Noussaima Tabesh, head of Islamic Banking at the Central Bank said the "approval was granted to the Iraqi Bank last Wednesday."

Tabesh said that the bank will be given a term from "six months to one year to complete all legal framework."

Al Bilad Bank was established in 2006 with a capital of $22 million. It later raised its capital to $87 million in March of 2009. Its total assets stood at $484 million at the end of 2008, the latest figures available.

Islamic Banking is still  a niche market in Lebanon with only four Islamic Banks currently operating including the Arab Finance House, Al Baraka Bank, Lebanese Islamic Bank, and Blom Development Bank (BDB).

Several Iraqi banks have expressed their interest in entering the local market including commercial bank, Bank of Baghdad and Islamic bank, Warkabank. 

Total deposits at Sharia Compliant Banks reached $380 million at the end of the first half of 2009, which represent only 0.5 percent of total banking deposits.

In comparison, deposits in commercial banks totaled $75 billion at the end of August 2009.

The local Islamic banking market is mainly split between the Arab Finance House which dominates the market with a 45 percent share, and Al Baraka Bank which has a 35 percent share.