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SocGen to launch sukuk Islamic bonds in Malaysia

media Société Générale's headquarters at La Défense in Paris. Reuters/Benoit Tessier

French bank Société Générale is to become the first European bank to issue an Islamic bond programme in Asia, with a one-billion-ringgit issue in Malaysia, according to reuters news agency. SocGen is the second major European bank to issue sukuk, as Islamic bonds are known.

France's second-biggest bank is to issue the firs tranche of the sukuk by the end of the year, one of two anonymous sources told Reuters.

Western banks who wish to raise capital are attracted by the Islamic bond market because credit costs less than on conventional markets.

The Middle East unity of HSBC Holdings made a five-year, 370-million-euro issuance in 2011.

Issuers of sukuk do not pay interest, which is forbidden under Islam, but pay annual profits to buyers, who have become do-owners of the debt.

Sukuk issuance worldwide grew 54 per cent to 99 billion euros last year.

Malaysia accounts for 74 per cent of primary market issues.

Saudi Arabia follows with eight per cent.

Malaysia's central bank last month implemented new laws to beef up compliance with Islamic laws, introducing higher pentalties and making sharia advisers legally liable for the first time.

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