grown too. We had a specific risk that needed hedging in a Shari’a-compliant manner and this was not possible through the normal Islamic Profit Rate Swap. We worked with DIB Sharia and Deutsche Bank to structure a bespoke solution. Deutsche Bank’s service was first class in terms of structuring, pricing and execution.”
Ali Zaidi, Global Head of Islamic Sales at Deutsche Bank commented, “DIB is one of the largest and most sophisticated Islamic Banks, and its requirements need a tailored approach. Deutsche Bank is a leader in the provision of risk management products globally, which combined with our Shari’a structuring expertise has allowed us to create a flexible suite of products. We see the Islamic Market continuing to grow and requiring access to all the tools available in conventional markets and we are well positioned to provide this.”
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