Private Investment Portfolios

Establishment and management of investment portfolios for the Bank’s own account and for clients

Definition

The portfolio is a mudharaba contract between the investor ( rab al mal ) and FIBA ( al mudharib ) . The portfolio is invested in assets carefully selected to achieve its objectives. These assets include stocks and /or bonds or any other securities.
It is an investment service offered to individuals and corporations who haven’t got enough time or experience to invest in securities.

Objectives of Private Investment Portfolios

1- To Realize reasonable profit .
2- To reduce investment risks.
3- To manage investor’s liquidity .

Portfolios are constituted on the following bases

1- Diversity of portfolios’ constituents .
2- Liquidity considerations .
3- purchasing portfolio constituents in the name of the portfolio owner

Facilities provided by FIBA

Reducing purchasing /selling commissions, for trading securities.

Providing liquidity for client when requested.

Reinvesting realized profits.

Providing a monthly report on the performance of the portfolio .

Procedures

The portfolios are managed according to restricted Mudharaba formula . Accordingly , a contract is concluded specifying the following :

* Capital is fixed ( minimum SDG 500.000 ) .
* The manager ( FIBA ) .
* Duration ( normally one year ) .

Profit sharing mode as follows :
* Less than 10% : Client 95% The Bank 5%
* Between 10% - 14% : Client 90% The Bank 10%
* More than 15% : Client 85% The Bank 15%

Performance in this field

This activity started at the beginning of 2000 . Since then portfolios witnessed sustainable development in number and size of capital invested . It reach 122 portfolios by the end of 2008 . Money Invested was SDG 496 Million .

Restricted Mudharaba Contract

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