Deutsche Bank, Saudi Investors Form Joint Venture

Deutsche Bank and a group of Saudi Arabia-based investors have formed a joint venture providing home financing compliant with Islamic law. The Saudi investors will have a 60% ownership stake in the venture, which is called Deutsche Gulf Finance. DB's Riyadh branch will own the remaining 40%. Deutsche Bank said the company will have an initial capitalization of approximately $110 million. It is starting by providing Shariah-compliant home financing for properties located in Saudi Arabia and plans to expand its operations into Bahrain, Qatar and Kuwait in the future. Deutsche Gulf Finance already has started financing completed units as well as those under construction on individual lots or at real estate developments. Doug Naidus, managing director and global head of residential MBS lending and trading at Deutsche Bank, said Islamic finance is key to the company's global mortgage platform and Saudi Arabia is an important country in DB's emerging markets strategy. Deutsche Bank research projects Saudi Arabia will need 1.2 million additional housing units by 2015. The bank estimates that when a new Saudi mortgage law is enacted the legislation will contribute to incremental demand of about 55,000 additional units per year.