Sberbank has announced its first ever Sharia compliant letter of credit (L/C) as it looks to expand its Islamic financing offerings in the Gulf region.

Russia's largest bank has recently been developing Islamic finance products for its domestic clients, and now sees big opportunities for Sharia compliant offerings in the Gulf because of strengthening business links between the region and Russia.

L/C details

Sberbank announced its first Sharia compliant L/C earlier this month.

The bank confirmed an L/C issued by the State Bank for Foreign Economic Affairs of Turkmenistan to reimburse the Islamic Development Bank on debt related to the Turkmenistan-Afghanistan-Pakistan-India gas pipeline project.

Gulf expansion

Sberbank, which holds nearly one-third of aggregate Russian banking assets, is also looking to establish a presence in the Gulf region according to its first deputy chairman, Alexander Vedyakhin.

The bank will start with a central Gulf hub, most likely in the UAE and based in either Dubai or Abu Dhabi. The hub could be established this year.

Vedyakhin says the bank is also looking to develop Sberbank correspondent networks with Saudi banks.

This article represents the views of the author and not necessarily those of the ICC or Coastline Solutions.