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Bank with $100m of capital will finance infrastructure projects in Algeria, Libya, Mauritania, Morroco and Tunisia.
King Mohammed says he wants normalisation of relations in order to implement plans for a integrated economic bloc.
Reports say pro-regime supporters attacked protesters and tried to lynch prominent opposition politician in Algiers.
The Arab Maghreb Union (AMU) is a North African Arab regional organisation composed of Algeria, Libya, Mauritania, Morocco, and Tunisia.

Libya has dropped its plan to step down as president of the five-nation Arab Maghreb Union, state news agency Jana said.

Tunisia's president tried to salvage the Arab Maghreb Union in a phone call to Libyan President Muammar al-Qadhafi on Thursday.

A key North African summit due in Algiers on Tuesday and Wednesday has been postponed due to regional disagreements.

Featured on Al Jazeera
Italy struggles to deal with growing flood of migrants willing to risk their lives to reach the nearest European shores.
Israel's Operation Protective Edge is the third major offensive on the Gaza Strip in six years.
Muslims and Arabs in the US say they face discrimination in many areas of life, 13 years after the 9/11 attacks.
At one UN site alone, approximately four children below the age of five are dying each day.
 
 
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