Islamic Finance
Conventional, Islamic Finance Can Co-exist: Economists
Conventional and Islamic finance may co-operate or even compete to produce the best outcome for common projects such as the provision of cheap banking for the world's poor or for investment in environmental undertakings, say two eminent economists. Ajit Singh, Emeritus Professor of Economics at the University of Cambridge, UK and Tan Sri Andrew Sheng, president of Hong Kong-based Fung Corporation, said at a public lecture here today that co-operation between these two systems is not only feasible but also desirable. The lecture, themed "Continuing a Legacy in Monetary and Financial Economics", was organised by The Tun Ismail Ali Chair, Universiti Malaya here.
Report to probe Islamic Finance
The World Islamic Banking Competitiveness Report 2011/12, developed in collaboration with Ernst & Young, will be officially launched on November 22 at a top Islamic banking forum in Bahrain. The 18th annual World Islamic Banking Conference (WIBC 2011) will be held from November 21 to 23 at the Gulf Convention Centre. The World Islamic Banking Competitiveness Report, a ground-breaking initiative designed to not only identify but also raise the bar of competitive excellence, strategic leadership and performance improvement in the global Islamic finance industry, will analyse key strategies that leading Islamic financial institutions must deploy in order to ensure continued growth in a challenging economic environment.
Where are the angel investors?
Malaysia has raised the profile of Islamic finance, takaful and the Halal industry, and, now, it must do the same to venture capital (VC). VC is an important emerging asset class that should contribute to the government’s objective of building a knowledge- based economy by 2020. There were several important takeaways from the recently concluded International Venture Capital Symposium 2011. One of the most important sparks to establish a VC infrastructure in debt-based and biased Muslim countries is the role of “angel investors”. The angels are between “friends, family and fools” (FFF) seed money and established VC money. Although it’s expensive money, due to a high failure rate and a five to seven-year lock-up period, these stage two companies will not receive financing/funds from banks, Islamic or conventional, which typically lend to old economy companies whose business they understand.
MALAYSIA: Banks need to train more people in Islamic banking
The need to educate more staff on Islamic banking products and services is apparent as Malaysia moves towards becoming a hub for Islamic finance, said Islamic Banking and Finance Institute Malaysia (IBFIM) senior consultant in training and professional development Zanariah Zahari. She said while the country retained a dual-banking system to cater to conventional and Islamic banking needs, employees with Islamic banking knowledge were not many as compared to conventional banking staff.
Islamic banks got good prospects: HSBC
Recent regulatory changes in Kuwait and Qatar, retail client preferences for Shariah-compliant banking products, and stronger balance sheets and funding positions, offer better growth prospects for Islamic banks compared with conventional peers, HSBC said as it initiated coverage on four Islamic banks. The brokerage initiated Saudi Arabia's Alinma Bank and Qatar Islamic Bank with “overweight”. In an October note, the brokerage said it expects Alinma, which has no legacy credit risk in its loan portfolio, to double its market share in the medium term, helped mainly by corporate lending. HSBC said it expects Qatar Islamic Bank to gain from recent regulatory changes in the country that do not allow conventional banks to offer Islamic banking services.
INDONESIA: UAE Eye Indonesian Banks
The United Arab Emirates is interested in investing in Indonesia’s banking sector. Mansyur Pangeran, the Indonesia Consulate-General to UAE, said that two of the country’s major banks have shown serious interest in exploring the possibility of bank purchase. “One of them is Abu Dhabi Islamic Bank which is interested in investing in a bank in Indonesia,” said Mansyur at a seminar which carried the title: “Indonesia's Islamic Financial Services: Opportunities and Challenges," in Jakarta. A consul at the consulate-general said Al Hilal Bank was also interested in making investments.
HSBC’s Islamic unit says funds to exceed $10bn
HSBC Amanah Securities Services, part of HSBC Holdings, will more than double the value of the Islamic funds it services to exceed $10bn after it helps to set up funds in the next 12 to 18 months. Demand for Islamic funds has raised in the past three to six months as the global economic slowdown prompted investors to seek alternative investments to help manage risk, according to Germain Birgen, Luxembourg-based global head of HSBC Amanah Securities. The unit will help set up more than 30 Shariah-compliant funds globally. About $10 trillion was wiped from the value of global equities in the third quarter amid concern a worsening European debt crisis will derail global growth. Shariah law forbids gambling, investments in alcohol and receipt of interest, so fund managers have to select investments deemed Halal, or permissible.
Innovation key to success of Islamic finance industry
Innovation is the key to the future success of the Islamic finance industry and to meet the challenges of contributing to economic growth and to facilitate internationalization of the industry. According to Nor Mohamed Yakcop, minister in the prime minister's department in Malaysia, "the Islamic financial system has to continually innovate and adapt in order to be competitive. At the same time, innovation is also the driving force behind developing greater diversity of products and services. Therefore there is a need to focus on product innovation and development efforts that will provide a comprehensive array of Shariah-based products for the industry."
Al Hilal to keep plans on track
Al Hilal Bank intends to press on with branch openings and a bond issuance, in spite of trouble on world markets and diminishing opportunities for the banking sector at home. The Islamic lender is opening a branch in Kazakhstan this week, with three to follow in the UAE by the end of next year, as it makes inroads into markets held by more established banks. In August, Al Hilal revealed plans for its first sukuk, of an expected size of at least US$1 billion (Dh3.67bn). Despite difficult conditions on credit markets, the bond issuance will go ahead, said Mohammad Berro, the bank's chief executive.
MALAYSIA: Malaysia Can Emerge As Centre of Excellence for Islamic Venture Capital, Says Economist
Malaysia can emerge as a centre of excellence for Islamic venture capital, says Islamic economist, Prof Humayon Dar. Humayon said the country has the chance of receiving risk capital from other parts of the Muslim world, especially the Gulf Cooperation Council (GCC) members. "Given the government's commitment and dedication, I believe in three to five years, Malaysia will emerge as a centre of excellence for Islamic venture capital. If the government is looking into developing Islamic venture capital, I believe it is going to attract lots of interest from GCC, especially Saudi Arabia, United Arab Emirates and Qatar," he said.