Bahrain's Albaraka Banking Group plans to spend around $200 million to consolidate its presence in the Middle East including a possible acquisition in Asia this year, its chief executive said on Thursday.

Adnan Yousif said IPOs would mainly finance expansion of Albaraka's operations in 12 countries where its over 250 branches has given it the widest reach of any Islamic bank.

The bank, which complies with Islamic principles, also has a strategy to double its branches in the Middle East and Asia to 400 in the next five years.

"We are talking about allocating $200 million for our
expansion in the next two years from setting up new units or acquisitions," Yousif told Reuters in an interview in Amman.

Over $200 million has been spent since 2006 year in capital injections for its Jordanian, Turkish, Lebanese, Egyptian, South African, Algerian and Sudanese operations.

The consolidation of diverse units owned mainly by billionaire Sheikh Saleh Kamel, the largest shareholder, and an IPO that raised $1 billion transformed Albaraka into the largest Islamic banking group, Yousif said.

Shareholders rights now stood at the end of March at $1.6 billion against $370 million in 2003. The total balance sheet stood at $11 billion compared to $4 billion in 2003 and net profits in the first quarter of this year rose 60 percent to $50 million compared with the same period last year, Yousif.

In Pakistan, where the bank has 20 branches, an IPO planned by year end would raise the capital of its subsidiary to around $90 million from an existing $37 million.

Albaraka hopes to sell 40 percent to private investors. The bank also saw fast growth in Egypt and Turkey mainly fuelled by growth in demand for Islamic banking services.

Turkish Islamic lender Albaraka Turk <ALBRK.IS> was set to grow faster in an untapped market for Islamic products through internal financing from an successful IPO.

Albaraka would also begin operations in Syria in the next four months with a $100 million capital raised through an IPO in which 51 percent would be offered to Syrian investors.

A doubling of Jordan Islamic Bank's capital to $91 million through a $50 million capital injection from Albaraka boosted the lender's foothold in the Jordanian banking sector.

The Islamic group was also moving ahead with plans to expand in Asia in the next two years starting with Indonesia and followed by China and India as part of a push into a region
witnessing wider Arab Gulf investment ties, Yousif said.

A bank acquisition as early as year-end could happen in Indonesia, the world's most populous Muslim country, where
Albaraka just opened a new representative office.

"The potential is great and Asia is no longer what it was
ten years ago and countries like Indonesia, India and China are now major traders with the Arab Gulf. It's time to expand there," Yousif said.

The post-September 11 climate made the US market difficult for Islamic banks to operate but in Europe Albaraka could by next year have a presence in France and Italy that taps a large Muslim client base with links to North Africa, Yousif said.

"These events affected Arab investments. Even Arab banks did not make a real presence..But if we find a base in a European country we can then branch out...you don't then need to set up a new unit in every country. We are targeting the Muslim community in Europe," Yousif added.

Albaraka forecast faster growth in Islamic banking than conventional banks in the Middle East with assets reaching $1 trillion in the next two years from an existing $800 billion.-Reuters