May 2009 Issue

Bankers Eye Islamic Finance Jobs - as crisis hits

Reuters, April 16, 2009

MANAMA (Reuters) - A growing number of investment bankers whose jobs have been axed due to the global financial crisis are leaving conventional banking to move into Islamic finance, banking executives say. Executives from Islamic banks told a Reuters Islamic Banking and Finance Summit this week the number of applications from conventional bankers wanting to enter the industry, seen as having huge growth potential, was rising sharply. And most agreed the move from conventional to Islamic banking was relatively straightforward. "It's totally changing. I'm seeing CVs from the London market, also the Far East, and more than anywhere else, from Dubai," said Nabeel Kazerooni, head of private equity at Bahrain-based Islamic investment bank Gulf Finance House (GFH) GFHB.BH.

Why Islamic banks escaped crisis

Capital Business, Nairobi Kenya, April 29 2009

Gulf African Bank CEO Najmul Hassan says none of the 375 banks that practice Islamic banking globally has been affected by the crisis so far. “The reason for this is that Islamic banking does not go into the products that got these banks into this downfall. Look at Societe Generale, it lost billions in speculative transactions; Somitu Corporation lost because it was speculating on prices of copper,” Mr Hassan explained. “These are the very things that Sharia banking disallows.” Mr Hassan noted that Islamic banking is based on neither speculation nor interest but real growth. “All the trading that happens in this world is not interest-based; there is real trading taking place. Some assets are purchased, you add value, and you sell them out. That is what Islamic banks do,” he said. Mr Hassan explained that Islamic banks buy assets, add value and sell them on deferred payment and make their profit from taking part on real economic activity in a society as opposed to conventional banks which makes money on fractional lending which he described as ‘paper business’. “Most people stereotype us and make our banking concept look like we discriminate people on grounds of religion. This not the case because we are open to everyone,” he said.

Mauritius launches first Islamic banking window

Reuters, May 2009

The Hong-Kong and Shanghai Bank (HSBC) Ltd. launc hed Tuesday the first Islamic banking services window in the island, PANA learnt from banking sources. "Today is a historic date as we launch HSBC Amanah islamic banking services that respond to the principles of the Sharia," Sandeep Uppal, CEO of the bank said. Uppal emphasized that the new service is being offered to global business clients "as there are many opportunities in the offshore sector." Uppal estimated that Mauritius can offer value to eventual clients in the Middle -East. "We'll focus on local clients at the appropriate time," the CEO added. Governor of the Bank of Mauritius Rundheersingh Bheenick said Islamic finance is not just for people of Muslim faith. "The sound ethical principles underlying Islamic finance represent an attractive alternative to conventional financial products. Islamic finance offers advantag e s to Muslims and non-Muslims alike," Bheenick underlined.

Monetary Authority of Singapore issues guidelines for Islamic banking

AsiaOne, May 2009

The Monetary Authority of Singapore (MAS) announced earlier today that it has issued a set of guidelines that will provide greater clarity and certainty for financial institutions offering Islamic banking products in Singapore. It also announced that with immediate effect, Singapore-based banks may enter into Diminishing Musharaka financing - a full partnership or joint venture held between a bank and a group of individuals. In addition, MAS has ensured equal tax, regulatory and liquidity treatment of the Singapore dollar sukuk - or Islamic bonds issuance - with Singapore government securities, effective immediately.

RHB Bank Singapore Launches Islamic Banking Unit

Bernama Malaysia, May 2009

RHB Bank Bhd Singapore officially launched an Islamic banking unit in the city-state, which is the first establishment outside Malaysia. For a start, the Islamic Banking Unit located on the 16th floor of RHB Bank Singapore main office at Cecil Street here would concentrate on wholesale Islamic banking services, encompassing debt and capital fund raising such as Sukuk issuances to business enterprise, the bank said. The establishment of the banking unit which coincided with the 6th Islamic Financial Services Board Summit beginning here today highlighted the importance of Singapore as a regional Islamic banking hub. The bank's country head Lim Hun Joo said Islamic banking provided a viable alternative solution that many were looking for, in light of the current uncertainty. He said RHB Islamic Bank in Malaysia had over 15 years of experience and the bank here would be tapping on their understanding of the intricacies of Islamic banking.

Islamic finance offers tips to correct faulty conventional system

Riyadi Suparno, The Jakarta Post, 05/03/2009

The current global financial crisis stems from the absence of adequate market discipline, and Islamic finance can help fix it by injecting a greater discipline into the system, an expert at the Islamic Development Bank said. The global financial system lacks discipline because the reward and punishment mechanism in the banking system was not working. Under current practices, banks are allowed to sell debt, transferring the risks of default to the purchasers, and use the proceeds to make more loans to increase their profits. After selling the debt, banks have no relationship with the debtors. In such a system, the banks have no incentive to make a proper assessment of the debtors in the first place, and have no interest if the debtors are able to pay off all their debt.

