The Dubai International Financial Centre (DIFC) issued its first three licences on September 20, marking the launch of a free zone that Dubai officials hope will catapult their city into the major league of global financial hubs.

Julius Baer, Standard Chartered and a Gulf Cooperation Council (GCC) energy fund were handed their licences at low-key ceremonies in Dubai’s Emirates Towers. The DIFC’s regulatory authority said it plans to issue a further 20 licences by the end of the year. Credit Suisse, Deutsche Bank, Merrill Lynch and Aon are among the financial institutions publicly to have expressed an interest.

Julius Baer has formed a new subsidiary for the DIFC, from where it will offer offshore private banking, institutional asset management and capital markets services to clients in the Middle East and South Asia. “What the DIFC is doing is really quite exceptional,” said Michael Baer, head of private banking for Julius Baer. “They have set up a financial centre in a region where until now it was not possible to offer a full range of services to clients.”

Standard Chartered, which already has 10 onshore branches in the UAE, will open a separate branch under a DIFC wholesale banking licence.

To avoid conflicts with the UAE central bank, the DIFC will not issue retail banking licences. David King, acting chief executive of the regulator, the Dubai Financial Services Authority (DFSA), said that he had been “overwhelmed with interest” from financial institutions keen to tap into Arab wealth through local wholesale, asset management, insurance, capital markets and Islamic finance activity.

“This is not about taking business from other centres,” he said. “It’s about making the cake bigger for everyone. We are providing a platform of independent regulation that is based on international best practice so that major financial institutions can feel comfortable doing business in the Middle East.”

Omar bin Sulaiman, chief executive of Dubai Internet City (DIC) and a rising star in Emirates business circles, was appointed director-general of the DIFC in early September to help stabilise governance following a series of high-profile executive departures during the previous three months. “As the DIFC moves from project to operational mode, I will now work with the regulators to ensure ongoing compliance and credibility,” he said.

Construction is under way at the DIFC’s site in central Dubai, and the flagship Gate building is due to open at the end of this year. DIFC tenants will be allowed to work off-site until 2008.

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