DUBAI: French lender Credit Agricole is considering either issuing an Islamic bond or creating a wider sukuk program that could lead to several issues, as European banks seek to diversify funding, a senior executive said on Thursday. "It's something that we're always looking at but it's probably more on the agenda today than yesterday because banks need to diversify funding," Simon Eedle, managing director and global head of Islamic banking, told the Reuters Middle East Investment Summit. "I believe it's something that we will do. It's only a question of time," he said. Deteriorating confidence in French banks' ability to withstand the euro zone debt crisis has hit their share prices hard and ramped up their cost of US dollar funding, forcing banks to look at measures including cost cuts and asset sales. Eedle said the company has not set a specific time-frame as it weighs the current environment and the benefits of a one-off issuance as opposed to a larger sukuk program. Goldman Sachs registered a $2 billion Islamic bond program on the Irish Stock Exchange earlier this month — a move that some bankers said may get push-back from conservative Islamic investors who question how Islamic funds would be funneled in the conventional firm. Goldman Sachs' sukuk program is based on a murabaha structure, which is a cost-plus-profit arrangement compliant with sharia law. Eedle said he would prefer a sukuk program over a single sukuk offering but would consider whether the company sees enough asset growth to justify the regular issuance of sukuk. He also said that any sukuk or program would be structured through an ijara, or forward lease, agreement to alleviate any concerns over sharia-compliance among investors. "If Credit Agricole were to issue a sukuk, it would be an ijara structure with real Islamic assets to justify to the investors that we are using the financing to divide the liabilities to match the Islamic assets we have," he said. –Additional reporting by Amran Abocar, David French and Nour Merza