Islamic mortgages for all faiths

Business.Scotman, 02 May 2009

THE need to return to traditional banking values is a debate that has been well and truly reignited by the economic crisis. Ethics and responsible lending are high on the agenda as we come to terms with the fallout from the crises that have hit some of the world's leading banks. It is therefore not surprising that attention is turning increasingly to Islamic finance as a ADVERTISEMENTstable alternative. While "toxic" debts have swamped conventional banks across the world, Sharia'a compliant financial products have continued to expand. Islamic institutions have avoided massive writedowns in their assets because they carried no exposure to complex financial instruments or derivatives. Following its ethical principles, all financial transactions within an Islamic finance system must be connected to a tangible asset. Islamic banks use their own funds and will not issue interest-bearing instruments to finance loans; they avoid transactions which are essentially speculative and trading in unowned assets (such as short selling) is prohibited.

Islamic banks take position to reap from crisis

Business Daily, Nairobi, May 4, 2009

Islamic banks are stepping up their foray into Sub -Saharan Africa, riding on the confidence crisis facing conventional banking models. This comes as cash laden Islamic states increase trade ties with the continent while African countries turn towards the Middle East for financing deals. Islamic banks and financing institutions are now positioning themselves in the region while mooting the idea that the way out for global financiers is to embrace the Islamic financing and banking. “In hindsight, Islamic banks are looking quite attractive,” says Najmul Hassan, the chief executive officer of Gulf African Bank, an Islamic bank operating in Kenya.

Standard Chartered launches Islamic home finance

Daily Star, May 2009

Standard Chartered Bank plans to launch a number of Shariah-based products to strengthen its Islamic banking services in Bangladesh, officials said yesterday. As part of the move, the bank yesterday rolled out a home loan scheme titled "Saadiq Home Finance" in Dhaka. “We are willing to offer more Islamic banking solutions to Bangladesh customers to cater to their needs,” Afaq Khan, chief executive officer of Standard Chartered Saadiq, told reporters in a news briefing. StanChart's Islamic banking is called "Saadiq". “We are committed to bringing new products to Bangladesh. It is one of the few markets where we want to grow," Khan said. Kamran Sunjoy Rahman, head of StanChart's Islamic banking for Bangladesh, said the new Saadiq home finance is part of a series of products to be launched by next year. “We will roll out more financial solutions to help our customers in their financial management planning,” Rahman said.

New $10 billion Islamic bank planned for Bahrain

Market Watch, April 19 2009

DUBAI (Zawya Dow Jones) -- Persian Gulf investors plan to launch a new $10 billion Islamic bank by year-end in Bahrain, Adnan Ahmed Yousif, Chairman of Union of Arab Banks said Sunday. The institution will be called "Istikhlaf Bank" and its shares will be listed on the Bahrain Stock Exchange and Nasdaq Dubai via an initial public offering, he said. "We call it the godfather of Islamic banks," Yousif told reporters on the sidelines of a banking conference in Dubai, United Arab Emirates. The creation of the new bank comes amid a severe downturn in Islamic banking in the region. Global issuance of Islamic bonds, or sukuks, tumbled 37% in the first quarter of the year to $1.8 billion, according to the latest data compiled by the Zawya Sukuk Monitor. It may also struggle to compete with larger more established rivals such as Saudi Arabia's Al Rajhi Bank

Virtual Islamic Banks to get Clients in West

Reuters, April 16 2009

DUBAI (Reuters) - Islamic banks, which previously focused on their home markets, are looking to set up virtual branches in a bid to break into Western countries, as they seek to serve scattered Muslim communities there, consultants said. "An online Islamic bank could do very well, especially in the UK. I think that could work in Canada and the United States as well," Mohammed Badi, Principal at Boston Consulting Group, told the Reuters Islamic banking and finance summit in Dubai on Thursday. "We've been engaged in serious conversations with our clients about this," Badi said. Boston Consulting advises financial institutions in Islamic services in the Middle East and southeast Asia. Islamic banks in the oil-exporting Gulf Arab region and in Asia were looking for alternative ways to stay ahead of the game as interest in Islamic finance grows in the West, Badi said.

Islamic bank eyes French Market

Reuters, April 22 2009

MANAMA, April 22 (Reuters) - Bahrain-based Islamic lender Al Baraka Banking Group BARKA.BH said on Wednesday it planned to enter the French market to tap into Western Europe's largest Muslim community. The penetration of Muslim populations in European countries is seen as a key element for future growth of the nascent Islamic finance industry, but penetration has been slowed by the need for national regulation to cover Islamic product structures. France is currently changing its legal system to allow Islamic financial institutions to provide services to its 5 million Muslims. Al-Baraka's units in North Africa are planning tie-ups with French partners to "establish Islamic banking in France", it said in a statement on the Nasdaq Dubai, where it is also listed.

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