RIYADH, 15 February 2006 — The first deal of Islamic hedging of lending rates was signed yesterday between a Saudi national company and SABB Bank. Fawaz Al-Hokair & Co. entered into a deal under which the SABB will protect the company against the possible rise of lending rates.
The deal, being the first of its kind globally is purely Islamic; reflecting the ability and flexibility of Islamic banking to respond quickly to the modern financial requirements and the tailoring thereof to meet the needs of borrowers and lenders.
Commenting on this event, Mohammed Al-Tuwaijri, SABB Treasurer, said “This is a precedent event for international financial markets which adds to the achievements of SABB. The deal emphasizes SABB’s ability and success in managing the projects it is involved in. It provides best financial products and solutions to cope with the modern requirements and caters for the special needs of investors and borrowers. He added that Al-Hokair Co., represented by its management is distinguished for their ability to understand the facts and various requirements of the market as well as to seek effective solutions for drawing the future financial requirements of the company. Given the fact that Al-Hokair are determined to benefit from the Islamic quality banking services that enable their company to achieve precedence they signed this special deal for shifting the company’s loan to be purely Islamic.
SABB has recently launched many Islamic financial derivatives that suit all requirements of investors and borrowers in liaison with its foreign partner, HSBC.
