FT.com / Reports - Investment banks: Nascent sector looks for new model

Islamic investment banks and companies mushroomed across the Middle East in the years preceding the financial crisis, buoyed by increasing religious sensibilities and the flow of billions of petrodollars into the region.

Companies such as The Investment Dar in Kuwait and Bahrain’s Arcapita and Gulf Finance House were among the most profitable institutions in the region and broadened the Islamic finance industry’s geographical footprint and sophistication.

But while most Islamic commercial banks have fared relatively well, the financial crisis caused billions of dollars of losses and exposed severe problems in the business models of many Islamic investment banks.